Seanad debates

Wednesday, 23 March 2005

Finance Bill 2005 [Certified Money Bill]: Committee and Remaining Stages.

 

12:00 pm

Photo of Brendan RyanBrendan Ryan (Labour)

I am very grateful to Senator Mansergh for advancing my education as I had never heard the term "Procrustean bed" before. I appreciate Senator Mansergh's willingness to explain the term and not leave those of us on this side of the House wallowing in ignorance.

A fascinating aspect of tax reliefs, which are a very useful instrument of public policy, is the emerging information that suggests that no serious cost-benefit analysis of every tax relief is carried out on an ongoing basis. There are tax reliefs regarding which a large number of economists argue that the cost-benefit ratio is completely wrong, as is the case with mortgage interest relief. However, these tax reliefs are politically indispensable, regardless of the economic wisdom of continuing with them.

The idea that we do not know how much certain tax exemption schemes would cost, either in estimate terms or real terms, defies logic. For example, it is a fiction to suggest that if all multinationals paid tax at 40% instead of 12%, we would have three times as much corporation tax and one third or one quarter of the number of multinationals in the country that we have now. This is a separate issue.

It is fascinating that in the most high-powered Department, no cost-benefit analysis of every tax exemption scheme is carried out. These cost-benefit analyses should be regularly carried out and their results made public so that we can find out who is benefiting from the schemes, why they are benefiting from them and what the outcome is. It is a matter for debate as to whether this recommendation is the best way to go about it and I take note of Senator Mansergh's point. I would have no serious qualms about supporting this recommendation. I do not understand why we do not have a clear and explicit public policy that states that every tax relief should be based on or accompanied by a cost-benefit analysis.

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