New tax must be equitable

COMMENT

Two issues certain to cause bitter divisions in this country in the weeks and months ahead came into the spotlight over the past number of days.

Those are the burning questions about abortion and the property tax. The Catholic Primate of All-Ireland, Cardinal Sean Brady, warned the Government that the hierarchy would lobby TDs and ministers against any legislation that might liberalise our laws against abortion. Then we had Finance Minister Michael Noonan confirming the proposed property tax would be collected by the Revenue Commissioners and would be deducted from the wage packets of workers on PAYE.
You are going to be hearing a lot more on those two issues before and after the budget. However, we still do not know what the Government plans to do in relation to each issue, as the Cabinet has still to make up its collective mind. An expert group has to report to the Government on the abortion issue shortly and the feeling is that no decision will be taken on this question until next year. Sources close to the Government are saying they have enough to worry and divide them on the economy alone, without having to contend with the abortion issue as well. What is expected from this Government is that they will kick this issue to touch, just as all the other governments have been doing over the past 30 years or so.
Abortion is an area they don’t want to talk about, no matter what the Supreme Court, the European courts or even the people themselves might say on the issue. However, it is a question that will not go away simply because it is being ignored or because so many Fine Gael TDs will want to join the Pope’s brass band. I will get back to this issue some other time.
On the question of the property tax, Mr Noonan said no decision had yet been taken on how the tax would work. It would certainly not work if the collection is left to the local authorities, as happened on the household charge, with nearly half of those liable for the charge refusing to pay.
The biggest question marks will be on how much we are going to have to pay and who will be exempt.
We do know it will be based on the value of the property and that those on low incomes will be exempt. But what is a low income? Will old-age pensioners or unemployed people be exempt, no matter what the value of the house they live in? Will those in rental accommodation be obliged to pay? Or will the onus be on the owner of the property, as with the household charge, to cough up?
It is easy to see how the money can be deducted from pay packets. But what about farmers and other self-employed people? There is a very strong view among PAYE workers that farmers are able to manipulate their incomes in order to qualify for various grants and hand-outs.
They fear the same will apply to payment of the property tax, that well-off farmers will not have to pay the tax whereas workers will not be able to slip the net.
The fact of the matter is, of course, that no matter what system of tax is imposed, the majority will oppose it. None of us likes to pay taxes and we will always believe we are being over-taxed while others are getting away with paying little or nothing.
From every point of view, there is a lot to be said in favour of deducting the tax from wage packets. It is more liable to succeed than the hit-and-miss method employed to collect the household charge.
For the taxpayer, it is less painful than the household charge. It is easier to have about €7 a week deducted at source from your pay cheque than to face a bill for about €300 once a year.
But that’s in respect of the PAYE sector. Let’s see how the Government is going to handle all other homeowners and/or occupiers.
The Government expects this tax to generate about €500 million a year but if a large number of property owners either refuse to pay or are exempt from paying for one reason or another, the more those who are liable to pay will have to pay.
No matter what way you look at it, it is going to be a nightmare. It is a new tax on top of all the other taxes and charges we are expected to pay such as income tax, universal social charge, value-added tax, water and refuse charges and the septic tank issue has not gone away, you know.
There is a crisis in relation to mortgages, with more and more people living in negative equity and unable to keep up with payments. How they are going to be able to meet those new taxes is a problem to be faced next year.
Michael Noonan and other members of the Government have admitted times are tough, people are being put to the pin of their collar and things are getting tougher.
However, I don’t see any alternative to the property tax. Nor to the proposed water charges. We are where we are, they say. We are spending €19 billion a year more than we are taking in. I prefer to see and to suffer from higher taxation than to see governments cutting back vital services from those who need them.
But whatever taxation is imposed, it must be fair and equitable. There is a feeling that those who have least are being asked to contribute the most. That is clearly unjust and inequitable.
What is also wrong is the provision of services to those who do not need them. For example, the payment of unemployment benefits to those who are capable of working but do not want to work.
I don’t know how widespread this abuse is but people will tell you that it is happening all over the place and that we are wasting millions of euros in this way every year.
I believe the minister responsible, Joan Burton is determined to wipe out this abuse but every minister for social welfare promised this in his or her time and the more they promised change, the more things remained the same.
There is also the question of people who are actually working and claiming the dole.
Again, I don’t know how widespread this abuse is but if it is as common as people tell you, then we could save countless millions every year if this issue is tackled.
We all have our solutions to all the problems facing the Government but things never work out as easily, as the fella in the pub will tell you.