Charlie Weston: Taxpayers bailed out the State, yet continue to pay price of the rescue
Ordinary taxpayers continue to pay the price for the near bankrupting of the State when the banks collapsed a decade ago.
It is 10 years since the St Patrick's Day Massacre when Irish bank shares collapsed, signalling the start of the worst economic collapse in living memory.
But austerity cuts to public services, at least 17 income tax changes, and a raft of new levies and charges have meant most people are still worse off than they were before the bubble burst.
The Economic and Social Research Institute has calculated the tax changes, cuts to services, and reduction in capital spending amounted to €30bn between 2008 and 2014, the worst of the austerity years.
Some 250,000 jobs were lost during the downturn, mainly in construction. Those who kept their jobs endured pay cuts.
Although there has been a healthy rise in employment levels, the scars continue to be borne by householders.
Spending is so tight for most people that half of workers reckon they could only maintain their current standard of living for three months if they were to lose their jobs, according to a survey commissioned by Irish Life. Renters feel they could only survive for two months if they could not work, such has been the rise in the cost of accommodation for those who do not own their homes.
Ordinary workers are bearing a massive burden of higher income taxes to bail out the State since the crash. People in jobs and those paying taxes on pensions are now shelling out €5bn a year extra in income tax alone since the boom.
Workers are bearing the higher burden to run the State and pay for services since the boom in 2008.
Austerity saw cuts to the respite care grant and maternity benefit became taxable. Medical cards for the over-70s were restricted and jobseeker's allowance for under-20s were among dozens of other measures.
Plans to introduce water charges may have been abandoned, but property tax has been imposed. But it is through tax hikes the real heavy lifting to rescue the economy was done.
The universal social charge (USC) was the big change, prompting many to label it an austerity tax. Despite a number of reductions in USC, it is still set to raise €3.7bn from more than two million pay packets and pensions this year.
But there have also been a raft of other changes to the income tax system.
The personal tax credit was cut, the PRSI ceiling was abolished, the tax credit for paying health insurance was capped, and mortgage interest relief was abolished for new purchases, to name some of the big changes.
Then there were a string of levies and charges introduced.
People paying into a private pension were levied for four years, with some of those drawing down on one still being hit.
There is a levy on life insurance policies such as mortgage protection. The collapse of Quinn Insurance has resulted in a 2pc levy on all home and motors polices.
The top rate of value added tax (VAT) rose from 21pc to 23pc in a move costing the average household around €500 a year.
There has been some paring back on the taxes and cuts in the last few budgets, but the take-home pay of workers is still down compared with the situation in 2008.
Figures calculated for this publication by the director of tax and payroll at Taxback.com, Barry Flanagan, show workers are still paying the price for the banking bailout. Someone on €50,000 in 2008 had take-home pay of roughly €36,300. By 2011 the after-tax income would have fallen to €33,400, a drop of almost €2,900.
This year the take-home pay for the person on the same income will come in at €35,050, leaving this worker around €1,250 worse off than a decade ago, according to Taxback.ie.
USC is the big difference but between 2008 and 2013 several tax credits were withdrawn, reducing an individual's ability to claim relief. Medical expenses credit went from 41pc to 20pc, and the service charges credit was withdrawn. The abolition of the cap on PRSI of €75,000 hits higher earners significantly, Mr Flanagan said. Someone on €80,000 is down almost €3,200 a year in the last decade due to tax and USC changes.
Economics lecturer at University College Cork Seamus Coffey said the €30bn adjustment was unavoidable in the period between 2008 and 2014.
These income tax and USC changes take no account of new charges like property tax and various levies and charges.
Mr Coffey, who is also chairman of the Fiscal Advisory Council but was speaking in a personal capacity, said: "We had been spending money up to 2008 that we did not have."
He said some people question the pace of the adjustment.
"But 11 years is a lengthy period. The scale of the problem was unprecedented in international terms," he said. Governments had few other options as there was "no silver bullet", he added.
Mr Coffey said the Government deficit should finally be closed this year. This is where there is a balance between State spending and income.
But Siptu economist Marie Sherlock reckons too much of the needed adjustment was borne by average income taxpayers. "Because of the collapse in tax revenues we could not afford our public services, it was inevitable that adjustments had to be made. But there are questions over who shouldered the burden and the timing of it," she said.
She argues that those who say the correct course of action was taken, as the economy has now recovered strongly, are missing the point that external factors have played a huge role.
External factors such as falling oil prices, a weak euro, along with a strong rebound in two of our most important trading partners, UK and US, all contributed to the upturn in the State's finances.
"The burden of the adjustment was not fairly distributed," the trade union economist said. She said the big burden was borne by personal income tax payers, when more tax should have been imposed on higher income earners and in higher capital taxes. Ms Sherlock said the €30bn of cuts in public services and tax rises were imposed over too short a period.
"We are now living with the legacy of some of those deep cuts, particularly in the area of public infrastructure and in some public services," she said.
The banks nearly bankrupted us and it was Joe and June Citizen who paid, and continue to pay, the price of the rescue.
Citizens saved Ireland from the damage inflicted by the blaggard bankers and their developer friends. Just don't expect any thanks for it.