Professor Alan Barrett:

I will make a quick point on property taxes. As I have explained to the Chairman, I will then have to leave the meeting, so I apologise for that.

In terms of comparing the property tax to other taxes - the Deputy raised the element of confidence - it would be very hard to make an argument that in some sense a property tax would be more damaging to confidence. Among the suite of taxes that one might choose, the point Mr. Barnes was making is that most economists would say, and the analysis shows, that in terms of economic efficiency a property tax is a good way to go. The real arguments against property tax are the distributional issues and the question of whether it is a fair tax. There is general agreement that economically it is a sensible tax, but one can make a very good case for saying it is not a fair tax. Of course, one of the great dilemmas of property tax is how to make it fairer by trying to relate it to income in some form. For instance, one gives exemptions for low-income people, but once one starts to do that the property tax starts to look like an income tax, so one loses some of the benefits. The design of taxes is terribly difficult, but I am making the point because I can see Deputy Higgins-----