When will Ireland be honest about how the State pays for itself? | Younger, less wealthy people have to pay higher proportion of tax and FG wants to keep it that way
When will Ireland be honest about how the State pays for itself? | Younger, less wealthy people have to pay higher proportion of tax and FG wants to keep it that way
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Article:
When will Ireland be all grown up? When it can be honest about how the State pays for itself? Are we there yet? Not if the disgraceful response of the once and future taoiseach Leo Varadkar to the report of the Government-appointed Commission on Taxation and Welfare is anything to go by.
The first thing to be said about this report is that it’s one of the best official documents produced in Ireland in recent decades. It’s an exemplary piece of public service: well-written, clear, thoughtful, honest. Every citizen should read it.
The second thing to be said about it is that the current Government asked for it. It did so because everyone knows that there are huge problems with the sustainability of our taxation system.
Yet Fine Gael, which is part of that government, seems determined to rubbish the report before the public has a chance to get to grips with it. It’s doing this in the most irresponsible way, with attacks that come very close to political smears.
The report is 547 pages long. It took me a week to go through it. I very much doubt that many people, even those in professional politics, had read it before Varadkar went on the attack.
The report was published on September 14th. Varadkar sprang out the traps on the very day of publication, claiming that a number of the commission’s recommendations are “straight out of the Sinn Féin manifesto”.
This was an open slur on the members of the commission, who were appointed, let’s remember, by Varadkar’s party colleague Paschal Donohoe.
So far as I am aware, none of the commissioners has any ties to Sinn Féin. The chair, Niamh Moloney, is professor of law at the London School of Economics. Marie Bradley is a tax consultant. Philip Brennan is the former assistant secretary of the Revenue Commissioners. Sandra Clarke is a former president of the Irish Tax Institute. Fergal O’Brien is the chief lobbyist for Ibec. Anne Vaughan is the former deputy secretary of the Department of Social Protection. And so on.
This is a very mainstream group, drawn from academia, the Civil Service and civil society.
It seemed possible that Varadkar was just shooting his mouth off with the Sinn Féin slur. If so, he could have apologised to the members of the commission. He has not done so.
And then, in a letter to The Irish Times, a Fine Gael councillor, John Kennedy, claimed that the commission’s report had “a heavy emphasis on ‘redistribution’ and in the case of the recommendation on capital acquisitions tax, this sentiment borders on being an example of bona fide Marxism”.
What did the commission do to become the target of such hysterical red-baiting? It tried to think honestly about how a mature democracy in Ireland’s circumstances can raise the money it needs to sustain its society and its economy.
Its great sin was to face the fact that Ireland needs a bigger State with more revenue. It did this because no honest and objective analysis could do otherwise.
The three big reasons for this are all obvious. The State has to solve a generational housing crisis. It has to support an ageing population with a far better health and social care system. And it has to adapt to climate chaos and lead a very rapid shift to a zero-carbon economy.
Two other considerations weigh very heavily on tax policy. One is that Ireland has the second most unequal distribution of market ( “earned”) income in the developed world. This means that the State simply has to engage in that vile Marxist practice of redistributing income through the tax and welfare systems. Otherwise, the levels of inequality would be so great as to lead to social collapse.
The other is that nearly all the slack in the current tax regime is provided by a tiny number of American multinational corporations. Corporation tax has ballooned to 19 per cent of total tax revenue — and more than half of it comes from just 10 taxpayers. That’s a level of dependency that no democracy can be comfortable with and that no fiscally responsible government can take for granted.
Add in the very high levels of public debt we have inherited from the great banking and property crash of 2008 and no grown-up can see our current tax regime as either sustainable or adequate.
The “crime” of what we might laughingly call the Bolshevik Shinners on the commission is that they are not content to lay out this problem. They actually want to fix it.
Fixing it means taxing wealth as well as income. But that is not what some of Fine Gael’s core constituents want to hear. For them, the report’s equivalent to The Satanic Verses is the heretical sentence: “The share of taxation from property and wealth is low and should increase.”
Hence the fatwa. The commission has to be politicised and denigrated because it makes far too powerful and logical a case for reforms of capital acquisition and capital gains taxes, and for a site value tax.
