Irredeemable policy wonks often quote the late US political scientist Joseph Overton. He developed the idea that the viability of any proposal depends not on the policymakers who want it done, but on a range of options deemed acceptable by a broad swathe of the public. Basically, if the voters cry, the idea won’t fly. The acceptable policy range at any given time is known as the Overton window.
He also argued that think tanks and other “ideas people” should propose things beyond the currently acceptable range, to further push open the Overton window. He must have a few fans among the tweaking fiscal wonks on the State’s Commission on Taxation and Welfare. Its 547-page menu of ambitious proposals this week was welcomed by the Government like flatulence in a spacesuit.
With a range of edgy ideas such as road usage charges and levies on kebabs and burgers, the commission didn’t so much open Irish taxation’s Overton window as boot out the glass. There must be glazers up on scaffolds right now at the Department of Finance. The commission has attempted to reframe the Irish debate on what is acceptable to tax in this State — our own, new O’Verton window.
Of course it was our rhetorically unburdened Tánaiste Leo Varadkar who was the first on Wednesday to voice a complaint that has been murmured in certain circles recently: that some of the commission’s ideas appear to be in line with the tax policies of the main Opposition party.
“Straight out of the Sinn Féin manifesto,” Varadkar grumbled at a press briefing, referencing the commission’s proposals on hiking inheritance and savings taxes. He tried later to backtrack on the implied accusation that the commission, an independent body, had waded into political waters. But there are certainly a few people on the right of the political spectrum who would share that view.
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It isn’t the full picture. It is true that a handful of the commission’s proposals would moisten the dreams of some of the fiscal Fenians down in Sinn Féin’s financial policy department. If the party gets into power soon, it now has political cover to implement long-held policies such as higher capital acquisition taxes on generous family inheritances, and to review the regime of Sarp (special assignee relief programme) tax benefits targeted at top international corporate executives who bring foreign investment to these shores. Both policies sit quite easily with the commission report.
But there are also several clear differences between Sinn Féin’s ideas and some of the more substantial proposals of the commission. Both want a much greater focus on capital, or wealth, taxes. But while Sinn Féin wants to abolish the “regressive” Local Property Tax, the commission lauded it as a “well-functioning tax” and wants it further developed.
Sinn Féin wants a third, higher, rate of income tax on people earning over €140,000 a year. There was no sign of any support for such a landmark proposal anywhere in the commission’s report. Sinn Féin’s submission to the commission suggests the party wants VAT to be reduced in some cases. The commission wants to increase the take on VAT, including by eliminating lower-rate carve-outs.
Sinn Féin wants to roughly double employer PRSI to the European average of 22 per cent. The commission hasn’t proposed anything like this — it simply wants the lower employer rate scrapped. Sinn Féin hates carbon taxes and wants to scrap the stairway of rate hikes already laid out to 2030. The commission appears to be a carbon tax lover and endorses the Government’s roadmap. In some respects, it wants the State to go further in taxing fossil fuels.
Other proposals among the commission’s 116 recommendations chime with policies of the other main parties. Both Fine Gael and Fianna Fáil should be happy with the broadly pro-enterprise taxation approach favoured by the commission. The report’s loud and clear focus on developing the tax system as a Gustav to blast our way to climate targets ought to sit well with the Greens.
In particular, the commission’s proposal to levy motorists for the location, duration and time of their road journeys is a policy that not even the most bug-eyed eco-socialist would dare hope to see on the table anytime soon.
There is plenty of sweet and sour in the commission’s report for every party, not just Sinn Féin. The problem is not that it has been politicised, rather it is that several of the most eye-catching ideas are politically undeliverable by any party, because the public would never wear them.
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In a few instances, the commission has opened the Overton window so far that a chill has come in that would freeze the backside off any Government minister who tried to follow it through. Topping up the PRSI pot by targeting the self-employed and farmers, as the commission has proposed, is just not politically doable in this country now, or in the foreseeable future. Even one of the commission’s members, businesswoman Rena Maycock, clarified that she does not back the idea.
The political undeliverability of the report’s proposals for farmers is most apparent in ideas on inheritance taxes that would impact on the passing of a farm down through the generations. Rural Ireland would rise in anger. Even a Sinn Féin-led new government with a decent majority would chafe at it. The party has a lot of brand new rural TDs, many of them not yet entrenched in their areas. Their seats might be in danger over it, and so Sinn Féin would never do anything so unpopular.
Similarly, good luck to any party that tries to bring in a fat tax on processed foods, especially if that party is Fine Gael. Inevitably, whether rightly or wrongly, it could easily be portrayed as a tax on the mores of the working class. Also, road usage taxes would frighten the life out of any Irish government. Hiking inheritance taxes and lowering the level at which it is payable is a cause célèbre on the left. But it would cause uproar in Dublin, where even a modest family home in many areas, if left to children in a will, could be valued at upwards of €750,000 and attract a large tax payment.
ESRI economist and commission member Barra Roantree was on RTÉ Radio on Thursday saying the report should be viewed as not just for now, but for a timescale of up to 15 years. What does he think the commission has written? Ulysses? Pretty much nobody will be reading this report in a decade and a half. Its ideas have to have some relevance now, or they may wither.
Some around the commission have urged people not to cherry-pick individual items for criticism, but to view the report “in the round”. But it is not as if the report’s proposals will ever be implemented all at once, as a job lot. A few of the proposals, if any, might be implemented piecemeal over time. For that reason, there is nothing wrong with carving out individual proposals for scrutiny.
Sometimes the trees need to be as visible as the wood, or we may as well be looking at nothing at all.
