Policymakers Playing “Dangerous Game” in Ireland
Shrinking tax base can't pay rising debts.
BY Caroline Cakebread | December 1, 2010
Professor Edward Kane, keynote speaker at this year’s Investment Innovation Conference in Arizona, commented that by pumping liquidity into Ireland at high interest rates, policymakers are “digging a huge hole” for Irish taxpayers — one they will have to pay for in the future.
Kane is professor of finance at Boston College and a founding member of the Shadow Financial Regulatory Committee. His keynote address, Regulation and Innovation in the Financial Industry” kicked off this year’s event.
During the question period following his talk this morning, Kane was critical of post-crisis policies that increase the burden on taxpayers. In particular, he noted that Ireland’s population is shrinking as its citizens flee rising tax bills and high unemployment resulting from the financial crisis. It’s creating a shrinking tax base and policymakers who think they’ll be able to lean on that base to pay down debt are “playing a dangerous game” he warned. With far fewer people to pay ballooning debts, Ireland faces a tough road ahead.
More to come…