Sir, – Micheál Martin is reported as saying in response to Fine Gael’s proposed €1,000 tax break that it would not benefit people on lower incomes (News, May 27th). Of course he is right. But he didn’t elaborate as to why that is the case.
A feature of the Irish income tax system which is, I think, unique is that about 40 per cent of income earners do not have an income tax liability. In other developed countries most of those on lower incomes make some contribution to the income tax take and, as in Ireland, those on higher incomes pay much more.
Readers will recall that in the past Irish trade union leaders liked to call for Ireland to follow the Scandinavian model. This they saw as a system which had high income taxes and high levels of social supports. I haven’t heard those calls for a few years now. I think the unaccustomed silence is easily explained. Ireland differs from the Scandinavian model not because our middle and high earners pay less income tax than those in Scandinavia – we don’t – or because we have lower levels of social provision – we don’t. The real distinction between the two systems is the tax treatment of those on lower incomes. In Scandinavia those on lower incomes pay income tax while those in Ireland do not.
It follows from this that, as Micheál Martin points out, tax cuts will not benefit those who don’t pay income tax in the first place. But that is hardly a reason to deny tax reductions to those who have carried the burden of significantly increased taxes on income since 2010. Since we now have more tax revenues than we know what to do with, a meaningful reduction in the income tax burden should be one of the uses of the so-called windfall.
That should involve much more than indexing tax credits or tax bands by inflation. Politicians will tell us that increases in credits or bands are a reduction in income tax. They are not if the increases are less than the increases in price and salary levels. Indexing credits and tax bands to inflation should be a standard feature of our tax system rather than something the mere suggestion of which is a cause for self-congratulation in Fine Gael.
Listed companies which have excess cash frequently return it to shareholders on the grounds that their shareholders can make better use of the money than the companies can. How many Irish income tax payers can say that they would expect our politicians to make better use of the excess tax take than we would? – Yours, etc,
PAT O’BRIEN,
Rathmines,
Dublin 6.
Sir, – Former Fine Gael minister Jim Higgins says he is “angry and embarrassed” at the “selfishness and petulance” shown by three serving Fine Gael Ministers of State in calling for tax cuts, saying that they “haven’t a clue how coalition government works” (Letters, May 27th).
The fact is that the three Ministers had every right to call for tax cuts in the next budget. The principle of collective responsibility binds all Ministers, including Ministers of State, to support the Government’s decisions and actions. However, it does not mean that Ministers can’t comment on matters which have not been the subject of a Government decision, let alone that they should refrain from publicly articulating their own party’s policies.
The Fianna Fáil and Green TDs who have objected to the tax cut proposal were conspicuously silent when Micheál Martin recently called for the “triple lock” to be scrapped (News, May 22nd) and when Eamon Ryan said that “the State must get bigger” and that “thousands more civil servants” should be recruited (News, April 26th). Why were those radical proposals not subjected to the same criticism as the Fine Gael tax plan? Are we to take it that Fianna Fáil and Green Party Ministers can publicly advocate policy change, but that Fine Gael Ministers cannot? Clearly that would be a nonsense.
The objections to the tax cut proposal have little to do with Coalition etiquette and everything to do with a clear knowledge on all sides that tax cuts for middle earners are both electorally popular and long overdue. – Yours, etc,
BARRY WALSH,
Dublin 3.
Sir, – The party that would like to reduce income tax, perhaps by removing a temporary measure, USC, is restricted from doing so by the party whose policies enforced these measures on us all in the first place.
Meanwhile the main Opposition party wants to ensure that those in the middle who pay these taxes never feel any relief, given their discussions with “big business”, the British government to bring in a replica NHS (something that is doomed within the next decade), and those who make up “Ireland Inc”.
Meanwhile, similar parties on the left perhaps wonder how these policies impact the price of smoked salmon or objecting to developments in Dún Laoghaire Rathdown may impact their position in the Dáil next time out.
Is it any wonder that there is a floating vote in Ireland? – Yours, etc,
RORY J WHELAN,
Drogheda,
Co Meath.
Sir, – The demand from Fine Gael for a substantial income tax cut for middle income earners is prescient and overdue. Taxpayers here are hitting the top rate at a fraction of the threshold in the UK with whom we compete directly for skilled labour. The economy is strong and the exchequer is flush. The State has long relied on the middle income group to fund public expenditure and it is only fair that they get a break when times are good. USC was introduced as a supposedly temporary measure during the economic crisis and we are still paying this manifestly unfair levy over a decade later. We hear incessant demands for increased public expenditure from Sinn Féin and others, with no regard for how they are to be funded. Michael McGrath and Eamon Ryan have recently expressed the view that the role of the State needs to expand as a proportion of the economy, again with no indication of how it is to be funded. In fact, what is needed is a root and branch review of how greater efficiency can be achieved within existing expenditure, for example through more effective digitisation of public service delivery and elimination of restrictive practices. – Yours, etc,
JOE LENIHAN,
Dublin 9.
Sir, – Tax cuts buy votes, not the homes and hospital beds we really need. – Yours, etc,
PAUL KELLY,
Broadstone,
Dublin 7.
A chara, – The recent row provoked by Fine Gael with their Government partners Fianna Fáil looks like a bit of a ready-up as both parties seek to distinguish themselves from one another in advance of the next elections (“Coalition wars: How Fine Gael’s tax cut proposal soured relations in Government”, Analysis, May 26th).
After 12 years in power for Fine Gael, supported by Fianna Fáil for the last seven of them, it will be a challenge for both parties to convince the electorate that they’re not six of one and half a dozen of the other. – Is mise,
JOHN GLENNON,
Hollywood,
Co Wicklow.
Sir, – Your article “Varadkar backs tax cuts for ‘middle Ireland’” (News, May 27th) lifts the veil on a vacuous political ideology.
Mr Varadkar’s utterances are tone deaf. In the days preceding his interview, clearly distressed elderly parents of now-ageing children spoke of their abandonment by the State, isolated and left to cope without respite and no plans for what will happen to their loved ones when they die. During the same few days, there were multiple reports of care centres for autistic children and nursing homes for elders closing down. When asked about these gaps in services for our most vulnerable citizens, Tánaiste Micheál Martin said that money was not the problem, it is just that we cannot find the staff.
Money is the problem for care staff, predominantly women, who have always been poorly paid.
They constitute the membership of the Irish “working poor”. Use a chunk of the budget surplus to pay them what they are truly worth and there will be no difficulty in recruiting staff.
Mr Varadkar’s unequivocal statement of the mission of Fine Gael in Government reflects a set of values that are a far cry from the principles that underpinned the “Just Society” of his illustrious predecessors. – Yours, etc,
EDDIE MOLLOY,
Rathgar,
Dublin 6.