Urban/rural Ireland...where are we going?

Bear in mind that the bulk of civil service and semi-state employment, which is well paid, is in Dublin and is paid for by all citizens. Don't forget the four universities in the Dublin area (compared to three in the rest of the country), or the subsidy provided by the 10% corporation tax rate in the IFSC. Also remember to include the cost of the LUAS and the Port Tunnel in your calculations...

The majority of Civil Servants and Semi States are actually outside of Dublin. More senior and higher paid jobs may well be concentrated in the capital (hint hint) city, but thats a different story. Also, there may well be notional tax expenditure around the IFSC, but the areas is of huge net benefit to the State.

In terms of the capital investment vs general regional budgetary balance question - it's very interesting, and Dr Morgenroth of the ESRI has written a series of useful articles on same. This is probably the most immediately useful;

http://www.esri.ie/UserFiles/publications/20080131131705/WP195.pdf

In short though, traditionally only Dublin and Cork actually generated a surplus, every other city/county was a net recipient. More recently, as the article shows for 2004 figures, the Dublin, Midwest (read Limerick) and SouthWest (read Cork) actually generated surpluses. In simple terms, the cities generate a surplus that is used to fund everyone else - the systems is progressive, taking wealth from some areas and 'donating' it to others.

On the capital front, he also notes that "no clear pattern of ‘excess’ per capita capital expenditure can be detected in the data.", but does point out that the 2 main urban regions do tend to get a greater share of capital expenditure, mainly due to the fact that there is a far greater return on investment to the State from investments in those areas. Moreover, he comes down in favour of the argument that it makes sense to support the development of those parts of the country that are actually running a surplus, and paying for everyone else, which makes sense to me. He makes passing reference to the difficulties in 'forcing' convergence - in fact there is a very large literature on the subject, and the simple answer is that it is very difficult to do, and probably only even possible in very particular sets of circumstances.

Aidan1 wrote: »

The majority of Civil Servants and Semi States are actually outside of Dublin. More senior and higher paid jobs may well be concentrated in the capital (hint hint) city, but thats a different story. Also, there may well be notional tax expenditure around the IFSC, but the areas is of huge net benefit to the State.

In terms of the capital investment vs general regional budgetary balance question - it's very interesting, and Dr Morgenroth of the ESRI has written a series of useful articles on same. This is probably the most immediately useful;

http://www.esri.ie/UserFiles/publications/20080131131705/WP195.pdf

In short though, traditionally only Dublin and Cork actually generated a surplus, every other city/county was a net recipient. More recently, as the article shows for 2004 figures, the Dublin, Midwest (read Limerick) and SouthWest (read Cork) actually generated surpluses. In simple terms, the cities generate a surplus that is used to fund everyone else - the systems is progressive, taking wealth from some areas and 'donating' it to others.

On the capital front, he also notes that "no clear pattern of ‘excess’ per capita capital expenditure can be detected in the data.", but does point out that the 2 main urban regions do tend to get a greater share of capital expenditure, mainly due to the fact that there is a far greater return on investment to the State from investments in those areas. Moreover, he comes down in favour of the argument that it makes sense to support the development of those parts of the country that are actually running a surplus, and paying for everyone else, which makes sense to me. He makes passing reference to the difficulties in 'forcing' convergence - in fact there is a very large literature on the subject, and the simple answer is that it is very difficult to do, and probably only even possible in very particular sets of circumstances.

Just watch Galway, they are getting in top class jobs almost every week. They will be contributing more and more taxes. But guess what.....it's at the expense of other regions, a bit like the IFSC (big renewal scheme) in Dublin. A company setting up in Galway gets better tax incentives than if one were to set up in Limerick 65 miles down the road because Galway qualifies under the BMW scheme.
So Limerick is getting no IDA jobs, and Galway is getting loads, does someone seriously think it would be fair that Galway have a higher local tax spend than Limerick when it's not a level playing field to start with?

But guess what.....it's at the expense of other regions, a bit like the IFSC (big renewal scheme) in Dublin. A company setting up in Galway gets better tax incentives than if one were to set up in Limerick 65 miles down the road because Galway qualifies under the BMW scheme.

