Wednesday 23 October 2019

Lorraine Courtney: 'Our tax system must be redesigned so the young are not left to pay such a heavy price'

Standing together: Bronagh Murphy and Orlagh McCormack on strike with the nurses and midwives at the Coombe Hospital. Photo: Kyran O’Brien
Standing together: Bronagh Murphy and Orlagh McCormack on strike with the nurses and midwives at the Coombe Hospital. Photo: Kyran O’Brien
Lorraine Courtney

Lorraine Courtney

The recent nurses strike was supposed to be all about retaining healthcare graduates and we shouldn't just forget about that now. It's clear that the money we spend training young doctors and nurses is going to Brisbane and Dubai.

A recent survey of more than 2,000 students at the six medical schools by NUI Galway found almost nine in 10 plan to leave or are "contemplating" leaving Ireland when they qualify. Career opportunities, working conditions and lifestyle were the top three reasons.

We have a huge generational wealth divide in this country that is forcing health workers and other young people to choose emigration. The good news, though, is that it doesn't have to be like this.

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If you peek behind the sensational headlines about rocketing house prices and snowflakey millennials, it's true that young people are more likely to earn less than their parents did, are less likely to own their own home and are more likely to be childless for economic reasons.

Young people just can't afford to scrape together ever-increasing deposits and it's not because we would rather splash out on fancy brunches than save up for a house. Living costs are increasing and wages are being squeezed. Zero-hour contracts, low-paid work and patchwork careers are on the rise, and they mainly affect the under-40s. All the while, rents skyrocket and all of these things have serious implications for Ireland's future.

Last year, the UK's Resolution Foundation - an independent think-tank - recommended abolishing inheritance tax and replacing it with a lifetime receipts tax that is levied on recipients with fewer exemptions, a lower tax-free allowance and lower tax rates. The extra revenues it said should support a £10,000 (€11,416) "citizen's inheritance" - a restricted-use asset endowment to all young people to support skills, entrepreneurship, housing and pension saving.

The suggestion is radical but imagine if income-tax bands were set out not only by the amount you earn but by age too. I think it's worth looking at. Now is the moment to recognise that the intergenerational financial gap is the policy challenge of our time. Bigger than Brexit and bigger than public sector strikes, with consequences that could be more far reaching.

If we sit back and ignore it, we risk an entire generation under 40 leaving Ireland never to return, and the remainder of us never being able to afford to grow up and achieve life's usual milestones.

It's time for the Universal Social Charge (USC) to be dropped for the under-40s. When the recession first hit, there was much made of the need to broaden the tax base; to ensure that as many people as possible are making some contribution to the national kitty. But we've paid enough and more than half of Irish people want to see it gone, according to a 2016 survey by

It's a massive chunk out of wages every month that the Government can't justify anymore. There were USC and income tax cuts announced in Budget 2019 and they took effect from January 1, 2019, but most of us won't even notice them.

For PAYE workers, after the 2019 USC and tax cuts, a single person on €25,000 a year will see just a €27 annual take-home pay increase. To put that into perspective, that's 10 times less than the annual increase to pensions and social welfare.

If there is one thing opening up the intergenerational gap just that little bit further, it's home ownership. The latest figures point to what we already know - that home-ownership rates in Ireland have hit their lowest levels in 46 years. The rate dropped from 69.7pc to 67.6pc, the lowest it's been since 1971. The levels are lowest in urban areas, where just 59.2pc of homes are occupied by the person who owns them.

Many millennials are now spending everything they have on renting properties from older generations. It's impossible to save up for a deposit. If they have money set aside it sits in a savings account with little interest. Where are their SSIAs?

The latest RTB Rent Index reports the national average rent was €1,122 per month, up from €1,044 one year ago. Dublin remains the most expensive place to rent with average monthly prices now at €1,620, an increase of €141 from the same period last year. We need tax relief for those paying over 50pc of our income on rent. And while we are looking at tax breaks we need tax relief on the crippling childcare costs that are pricing young parents out of the workforce, and we need to rethink the unfairness of taxing the already paltry maternity leave benefit.

The only downside, unfortunately, is that it almost certainly isn't going to happen. The political odds are stacked against such radical ways of closing the wealth gap between young and older generations, and not just because the Government will never antagonise the grey vote.

We do need to start looking to the future of our young, or we might find out, sooner rather than later, that we are paying a very high price for our short-sightedness.

Irish Independent

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