| 6.4°C Dublin

Kevin Myers: 'A black economy is a true disaster for a government'

The bad news is that the black economy is back. It's not just bad news for this Government; it's bad news for whatever political quilt has the misfortune to inherit power from the outgoing bundle of rags that is Fianna Fail.

A black economy is a true disaster for a government, never mind one that is addicted to tax-take as any Irish government must be, after the supine Croke Park deal. It doesn't need an Adam Smith to outline the downward spiral that results when government over-extracts taxes from its tax base.

Taxpayers see that the Government (and the public servants) is getting more from their labours than they are; moreover, the taxpayer knows that -- unlike those public servants, the best-paid in Europe -- s/he can lose their job any day.

Moreover, those public servants are guaranteed a luscious tax-free retirement golden handshake, and then a lifelong index-linked pension -- all paid for by the taxpayer, who might get little or none of these benefits. The icing on the cake is that the particular public servants whom we all love most of all, such as Rody Molloy or Patrick Neary, were paying far less PRSI than the poor private sector saps. (So skewed has financial policy traditionally been that at one stage public service PRSI was 0.9pc of income, yes ZERO POINT NINE, while private-sector PRSI was 5.5pc).

Moreover, the usual consequence of people exempting themselves from the Irish tax net is not that the public service is trimmed according to the State's lower income, but the State seeks to raise even more taxes, through stealthy levies. The result is a further flight into the black economy, and a still greater shift of tax burden on to whatever is still taxable and immobile within the private sector.

The abomination that is the Croke Park deal means that the State can neither reduce the incomes of the public service, nor its size. So, either we borrow more money to pay for the public-service payroll (giving our grandchildren yet further reasons to thank us) or we raise the taxes on the diminishing band of taxpayers. That's it.

You think that's the bad bit? No, it's not. We have a Labour Party which is now the political wing of the public-service unions. No one in the private sector would, short of a neck-high accident with a chainsaw during a piece of dramatic hedge trimming, ever vote Labour. That's like a Sephardic Jew voting for Hezbollah.

Moreover, Labour will almost certainly be in government after the next election, put there by a public service that knows where its interests lie. (True, it is remotely possible that a government with Labour in it would cut public-service salaries and numbers; it's equally possible that Longford will launch a lunar navy to sail the Sea of Tranquillity).

In the absence of cuts to the public service, the next government faces the simple task of policing the tax system, to ensure that the black economy doesn't prosper. But classically, the operatives of a black economy are also on the dole, cheating the State -- and the lawful taxpayer -- twice over.

But do you know how policing dole recipients goes down with the bien-pensant media classes? It's akin to the Black & Tans, Outdoor Relief and the Great Lockout, rolled into one. Yet we have inherited rich traditions of dole fraud. When the black economy was last prospering, in 1997, 10pc of people on the dole had full-time jobs, and 25pc were using false addresses (for whatever reason, none lawful, you may be sure). When I wrote about this at the time, I was roundly criticised by one woman journalist, who sniffed: "Every time I pass Darndale, I feel proud that I'm able to pay PRSI."

Yes, well virtuous stupidity was commonplace in the old Ireland, when the archetypal villain was Ben Dunne: God help us, what innocent days.

Now we have an entire gallery of banking rogues who've nearly destroyed the State and who have now vanished into the sunset with our money. How can anyone seriously argue for a dole police, when not one single person, NOT ONE, has been charged in connection with the banking-catastrophe? And how can anyone argue for a dole crackdown, even as a score of smirking Fianna Fail TDs retire on gold-plated pensions?

Well, it's not easy, but we have no choice. The ship is sunk. We are in the lifeboats. What do we do? Rail against the ship's corrupt designers and the gormless skipper? Or keep our lifeboat afloat? But alas, the lifeboat's future cannot be secured merely by law enforcement. As the USSR discovered, all the economic police in the world will inevitably fail, if the State is systematically robbing its citizens. That is the point we have now reached. The State must do two things, merely to stay afloat. It must a) withdraw its tentacles as much as possible from the private economy, so as to allow those in the private sector to enjoy at least 50pc of their earned wealth; and b) it must rigorously enforce the benefit laws.

The political party that promises to do that is the only one fit to govern this benighted realm. And what a surprise: there is no such party.

Irish Independent