Banks already repaying the Government

It’s good to see that the banks are already beginning to indirectly recompense the Government for providing the state guarantee.

For while the politicians, media and general public all heap opprobrium on the bankers, no-one is pointing the finger at the Government who, for at least the past decade, have been responsible for furiously pump-priming the construction sector. This continued apace despite the clear evidence that the economy had become increasingly over-reliant on the construction sector.

A plethora of grants and tax breaks have fuelled the excesses as investors, which included many first-time buyers, sought to buy into guaranteed easy gains in an ever-rising property market.

Now that the bubble has burst, it’s easy enough to spot the financial losers – recent investors, construction workers, banks, developers etc.. But, other than the developers, who were the big winners over the past decade? Could it have been the Government, representing the Irish public?

The billions of euros collected each year in construction-related VAT, Stamp Duty, Capital Gains Tax, Corporation Tax, PAYE/PRSI etc exceeded, by a large multiple, the annual profits made by the entire financial services industry from funding construction activity and mortgages.

I don’t recall too many public protests when our personal tax rates were falling, subsidised by the sea of money flowing into Government coffers from the housing & construction boom.

Footnote: a slightly abridged (by IT) version published as a letter in the Irish Times.