Since 1987, the share of total wealth held by the top 10 per cent of income earners in Ireland has risen sharply. In 2020, the richest 10th of Irish households, had net wealth of at least €788,400, while the poorest 10th had net wealth below €600.
This wealth is also increasingly concentrated in older households. Generation Rent has a measly 2.8 per cent of Irish household wealth.
But taxes on wealth account for only about 6 per cent of Government revenue. What this means in practice is that younger and less wealthy people have to pay a higher proportion of tax than they would do otherwise.
And it seems quite clear that Fine Gael wants to keep it that way. There’s a large and disproportionately powerful part of Irish society that benefits more and more from the reluctance of the State to tax wealth and property.
Varadkar’s slur on the commission was aimed at pre-empting public debate on its carefully reasoned proposals to shift more of heavy lifting on to taxes on wealth and property. The point is to position his party as the defender of the possessor class.
Fair enough — if he were honest about it. The most basic demands of honesty are twofold. Firstly, to acknowledge that this is picking sides against the young and the dispossessed. And secondly to say where the extra revenue is going to come from if not, as the commission proposes, from increased taxes on inherited wealth, assets and property.
The incoming taoiseach has done neither of those two things.
This is not the politics of a mature democracy. It’s not even conservatism. It’s populism for the comfortable classes.
Grown-up politics is about making choices. Choosing to dismiss all increases in taxes on wealth is choosing to increase taxes on income and to keep our fingers crossed that nothing bad happens to any of the 10 golden-egg laying American corporations.
When we have a taoiseach who chooses to acknowledge that reality rather than to scare us off a hugely important document, our politics might be approaching adolescence.
You missed the opening and best line in it; **Varadkar is a populist for the comfortable classes**
Irish Times knows which way the wind is blowing.
Am I missing something here? I thought it was well known that lower incomes in Ireland pay much less tax than most other EU countries. It’s a fairly progressive model and gets very high very quickly the more that is earned. Is that not the case any more, did something change?! The issue that lower incomes paying relatively little tax aren’t earning enough to survive in this country is a completely different thing of course.
What did they expect when they ordered this commission? For the lads to tell them everything is great. They hired the best in the game to tell them what they need to do and they ignore it. This is maximum incompetence.
Think of Irish water as the Government, shit pipes bursting everywhere dirty unmanaged waste.
Dressed up in a frugal fanciful marketing campaign that pays the top end so heavily they are imuned to failure.
Why is the solution to everything tax people who have worked to get themselves.
Why aren’t the proposals ever to reduce our expenses. There is so much waste in the public sector. In a period of full employment why would increasing social welfare ever be a consideration?
Or look at the sheer amount of schools which have put in units to avoid losing teachers. Like always we should turn the tap on faster instead of blocking the drain.
Middle classes in this country are honestly abused.
We are so heavily taxed you would be better off not trying to improve your lot and get a tax payer funded house.
Value for taxes is virtually non existent.
Why seek promotions when the majority of any increase just go’s to the state to be wasted.
The last year has been a sobering experience for my D4 family, as mam and dad have had to witness first hand the agony of my brother and his girlfriend trying to get on the property ladder and see this shit show for what it actually is.
They’re on about increasing CGT as a means of bridging the gap, but that only further increases the gap as the middle class miss out on opportunities to build wealth outside of wages. If we increased the tax free CGT allowance from 1270 a year to something more reasonable (it’s £12k in the UK), and possibly increase CGT for gains over a larger threshold, this would help reduce inequity significantly.
As is, you just can’t get ahead in Ireland unless you own property from the 90s or before
If you want to be comfortable, get a job in the civil or public service.
Politicians’ pay, raises and conditions are linked those so…
Pensions rise in lockstep with current workers’ salaries.
Your headline salary might not look the best but it’s easy money
and that pension is worth its weight in gold.
You practically have to commit murder to lose your job.
No need to employ an accountant/ make tax returns.
No need to be an unpaid tax collector of VAT.
No need for ever increasing regulations, inspections, certifications, insurances etc that cost a siht ton and are a source of constant stress.
