Full text of Brendan Hayes letter

Below is the full text of the letter from Commission on Taxation member Brendan Hayes to its chairman Frank Daly, declining to…

Below is the full text of the letter from Commission on Taxation member Brendan Hayes to its chairman Frank Daly, declining to sign the final report:

Mr. Frank Daly
Chair
Le Pole House,
Ship Street Great,
Dublin 8, Ireland

10th August 2009

Re:-The Report of the Commission on Taxation

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Dear Mr Daly,

When I accepted the then Minister for Finance’s invitation to serve on the Commission on Taxation I was aware that the Terms of Reference circumscribed its remit in a manner that would present difficulties for me. Nevertheless I was of the view that

it was possible to make substantial progress on developing a fairer, more progressive and economically sustainable system of taxation.

In my experience, the Commission took its task very seriously, went about its work in a conscientious manner and arrived at its conclusion with honesty and integrity.

In addition, I want to acknowledge the work ethic, professionalism and expertise in, challenging, varied and complex areas of taxation against impossible deadlines, displayed by yourself as Chair and the Secretariat in facilitating the Commission

discharge its mandate and deliver its report.

Whilst I recognise that progress has been made by the Commission, to which I contributed, that will broaden the tax base, ensure a more sustainable revenue flow to the state, eliminate many of the more serious inequities in the tax system, introduce

some progressive amendments and extensions to the system, and reduce the scope for tax avoidance, nevertheless, on balance, I cannot support the Commission’s Report for the following reasons

The Commission’s Recommendations reinforce a low tax model of the economy and of society that I do not support.

The Commission’s Recommendations are not optimised to generate the revenues necessary to create a social infrastructure capable of supporting a cohesive and equitable society and a sustainably productive and growing economy.

The manner in which the low tax policy, is applied to the economy and informs the Commissions findings is fundamentally flawed and is inhibiting economic growth, exacerbating social and economic inequality and inequitably distributing the tax burden.

That social and economic model gives rise to structural pressures that increase income and wealth disparities that the Commission’s Recommendations will not correct. Those disparities, together with the current national economic and social policy

framework, have made ours a profoundly unequal society. The tax and social security systems, strategic state involvement and well financed public services are normally deployed, in advanced European countries, to moderate such inequalities to achieve

social cohesion and promote economic growth. However where the state adopts a low tax policy, in the manner in which this state has, the result is an underfinanced set of public services, including health, education and local government, and an

inadequate social security infrastructure which further exacerbates inequality, reduces social cohesion and retards economic growth.. The Commission was required by its terms of reference to uphold the current low tax policy and its recommendations reflect this.

Consequently the Commission’s Report will neither fairly distribute the burden of taxation nor generate, in a progressive manner, sufficient revenue for the state, to ameliorate those disparities or enhance social provision and cohesion whilst supporting economic growth.

Based on its terms of reference, the prevailing economic and social policy framework and a firm view on the most appropriate taxation structure for Ireland at this time, the Commission has made some recommendations that I cannot support and that I believe will undermine social cohesion and or economic growth.

Finally in a number of areas I believe the Commission has struck the wrong balance between fairness and efficiency in its recommendations.

For these reasons I have severe reservations on the Report of the Commission and respectfully decline to sign it.

Yours Sincerely,

Brendan Hayes