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Tuesday, September 8, 2009

Taxing questions for future generations

Today the Commission on Taxation has reported after 18 months. Both Brians as Finance Minister have put off decisions on revenue citing the report. It goes hand in hand with the McCarthy report, McCarthy was recommending what would be cut and the commission on what would changed in terms of revenue. Most age earners expected this report to set out tax equity but nobody told the commission that what McCarthy was taking with one hand that the state would redress in terms of revenue.

What is significant is that the trade union rep on the commission refused to endorse it. Many reliefs for PAYE workers will end if the report’s proposals go through. Its suggested that tax credits for union membership and waste charges will go. There’s no wealth tax, tax exiles remain outside the net while carbon taxes, water charges and a property charge will come in. The commission plan to tax social welfare and child benefit. There’s no mention of the pension levy. Workers (many in low pay) in the civil service will see the report as a further pay cut dressed up as a type of equity. The Irish taxation system penalises those on low income, they benefit least from changes in the tax system. Carbon taxes will increase how much people pay for fuel. Those on low income pay more of the income on fuel than the likes of me. They call it fuel poverty because these people cannot afford to insulate their houses yet if they could, they’d save even more. As Deputy Mayor I launched the WARM project in Wexford to insulate houses of elderly people. Could there not be a better return if a national insulation project was rolled out simultaneously with the carbon tax, a tax that I fear will drive Northern motorists out of Southern forecourts.
I don’t object to a property tax if it’s collected by the local authority on all property. A flat charge of €900 per house is mind boggling but I suspect that this plan will not go through and the old reliables of those on low to moderate incomes will shoulder the burden of the collapse in property based revenue measures. Another to bite the dust is the plan to categorise agricultural buildings as commercial from the point of rates. Expect the Bed and Breakfast sector to protest against the proposed rating of these premises. Increasing the landfill levy in addition to removing PAYE tax credits for service charges will see bin charges rise when in the last year they’ve dropped. Expect back yard burning to increase and perhaps well boring too!
So what would I do? Well I’d suggest ending tax shelters, pursuing those who have taken their money outside the jurisdiction, I’d introduce a top tier of tax on incomes over €100K. Do we actually now need tax relief for nursing homes as according to Minister Eamon Ryan hotels in the NAMA basket of properties should be redeveloped as nursing homes. But to tax child benefit? Last years row over Over 70’s medical cards will be like a tea party by comparison.
The report is still predicated on the McCreevy plan to have a low effected tax rate but to deliver top rate services, but it’s an impossible circle to square. We can only re-distribute what we raise, my difficulty is that those who need it more seem to get it less from the report.

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