Heightening Taxes to Boost Spending

According to the Nevin Economic Research Institute (NERI), the government needs to look at generating extra funding for housing. How do you generate additional government funding? Taxes.

The need for increased spending on housing can be gained from heightening employer-related PRSI, property, gift and inheritance, and carbon taxes. Irelands government spending and tax revenue amounts to much lower than the average EU spending and revenue.

According to the Department of Finance, in 2018 just over €55.5 billion was received by the Exchequer. Tax on income and wealth amounted to 10.5% of the Irish GDP in 2017, while tax on individual or household income amounted to 7.3%.

Countries in the EU that have progressively developed more stable housing and social housing taxes and tax revenues are comparatively much higher than Irelands. For example, Denmark has established housing that over 22% of dwellings are social rented. Denmark’s tax on income and wealth amounts to 29.7% of their GDP and tax on individual or household income equates to 25.4% of Danish GDP.  Denmark exemplifies a similar country in the EU where the housing market …

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Brexit takes more than just UK funds

As we are all well aware of by now, Brexit may affect the Irish economy. Although, one key part of the economy that we tend to overlook when it comes to this massive change is construction, which can and does play a significant role in our day-to-day life decisions.

Construction is much more intricate than just having laborers come in, swing around some tools, and build a structure. Specifics in supply and demand of laborers, resources, time, materials, consumers, money and a multitude of others aspects all play a part in construction outputs.

If Brexit is to occur, especially a no deal Brexit, there are a number of barriers that can arise. These barriers can and will be placed on construction companies, especially those currently working on a project. Some of these barriers include a reduced labor force, slower materials delivery, and possible construction penalties.

What current construction workers point out is that there is a steady decline in the amount of workers each year, and an even steadier decline in quality construction workers. If a hard …

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Boom or bubble and will it bust or burst?

This is a piece that Karl wrote for the Irish Sun, it relates to a piece that was the lead story for the paper last week.

(Begins)

There is a lot of talk that we have a ‘property bubble forming’, with virtually no supply, a growing population and a trend towards smaller households as things like separation and divorce become more common, it simply lacks ‘bubble’ qualifications.

But it does have ‘boom’ written all over it, we have had many such booms and busts in Irish history, I have spent much of the last two years researching just this very thing with Frank Quinn from Blackrock College of Further Education.

We have had many price rises and falls in the last 300 years, often we saw that after a crash the next boom would result in overcrowding because back then, as now, supply became ‘short’ in the areas that it was needed.

A boom is about rapid price appreciation, it doesn’t mean you have a bubble. You could have the price of anything boom and there wouldn’t be a bubble, …

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Moncrieff Show: news review on economic matters 25th August 2014

The Moncrieff Show on Newstalk had us on to talk about interest rates, economics and taxation. In the unmistakable style that Sean Moncrieff is known for, suffice to say, he kept Karl on his toes!

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Rent control, a misguided policy that just won’t go away

The idea of rent control is always a compelling one, that by decree you simply say ‘the price can’t rise’ and then it doesn’t. That this is a proven myth rarely factors in, take cities in the USA with rent control and you’ll also see that these same cities have some of the highest rents (like San Francisco and New York) because all rent control does is confer a transfer onto the incumbent renters.

When it happens for long enough you eventually get a disproportionate cost being carried by some cohorts who become structurally less well off because they face vastly different cost bases in rents even though they may earn an identical wage to their neighbour. It’s no wonder there was even a Mayoral Candidate in New York who’s party was named ‘Rent is too damn high!‘. Check out his debating style which is memorable if nothing else.

If housing cost control was a good idea then why not enforce …

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Ed Harrison – talking about banks & conflicts of interest

An excellent analysis of the issue with banks being bailed out, banks get into trouble and they are rescued (bailed out) or they default and creditors take a hit. However, often times the sovereign gets into trouble as well. Does the Sovereign then privatize assets or default themselves? Assets such as the banks fall into the hands of foreigners at that point – as we have already seen with Bank of Ireland.

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What will come of it all? Eurobonds? Probably not…

If you look at the dynamic of the crisis to date you see the following flow (broadly but not exactly)

1. Sub-prime mortgages in the USA started to go under 2. Interbank lending froze as banks liabilities were unknown & collateral was of unknown quality 3. Interbank rates shot up 4. The crisis was not contained, culminating in the fall of Lehman which triggered a series of world events the most substantial aspect of which was a loss in confidence. 5. Markets fell rates were dropped to record lows in the EU, USA and Britain. 6. Recovery began with several bailouts in the majority of nations affected.

and then….

7. This is critical – bank and private debt effectively became public debt, in Ireland’s example this was via our banks, in other countries it was in the same manner or via quantitative easing. Across Europe the ECB was a key facilitator of liquidity.

The debt has now, in many countries become a public debt issue, in Europe specifically it is a Sovereign debt issue, the like of which the US …

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