Maybe the person writing Enda Kenny’s College Green speech was unaware of this mantra. Even if they were, they could be forgiven for choosing to lift the US president’s script word for word, as it is doubtful it could have been improved on.
The pity is that others in this Government do not look to equally good sources when lifting ideas. Such is the case with the 0.6% levy. I have trawled the records to find a precedent for it. The closest I could find was Ray MacSharry’s 1988 levy on the capital gains of pension funds — though that was a levy on profits, not capital.
It was opposed by the then opposition finance spokesperson, one Michael Noonan, who said at the time: “The rule in regard to the taxation of pension funds was that the funds were taxed on the way in or on the way out but not taxed during the term.”
Well said, 1988 Michael, this is precisely the point. Back then Minister Noonan feared that a £15m levy would drive some funds into insolvency. Now he says a €1.9bn levy poses no threat.
What a pity no one in his office thought to copy and paste his 1988 speech into his script when he launched his Jobs Initiative.
But there is no point in just bemoaning what the Government is getting wrong.
What it needs are ideas that can be improved and adapted to the Irish situation. Let me try today to bring one to its attention.
Irish citizens effectively own the banks and have paid through the nose for this privilege. While the banks are now majority controlled by the State, they will, hopefully, at some point in the future be returned to the market to trade and generate profits. While this prospect looks distant now, it has been the goal of this — and the last — Government’s banking policy.
Yes, the State will have the benefits of successfully trading banks, lending again into the economy, but where will the dividend be for the citizens who suffered personal losses and hardship to get them back there?
An option being considered in other places — where they are far closer to being ready to fully re-privatise their banks — is to give people bank shares which they can then sell at a profit as the banks recover share value.
Broadly speaking it would work like this: when the banks are ready to be returned to the market, the State divides a portion of the shares it now holds, with every household or citizen receiving a set number of shares.
When these shares are sold, a fixed amount (“floor price”) would return to the State to cover its costs and repay the loans taken out to rescue the banks. This floor price would be announced when the shares are distributed and shares could not be sold for less than the floor price.
Any amount above this floor price would go to the shareowner. The longer you hold the shares, the more you stand to make.
While we are a fair while off getting the banks to this situation, the idea is worth exploring as it has the potential to give citizens the hope of recovering some of the money they have foregone while widening share ownership.
Clearly, there are many issues to consider, including how the shares could be distributed and what percentage to disperse. There is also the question of how this proposal might sit with an eventual debt-for-equity swap.
There are a number of different models to consider, from the likes of Portman Capital and UK think tanks Centre Forum and Centre for Policy Studies, which might give us room to find a mechanism we could improve on to suit the Irish situation.