No need to worry about the economy.
Duh, why was I so stupid!
The country is essentially geared towards the old. Most of the assets are owned by them, they never face any sort of cuts or redunctions in living standards. Notice how single mothers or people on the dole constantly get snide remarks or judgements about their moral character but nothing towards some older people who have a massive sense of entitlement. I get a real seeting type of rage with my older family members. They bang on about how things were in the 70’s and 80’s. Maybe they did have it hard growing up but that was 40-50 years ago. The last 15 years hasnt been like that.
Some of whom have multiple houses, got handy pensions (retiring at 50). Some of the older crowd are happily putting two beds in a double room collecting massive rents. I know of some who are on pensions are double jobbing. Rural areas are getting depopulated of young people there are GAA clubs being amalgamated due the collapse in numbers of young people. Massive amounts of young people are considering quitting the country.
I am in favour of progressive taxation but its very meagre the return we get. In Europe they have subsidized university, free healthcare, cheap medicine, a great standard of public transport. In France for example the GP costs 25 euro on first payment and you get that total amount reimbursed. A consultant is 70 euros. In the Czech republic and Germany it is free as well. Students in Nordic get subsidized flats.
Instead we live in this neoliberal hellscape where the only defining metric is GDP and job rates. Even with a multi billion euro surplus will the cost of doing a masters or going to Uni decrease? Young people sacrificed two years of their lives for Covid and what did they get as a thank you?
Its well known in economics that inequality actually hampers and distorts the real GDP. Rich people dont tend to share their wealth or they try squirrel it into other forms of wealth. Some day the older generation are going to wake up to a country where a lot of the young are gone.
The insane taxation on middle and high income earners here to prop up our ever expanding welfare class and insane government spending is a shambles. We need to massively lower taxes for those on less than 100k and massively cut spending to pay for it
Maybe someone could clarify something for me here. I’m a little confused by the wealth tax proposals I’ve seen floating about lately. Let me give an example:
We have two people, person A and person B. Both people work the same job and earn, let’s say, €100,000.
Over the course of the next decade, person A works hard and puts money in savings, amassing €300,000.
At the same time, person B goes on three holidays a year and doesn’t care much about saving, instead, ends up with just €20,000 in their savings account.
Are these new proposals suggesting that person A be taxed on the €300,000 savings they have amassed over the 10 year period?
If this is the case, then I have a real problem with this. We should not be penalizing people for ensuring future financial security through savings, while rewarding people who squander their money and put themselves in position to default on mortgages should they lose their jobs, etc.
Again, I could be completely misreading these proposals, so if anyone can correct me, I’d appreciate it.
Tbh the real issue seems to stem from the basic income distribution rather than anything the government does or does do
FG are heading pure Tory as quick as they can while still keeping just enough of the Mick Collins shtick to hoover up a few older and gullible younger votes.
It’s a very deliberate electoral strategy: they reckon they will get the upper 10th vote and enough transfers to be part of any coalition and drag it to the right as long as they can portray SF as too toxic to go into coalition with. That’s why they keep spouting the same bs: fix the narrative firmly in place. They have an eye of the upper class anti SF unionist vote in the event of a UI down the road.
Their vision of Ireland is absolutely the opposite of what I knew us to be growing up in the 50’s and 60’s. They want a little Britain here; Flanagan and Bruton are unionists really and Varadkar is really a Tory. They buried the old myth of everyone the same, a society with common aspirations, long ago. Elitists who hold ordinary Irish people in contempt.
Never vote for people who despise you.
Start cutting back on who receives welfare & give more to those actually should be receiving it. Council housing placement should be temporary with yearly review and process ~ once beneficiaries above the earning threshold standard notice should be provided property should be handed to the next family in need etc.
Plenty could be done with little creativity and political will, raising tax should not be the only tool.
The question now is, are sinn Fein the answer?
I’ve some serious problems with this article:
– Ireland has one of the most progressive taxation setups in the world this article has a headline that screams the complete opposite. When you read the article it becomes clear they’re talking about wealth tax as opposed to income tax, but that isn’t clear in the headline.
