Taxing taxonomy

 
 

With opposition reaching a fever pitch, Yvanne Kennedy deconstructs the household charge and asks whether it really is the big, bad monster it is being made out to be

In the last number of months, the controversy surrounding the bringing into force of a flat rate household charge has caused great upset and outrage. There have been regular marches to Leinster House and ‘town hall’ style meetings have popped up across the country. There is no denying that one more levy could be the one to break the taxpayer’s back, but can this reaction be justified?

One hundred euro is all that has to be paid. Most people, in days gone by, wouldn’t blink twice at dropping that on a pair of shoes but as the story goes, we’re in different times now. This hundred is on top of all the others, for the Universal Social Charge, the pension levies and general taxes. It has been the final straw for many, as protest websites and TDs alike are calling on householders to boycott the payment. The Government are proud of the fact ninety-seven thousand people have already signed up to pay the charge, but this is only a fraction of the nearly one and a half million eligible in the State.

“It is morally wrong, unjust and unfair to tax a person’s home” said Enda Kenny in 1994, so why in 2012 did he not deem it so to apply a household tax uniformly to every family, singleton or couple in Ireland? Desperate times call for the most desperate of measures, and the Government needs income. The source of that income is of small concern and while the flat rate of the charge is “not fair across the board” that hasn’t stopped its being implemented, if only for a short time until it is replaced by the property tax.

So why can’t we tax the rich in this instance as we do in all others – they make more, so shouldn’t they pay more? We aren’t talking simply about that elusive “one per cent”, so how exactly do we determine a fair share? It has been said that the wealthiest one per cent of the population make twenty per cent of the pre-tax income but they also pay twenty-five per cent of the tax and make thirty per cent of the charitable donations. A uniform tax may not affect everyone equally but it treats everyone equally and assumes everything will even out. It may not be a perfect formula but it is the one Revenue are employing and it’s the one we’re stuck with, for now.

According to the Economist, hitting the well-off where it hurts will only damage us in the long run. The principle of higher taxes for the economic elite should take a leaf out of any history book that “suggests that low taxes on the rich encourage investment and growth.” With the current state of our economy, it may not actually be the best time to saddle them with greater taxes in any area “particularly since the rich are among society’s most mobile.” If we were to lose any of our more mobile investors, they will take all their taxes with them. A few hundred extra is nothing compared with how much we potentially stand to suffer.

This may be one relatively small tax but it is, literally, the principle of the thing. There are whispers among those in the know that say the fifty per cent top marginal tax rate in Britain is doing lasting damage to the British economy. If we start with the household charge, we set down a precedent, one which many in the Dáil would be more than happy to extend and expand. You give them an inch, they’ll potentially take down the country.

Yet there must be an argument in there somewhere. The biggest problem is implementation. For some reason, the Government has implemented the household charge “for right now”, until they can properly assess criteria for the differing pay scales associated with the property tax. It beggars belief that they couldn’t have simply introduced that to begin with. It operates in the same way as regular taxes – slightly more for slightly larger homes, irrespective of how many live in them. It is a failing cornerstone of Irish society that we can have the fantastic ideas but actually getting them enacted is where we stumble. Coherent proposals put before the Houses of the Oireachtas did not fall on deaf ears; they know what their options are. In fact, the average property tax will be three hundred euro. I’m no mathematician, but none of these figures add up.

It has been said that the issue lies in assessing the situation – why can’t we just essentially estimate, based on the degree of the gap these plans hope to bridge, how much we all have to pay? Why can’t a property tax be based on the number of rooms per house, declared by the home owner, and corroborated by random auditing of every dozen or so households, both to dissuade misinformation, and apply penalties to those who attempt to buck the system? Why is a Census readily achievable, but this a Herculean endeavour? If we need money, why not do what we’ve always done; just take it? Perhaps, as F. Scott Fitzgerald once said, “The rich are different from you and me.”

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