Dr. Kieran McQuinn:

In my earlier response, I spoke about the difficulties that we face and the lessons to be learned from the crisis. Some of the research that we undertook as part of this programme with the Department of Finance updated earlier research that I had done with a colleague in the Central Bank looking at the impact of the housing market on the taxation take. In particular, the research looked at the impact of disequilibrium or the excesses in the property market - the excess supply that we witnessed, the huge increases in price and so forth - on our tax take. The key taxation headings were stamp duties, VAT and income tax. The objective was to quantify the impact of the disequilibrium in the property market on the overall collapse in taxes that occurred. There are obvious lessons to be learned in terms of ensuring the stability of the taxation system going forward.

In terms of our earlier discussion, this is where the macro-prudential approach comes in. It is there as a safeguard to ensure that we do not let the kinds of excesses which built up in the banking sector and then spilled over into the real economy and the housing market and eroded our tax base happen again. It is that kind of overview and the nexus between fiscal stability and ensuring the tax base is solid, combined with financial stability and ensuring that there are no excesses in the credit markets, which is all part of keeping the tax system on a stable footing.