Dr. Tom McDonnell:

The Deputy has asked many questions. The easiest question to answer is the one about fiscal space. I agree that it is miserable. It is not nearly sufficient to deal with all the problems that will arise over the next year. Part of the problem with the fiscal space is that the Commission's methodology for calculating it - which is bunkum, as any serious economist knows - is reducing it by over €1 billion in the context of next month's budget. The Commission's view is that we have been overheating ever since we had an unemployment rate of 10.3%. Its model is not designed for Ireland at all. It is essentially taking some of our fiscal space away from us.

The Deputy asked me to be specific about the taxes I am proposing. He spoke about different property taxes and the range of hidden charges. His point about the range of hidden taxes and charges is absolutely correct. The taxes that people rarely notice are VAT and excise duty. Maybe people notice excise duty when they see how much cheaper certain things are in other countries. Ireland over-taxes, and is a high-tax country, in the area of consumption taxes. On average, such taxes are higher in Ireland, on a per-person basis, than they are in the other ten high-income countries. This point does not necessarily apply to VAT, but is particularly relevant to excise duty. Our excise rates are extremely high by comparison with other countries. We have a range of regressive charges. The television licence is a flat charge. That is the most regressive structure one can have. It is probably our most regressive tax or charge. Everyone has to pay it, in effect.

It is true that the property tax is not progressive in the same way as income tax or the USC. I believe this conclusion was reached in research from the ESRI.

It is a tax on an asset, not necessarily a wealth tax per se, and it has certain problematic elements such as where a person with a very low income pays a high level of property tax. The best way to deal with such situations is to provide relief by way of a charge on the property which would only become due on sale or transfer. It would accrue over time and, when it is being inherited or sold, the State would get what is owed to it first. Over a lifetime, the State would get the same amount of property tax but it would not cause hardship issues for low-income households.The determination of what hardship was could be left to a democratic decision but I have not carried out any research into that point.

The Nevin Institute has published papers on a financial transaction tax, FTT, and on a wealth tax. A wealth tax on all assets over €1 million, without reliefs, would generate a yield of around €0.3 billion.