Wednesday 26 November 2014

Every time the exchequer needs a cash injection the same people are bled dry

Published 24/04/2014 | 02:30

Eamon Gilmore and Enda Kenny driving a tough agenda with cuts. 'The scale of deductions is staggering.' Photo: Collins
Eamon Gilmore and Enda Kenny driving a tough agenda with cuts. 'The scale of deductions is staggering.' Photo: Collins

CAST an eye over your pay slip. The scale of deductions is staggering: income tax, PRSI, the Universal Social Charge, plus a mandatory pension contribution in many cases. Together, they carve an ouch! into anyone's income.

Factor in the property tax, bin charges, the health levy, that 2pc insurance surcharge because of Sean Quinn's adventures and now the new water tax. How's your pain threshold bearing up? Add VAT at 23pc to the mix (compared with 20pc in France and Britain, 19pc in Germany, 21pc in Spain and 22pc in Italy), banking charges, and toll fees on top of road tax. Only one conclusion can be drawn: Irish taxpayers are the gift that keeps on giving to the exchequer.

Our after-tax income is under constant attack. And there's no sign of a let-up. By the time we pay the utility bills and put some food on the table, slim pickings are left. No wonder a substantial number of people are only one pay slip away from sliding under. Don't be fooled by promises of tax cuts in the next Budget. Taxes are headed one way and that's up. Even now, almost six years into an austerity programme, the squeeze continues. If in doubt, look out your window. Those water meter installers on your street are not paving the way for any easing of the tax burden. It explains why residents of the Ashbrook Estate in Togher, Co Cork, set up blockades against them.

You might notice something else if you glance outside. Election posters crammed onto every lamppost. Yesterday marked the start of poster season, as candidates for the local and European elections on May 23 began their visual bombardment of voters. And suddenly the Government raises the prospect of reviewing the point at which people enter the highest tax band.

Do its spin doctors really believe us to be incapable of joining the dots? Hope isn't being dangled, but false hope on an elastic band. Taxes will not go down later this year in the Budget, and don't let any election candidates on your doorstep suggest otherwise. On the contrary, taxes will go up when the first water bills arrive through letterboxes nationwide. Every time the exchequer needs a cash injection, the cost is bled from the same group of citizens.

An example emerged last week, when Setanta Insurance's collapse raised the spectre of another insurance levy on Irish consumers. In this case, the problem originated in Europe. European legislation allows insurers regulated in any member state to sell into others, without making them subject to a common set of capital and solvency tests. So Setanta applied for regulation in Malta – where requirements appear to be less onerous – while selling only into the Irish market. The Maltese regulator is at fault, but the Irish consumer is in the firing line. So, Irish taxpayers carry an ever-increasing load.

Meanwhile, where is the readiness at either local or central government level to scale down costs as a way of lightening that weight? We can thank the troika for recent price rebates. Its members may have pushed for property and water taxes, but they also highlighted our high drug and legal charges, and the steep price generally of doing business in Ireland. Take Irish Water. Inefficiencies marked its start-up shambles. In January it emerged that €50m has been spent on external consultants, with expenditure to reach €85m by next April. The march of the consultancy class continues unchecked. Furthermore, all 4,300 local authority water division workers were lobbed into the new super-body, irrespective of whether such staffing levels were necessary. Remedial work on the network is long overdue, but people are naturally suspicious that the headcount – never mind those consultants – may suck up income from water charges. Even if a voluntary redundancy scheme is implemented. Remind you of anything? The amalgamation of health boards into the Health Service Executive, with an additional and expensive layer of management. Do we never learn?

Water charges are common in other countries. They teach users to be sensible, and environmentally aware: to turn off dripping taps, only boil as much as they need, have shorter showers and hose plants with bathwater. Except Irish water charges aren't really about conservation. If they were, there wouldn't be a flat rate per household irrespective of use, in addition to metering. Taxation is not wrong intrinsically. But taxing for the same service twice is unjust. A clean and efficient water supply is in everybody's interests, and it needs to be paid for. In the past, income tax receipts were directed towards this. If the Government is determined to bill specifically for water, income tax should be reduced accordingly. Otherwise, water charges are just another revenue generation wheeze.

Elsewhere, the possibility of talks re-opening on a national pay agreement is being floated. With no mention of a taxpayer's representative. Yet someone needs to be present from the taxpayer's camp, to ensure value for money and that unreasonable wage bills are not demanded from the public purse.

Much continues to be asked of us without consideration for our right, in return, to value for money and the elimination of duplication. The default position is simply to tax-tax-tax, with waste and mismanagement shrugged off. Our political masters are quick about imposing new taxes but slow about imposing efficiencies. That's why, on May 23, I intend to check my pay slip again before lifting my polling card.

Irish Independent

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