Madam, — Here are three proposals which, I believe, could help negotiations on a new national wage agreement, claw back some of the excesses of the Celtic Tiger, improve social equity, generate additional funds for the Exchequer and enhance national competitiveness.
1. Apply wage increases under the next agreement on a sliding scale, for example, 3 per cent a year on the first €30,000, 2 per cent on the next €30,000, and 1 per cent on the balance.
As wage increases, in the absence of growth, are mainly intended to compensate for basic cost increases, there is no case for automatically offering the same proportional increases to those already enjoying high incomes.
2. Introduce an additional tax rate (say 45 per cent) for those earning over, say, €100,000; or else ensure that those on the 41 per cent rate actually pay tax at that rate on their incremental earnings by scaling back allowances for "top-hat" pensions, investments, etc.
It is unfair that someone earning €60,000 a year pays tax at 41 per cent while a person earning five times more can pay tax at a lower effective rate.
3. Reduce the standard VAT rate to, say, 18 per cent. This would reduce the cost of living and help redress the imbalance between low direct taxes (which benefit the better-off) and indirect taxes, which fall most heavily on the less wealthy.
The figures are illustrative; further analysis would identify the ideal combination to achieve the desired objectives. - Yours, etc ,
BRIAN FLANAGAN, Ardmeen Park, Blackrock, Co Dublin.