Re-engineering incentives in the Irish Economy toward research and innovation
There was an interesting article by Pat McArdle in the Irish Times on New Year’s Eve, December 31, 2009.
In the article, he notes in passing that the OECD described Ireland as having ‘…the most property-friendly tax system in the world’. This comes as no surprise to those of us living here, but points to an important point made in books such as ‘Nudge’ – people respond to incentives. And in respect of property, it is a rational investment given the incentives available, but it can and has gone terribly wrong.
If it is possible to incentivise investment in fixed assets such as property, surely it must be possible to use the tax system to allow people to create new asset classes that are tradeable and saleable, via investment in research, development and innovation (RDI)?
Access to venture capital and associated business development skills is a recognised rate-limiting step for Irish RDI being translated into a business proposition that will generate wealth, employment and new products. Incentivising personal investment in RDI developments through the tax system should be possible, and must be more desirable than incentivising investment in property.
Wouldn’t it be great to have the OECD praise Ireland for having the most RDI-friendly economy in the World?