With all the talk of toxic loans and excessive prices being paid in land and property deals up and down the country it appears to be forgotten for the most part that someone, somewhere at the end of the chain got paid those vast sums. And no one appears to want to ask about them. The road from bad decisions at Anglo Irish Bank and Irish Nationwide to approve loans on dubious grounds to friends and follow traveller on the road to eternal wealth, paved by magicking up money from nowhere ends with those who made vast profits selling assets. They were the last ones to get paid and hence see the money in real life. Yet we’re not going to talk about that, cos that moves the discussion away from the losers (who we’re expected to bailout) to the winners who appear to have gone to ground.
Take the Irish Glass bottle site, as covered on Finfacts, theyt noted that “the DDDA an Irish State agency was among the purchasers while the owner was the Dublin Port Company, a private limited company owned by the State.” So the Dublin Port Company and a company called South Wharf ended up splitting a price of €412 million, what did they do with it? Where did it go? And there are any number of similar cases across the country. How come it’s not in circulation for re-investment, is it buried under the tallest mattresses in Christendom somewhere?
We are all aware of illustrative examples where land (like that parcel in Athlone) that might now be valued at rock bottom prices of say 600K for which a price of €30 plus million was needed to purchase will end up going into NAMA but what about the person who pocketed the €30 million? What did they do with it? Loans weren’t simply given out and then the cash created burnt (unless the KLF at back in action), the fact is that most of the money so loaned was spent within Ireland buying property here and much of that cash should still be in the hands of Irish citizens. Indeed a good portion of it is probably lying about in the bank accounts of the same banks we are bailing out or invested elsewhere. Some might have been used to buy shares in the banks, if so the money moved on to those who sold the shares.
Windfall and more particularly wealth taxes have an awful reputation and rightly so but at a time when the citizens are on the hook for perhaps an additional €70 billion in national debt it is worth considering whether or not we can claw back at least some of the money paid over. It is ironic that the capital gains tax on these excessive profits were at a rate lower than the average PAYE schmuck pays. I can understand the idea that some element of capital gains should be lower than the marginal income tax as there is a risk involved in capital investment but to apply the same rate to all levels of capital reward irrespective of the amount is nuts. A Progressive tax system should be progressive across the board not just on earned salary income. But is anyone going unmask the winners from the property boom or will a myth that we’re all losers continue to gain traction.