– the article does reference our progressive income tax distribution but it goes out of its way to make it a negative by saying we’ve the most unequal earned income distribution (before tax). Hmm… Fintan did you stop for a second to consider if these two things are linked? Maybe if we didn’t tax high earners so much they wouldn’t demand such high salaries.
– the tax commission report is probably harder on low earners than higher yet you wouldn’t know that reading this article. Ireland’s biggest risk is our over dependence on a small number high earners. The report looks to address this by broadening the tax base. That means taxing lower earners more. It’s suggested change to inheritance tax is a great example of this. The commission’s answer to broadening the tax base is to get rid of its €300k tax free allowance. What does that mean? A rich person inheriting €2 million pays €660k tax instead of €560k. A working class person inheriting a house worth €300k will be saddled with a €100k tax bill instead of paying €0. Who is going to find it harder to pay the extra €100k? The working class person will probably have to get a loan if they want to keep the house. Add in the cost of the loan and it will eventually cost them €110k-€120k. We have tax free allowances as they are progressive! FG oppose this change because they’re a low tax party more than they are a progressive party.
– Ireland is probably one of the worst countries in Europe to build wealth. Deemed disposal is unique in it punishment of savers. Selling stock is a taxable event even though other countries exempt tax if it’s reinvested within a week. Our Capital gains tax is really high (33%) compared to other countries (UK is 20% and EU average is 19.5%).
– The article and the tax commission report thinks Ireland operates in a bubble. Yesterday high earners in NI got a tax cut of 5%. Their marginal tax rate is now 40% and kicks in at €56k. We pay 44.5% (PAYE & USC) on earnings over €37k and and 48% on earnings over €70k. Add to this our crazy deemed disposal rules and Capital gains tax and a move from the republic to NI starts to look attractive. I think this could become a trend over the long term.
– My biggest problem with it is the fact that everyone thinks they’re rich because their house costs hundreds of thousands! Take houses and farmland out of the wealth equation and you’ll find that there is very little left.
– Fintan should have saved himself some bother and just wrote I hate FG!
Well it starts with people that want change, actually getting up off their arse and making an effort to make change.
No point crying left, right, and centre about money, bills, hard life etc.
When alot don’t even go out and vote, don’t attend any protests, don’t email local representatives and T.Ds.
It all changes when societies mindset changes.
And voting for your local singer, G.A.A star, comedian etc who has joined FF or FG. Thinking sure they are sound let’s vote for them. Is not a solution or doing anyone good except their own pockets. Then listening to the same local rep when it comes to the general election to vote for their party.
Then turning around wondering why there has been no change, but elected x, y, and z have a lovely new car and stuff they don’t need.
Let’s not be skirting the real issue here… How often does Mary Lou dust her knick knacks?
Fine Gael looking after their voter base is hardly a surprise.
*I don’t condone this.
Anyone have a link for the 547 page document?
I want FF/FG voted out ASAP. A boy can dream
Nothing has changed in the last 20 years.
Ireland is your classic boomer economy.
All gave themselves affordable houses, childcare, healthcare and decent pensions. Promptly pulled the ladder up. Collapsed the economy and then bailed themselves out by taxing the shit out of their grandkids.
Then complained about the younger generations ‘entitlement’
Can someone put the article here please – it’s behind paywall
As a 24yo about to start work after graduating, seeing the package being offered compared to the living costs is fucked up. Being taxed fuck load also because I’m single etc (time when an individual is suppose to set themselves up for future family etc) is also fucked up.
It’s probably like that everywhere and I’d be lying if I said I’m looking forward to living, working, where I have to give my money away for reasons that don’t make sense.
This whole discussion misses the bigger point: The Commission on Taxation’s report is still based upon NeoLiberal budget-balancing narratives (hell, even the headline of the article implies the same narrative).
The only reason Varadkar found it objectionable, is because he is on the hard-right of NeoLiberalism – yet the narrative is still very much safely limited within the confines of NeoLiberal budget balancing – when that’s not how public finances work.
“yeah but if sinn féin were in power it’d be worse” Darth Varadkar
Its almost like the current party looks after a certain generation more that the others