Monday 24 October 2016

Squeezed middle left to shoulder tax burden

Published 05/08/2016 | 02:30

Dermot O'Leary is chief economist with Goodbody
Dermot O'Leary is chief economist with Goodbody

The squeezed middle is in danger of becoming mangled as the Government persists in going for the soft target.

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According to the latest figures, workers are now paying €5bn a year extra in tax since the boom.

Dermot O'Leary of Goodbody's is in no doubt that the Revenue figures prove that ordinary workers have been hit hardest.

Einstein believed that his income tax return was far too difficult a matter for himself - a mere mathematician - and would be better taken care of by a philosopher. If you are a middle-income earner in Ireland, you would certainly take your chances with the philosophers.

Mr O'Leary also points out that, as employment is currently 7pc below the levels of 2007, the vice in which workers are trapped is being tightened relentlessly to yield even more tax. Thus we have arrived at a juncture where income tax and USC are the largest sources of tax revenue to the State.

Last week the IMF stated bluntly that Ireland's income tax system was hurting middle-income earners. People struggling to pay mortgages, rents, or childcare hardly needed the IMF to tell them they are being put through the wringer.

The system needs to be radically reformed. We know to our cost that it creates welfare traps and locks women out of the jobs market. People have been compliant on the basis that it was in the best interests of the country to be so.

Everyone has a breaking point, especially when over-extended. But being stoic or being stupid probably depends on whether one is being treated equitably or not. Being left to shoulder an unfair burden when there are other options is simply unjust. As the October Budget looms, Finance Minister Michael Noonan, had better take note.

May Rio bring sporting memories to cherish

In Baron de Coubertin's vision, the most important thing in the Olympic Games is not winning but taking part. But try selling that to the sponsors. As the torch burns for South America's first Olympiad, the baron would be impressed with the numbers taking part in the debate at least. So far the talk has been dominated by mosquitoes, doping, sewage and corruption. 

So for the focus to finally shift to actual sport will be a relief. There has been a lot to criticise about dual standards and dubious practices. But the vast majority of these high-performance athletes have pushed themselves to the extreme to make it to sport's greatest stage. This is their moment. A fusion of sporting excellence mixed with the seductive excitement of raucous Rio energy will hopefully conjure up a carnival atmosphere, as befits our greatest competitors.

Olympic host cities are expected to be pristine. Staging these games demanded the levelling of shantytowns and relocating thousands of people.

And some truths should not be glossed over. A massive security presence of 85,000 is on standby to protect foreigners from rampant crime.

Many Brazilians also resent the estimated $12bn spent on the Games in a country where grinding poverty makes life a struggle for millions. As critics have pointed out, this great sporting circus allows a suspension of disbelief, distracting from the harsher political and social realities. Those left behind are not always touched by its spell.

Yet Rio has so far put its best foot forward and now it is up to the athletes to do likewise. It is to be hoped that when the circus leaves town Rio will be left with some valuable infrastructure - and the rest of us will be left with some great sporting memories to cherish.

Irish Independent

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