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IF YOU'RE worried about the budget, there is good news and bad news. Trouble is, the good news counts only if you're a farmer. If not, tough luck.
The good news for farmers is that Fine Gael's blood is up over Ruairi Quinn's plan to use farmland and small business premises to means-test student grants. In a move that would bring a tear to Sean Quinn's eye, backbench Fine Gaelers are rallying against this Dublin 4 onslaught on the plain people of Ireland. Rightly so: using farmland values for means testing is deeply flawed and dysfunctional.
As Pat Rabbitte has admitted, property tax is a left- wing idea. From Rousseau to Marx and Proudhon, left-wing philosophers have regarded property as some sort of mass exploitation. To theorise the idea, economists came up with the idea of "imputed rent". The idea -- which is the cornerstone of a submission by the Chuck Feeney-funded "Public Policy" think tank's submission on property tax -- goes something like this: your family live in a family home which you own, or on a family farm which you work, or above business premises in which you work. In theory, you could rent this property to someone else and derive an income; what economists call "imputed rent".
The trouble is that to derive this income, you'd have to either sleep in a ditch or rent from someone else. The State would prefer you to do the latter as that way it could tax both the rent you pay and the rent you receive. It's a perverse logic which regards home ownership as a socially deviant tax avoidance scheme. Borrowing a phrase from Leo Varadkar, Fine Gael TD Michelle Mulherin has pointed out that family farms are often not worth a "red cent" in income. At a dozen at the last count, Fine Gael TDs are planning a revolt on behalf of farmers. But -- and here's the bad news -- not on behalf of home-owners.
The real "rents" in the Irish economy that should be taxed are not the imputed rents of home or farm-owners, but what economists call the monopoly rents in the public sector. Extracted not due to productivity but due to skill at lobbying for higher incomes (an activity that economists call "rent seeking"), the highest public pay and pensions in Europe reflect the awesome power of organised lobbies like civil servants, academics and local government officials to force the Government's hand. An average 10 per cent tax -- with a proportionate sliding scale from lower to higher incomes -- on all those public pay and pensions above €40,000 could yield €1.1bn a year, enough to leave home-owners alone.
If Ruairi is concerned about a "privileged" farming community, he might ask other questions. Why, for instance, does Europe's most fertile nation subsidise -- at taxpayers' expense -- among the highest food prices in the world? And why do farm incomes carry little or no tax? But taxing land -- land from which income can be extracted only by shutting down the farm -- makes little sense.
Fine Gael TDs aren't making much sense either. Farm families constitute 5 per cent of our population. Those in negative equity constitute five times that number. By taking a stand on property tax, insisting instead that local government is radically reformed and monopoly rents in the public sector are taxed, they would be doing the country and their party a favour. Once that is done -- and only then -- is there a case for local taxation based on the ESRI suggestion of user charges.
People will pay fair taxes that are clearly linked to service provision. But a general tax like property tax is a mandate for waste, such as the recent revelation by the Dun Laoghaire Gazette of €10,000, (equal to 1,000 household charge payments), paid to fund a county councillor's MBA.
The influence of long-dead left-wing philosophers on our tax policy is far too strong. Nor did home buyers "have a choice" between renting and buying. If we are one of the few nations with a property tax, we are also one of the few with grossly inefficient local government, insecure rental tenure, inconsistent quality of rented accommodation and variable interest rates. Foisting only the disadvantages of continental housing policy without the advantages is grossly unfair. So why is it being done?
Catholic farmers are a particular bugbear of Labour's urban wing. If this seems far-fetched, consider Mary McEvoy's lament last week on how "embarrassment" in RTE -- that bastion of the chic urban left -- over its "rural values" caused Glenroe to be axed. The contrast with Labour's protection of urban cadres in academia -- by the Croke Park deal -- also speaks volumes.
As Central Bank data last week showed, the bourgeoisie have been crushed enough without this onslaught. A 97 per cent drop in top-up mortgages and a fall from €600bn to €328bn in real estate values is brutal proof of how nearly half a million people are now in negative equity.
Fine Gael TDs are sticking up for rural voters. Fine. But how does this stand beside Fine Gael's promise to end parish pump politics? And how is it different from the defence of Sean Quinn last week? Answers on a postcard, please.
Finally, an interesting development last week was Labour chairman Colm Keaveney calling for a delay in the property tax. Keaveney is a more level-headed -- and rural -- Labour politician: more interested in making government work than waging cultural wars. He supports the property tax but wants it done right. As Fine Gael looks after only one set of core voters, at least someone is trying to think about the rest of us.
Marc Coleman presents 'Coleman at Large' each Tuesday and Wednesday from 10pm on Newstalk 106-108fm. www.marccoleman.ie
