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Dublin: 14 °C Wednesday 17 September, 2014

The world’s most famous economist thinks the property tax is unfair*

*But only if you’re in negative equity.

Image: JOHN MC ELROY

IRELAND SHOULD ALLOW property tax exemptions, introduce a higher rate of tax for top earners and move towards a harmonised European rate of corporate tax.

That’s the advice of French economist Thomas Piketty, who was in Dublin yesterday to speak at the annual conference of think-tank TASC.


Speaking to reporters before the event, Piketty questioned the fairness of a property tax levied on those in negative equity.

Some people even have a higher mortgage than their property is worth. It seems to me that you should not pay the same property tax as someone without a mortgage.

Piketty said that he was in favour of wealth based taxes such as the property tax, but only when they hit people who were well off rather than vulnerable people in negative equity.

Corporation tax

Piketty also had strong words for Ireland’s low corporation tax rate, which he said was part of a race to the bottom that will hurt the capacity of states to pay for big-ticket expenditure items like health and education.

The future of Europe, and in particular the future of Ireland, is in the investment in education, not investment in tax competition, that’s getting us nowhere.

He continued:

“If you want to invest in education and skills then you need tax revenue. If you don’t have the tax revenue from corporate tax (and) if we all converge towards zero per cent corporate tax in the long run, we’ll have less money to invest in skills and education.”

Piketty argued for greater European integration and policy harmonisation, saying “you cannot make a single currency work with 18 different tax systems in competition with each other”.

Inequality

Piketty’s work on inequality has catapulted him into the spotlight since the publication of his book, Capital in the Twenty-First Century, earlier this year.

The growth of nationalism is the biggest threat that Europe faces at the moment, with more and more people becoming alienated from the European project, convinced that the bloc is not looking after their interests, he said.

TASC CONFERENCE-PIKETTY ADDRESS

Piketty in Dublin yesterday

Source: JOHN MC ELROY

“There’s a growing faction of public opinion that globalisation and economic openness in Europe works mostly for the financial sector or large multinational corporations that pay less tax than small and medium sized businesses, and it’s not working for the rest of us.”

We have to make Europe more democratic and able to take decisions on important fiscal matters such as corporate tax rates, tax havens and international financial regulation issues.

Honohan response

Responding to Piketty’s address to the 650 strong crowd at the Croke Park conference centre, Governor of the Central Bank Patrick Honohan said that Piketty’s book was a “tour de force”.

The area of inequality has “been neglected in Ireland, and he (Piketty) has really opened up a huge area that has been forgotten”, he said.

Honohan said that as long as the distribution of wealth remains the same, unequal systems will “really put the squeeze” on lower paid people when countries suddenly become less wealthy, as had happened in Ireland.

He said that he thinks there has been a widening of inequality in Europe since the beginning of the millennium.

Read: Why 600 people will be at a sold-out event in Dublin today just to hear this rockstar economist talk>

Read: Ireland is split between people who have good jobs, and people who don’t>

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