What BMW scheme? If there is some form of regionalised Corporation Tax regime, it'd be news to me (which isn't beyond the realms of possibility). The primary benefit of being designated as an Objective 1 Region has (nominally) to do with Structural Funds, but given that these are co-funded, and thus require the Member State (us) to pony up some of the cash, and we don't have much, it's kind of irrelevant. Also, Galway has some profound advantages that Limerick doesn't, some of them easier to measure than others. The most obvious of these is a form of second mover advantage - Limerick got in early with a lot of FDI in assembly manufacturing (like Dell), which Galway largely missed out on (Digital apart, and they are long gone). Galway went after the high end jobs, the R&D, medical devices and software - partly because they were too late to hoover up the manufacturing work, and party because their electricity and water systems couldn't cope. Their disadvantage has now turned into an advantage, in that they have a critical mass of tech companies, which Limerick is struggling to get to. The IDA can only locate companies where they want to go, and companies want to go where they can get employees that they can work with, or where they can encourage employees from elsewhere to move to.

Which brings us to the other, and more controversial advantage is that Galway is generally regarded as a nicer city to live in (safer, better social life, better cultural scene). Objectively I've no idea if it's true, but people still think it so it still counts.

Maybe it's just my browser/copy of acrobat, but I can't find any reference to Corporation Tax in that document?

Two other things.

1. Galway does/has benefited from something else - a historic commitment from the IDA that 50% of all Greenfield jobs would be in the BMW region. They've never hit that figure, but as the only city in the region, Galway obviously still benefits.

2. This

it's at the expense of other regions

- even if it were true that there were profound tax advantages to locating in the BMW vs the S&E regions (and there may be), it is still unlikely to be the case that other regions 'lose' - in fact it is quite likely that Ireland as a whole benefits (on the basis that the investment is either made in the BMW region, or in Switzerland/Denmark/France). Just because the jobs don't land in someones own back yard doesn't mean that they don't benefit. Ireland = a State. Not a bunch of counties/constituencies squabbling over scraps.

Victor wrote: »

Both need not have been built. Instead of building the M8 as they built it, they could instead have had Cork-Dublin traffic go via Limerick or Kilkenny and instead build those routes as motorway, for no additional cost.

But if there was no tax, how could they raise any money?

Good question.

What would happen is, companies would queue up to get in to Tralee, workforce would rocket, there would be a huge spend in the local economy, this is where you would get the tax from. The downside is, other regions would suffer.

Oh right, I thought you were suggesting that the NDP document contained a regionalised corporation tax system.

I take it then that there is no such system in place, and that Galway competes on a level playing field in terms of taxation at least?

What would happen is, companies would queue up to get in to Tralee

Why Tralee and not (say) Killarney, or Cork, or Dublin? Why voluntarily surrender tax take just to lob some jobs into a town, where it costs the taxpayer so much more to maintain services and infrastructure, when they could be put into a city where (a) there is still a tax take, and (b) the population growth could be managed much more efficiently for the tax payer?

Aidan1 wrote: »

Oh right, I thought you were suggesting that the NDP document contained a regionalised corporation tax system.

I take it then that there is no such system in place, and that Galway competes on a level playing field in terms of taxation at least?


Why Tralee and not (say) Killarney, or Cork, or Dublin? Why voluntarily surrender tax take just to lob some jobs into a town, where it costs the taxpayer so much more to maintain services and infrastructure, when they could be put into a city where (a) there is still a tax take, and (b) the population growth could be managed much more efficiently for the tax payer?

In terms of taxation yes.
I agree with your point, but why the IFSC for the urban renewal scheme?

I believe it's not the area that's important, it's the scheme behind it. You can make any region attractive to employers. Just like Ireland is attractive for US multinationals in a European context.

I've always thought the main reasons to the dysfunction of Irish society was the small population but it's not.

It's really the urban rate - 64% is really low for a developed country. I think we've one of the lowest urban rates in Europe? If we even had just 10% more people in our urban areas, that's 450,000 people moving into our towns and cities, what a positive effect that would have.