Madam, - It is the stuff of a free press that Jim O'Leary regularly uses his "Economics" slot in The Irish Times to criticise trade unions. However, his attack on the ICTU tax briefing "Tax Cuts did not Create the Tiger" (Business This Week, November 26th) greatly distorts what we are saying.
He sets up three straw men and proceeds to knock them down. He reduces the briefing to his own three questions and then answers them to suit his own arguments. In a complex and Jesuitical argument, he further reduces the core argument in the paper (that tax cuts did not create the Tiger) to two further questions - and then again answers them to suit himself. He appears to disagree with us, though one answer appears to contradict the other.
He takes issue with our view that insufficient revenue is being raised to fund the required level of public services. He says we focus on the fall in the proportion of spending to GDP/GNP, which we do. He points out how public spending has risen in absolute terms. So do we. But it is still insufficient to pay for modern public services.
We - and, I believe, most citizens - hold that we need to provide much better public services and we need to fund them. We do agree that we need to address the management of the public services. Mr O'Leary and some other economists argue against any increases in public spending,claiming that any further spending disappears into a "black hole". However, even Mary Harney, in spite of her ideology, now agrees with increased spending in health.
Is Mr O'Leary serious when he asserts that increased public spending would harm the private sector? Another question he poses is: if the tax burden is inequitably distributed, should more tax be raised from those not paying a fair share? We believe so, while he clearly does not. In particular, he quotes me on how unions accepted moderate increases in wages in return for income tax reductions in the national agreements. He asks: "Who ultimately bears the burden of PAYE income tax? The answer is: the employer." Tell this to the average employee!
Is Mr O'Leary unaware of the 11 people who paid no tax at all on a year's income of over €1 million, and 242 who paid little or not tax on incomes of €100,000 to €1 million back in 2001? What about the hundreds of millions in offshore accounts, the insurance-based evasion, the property-based tax schemes, the low taxes on inheritances and wealth and the high taxes on spending and the growing stealth taxes? A substantial amount of tax could be raised from those who are not paying their fair share, with no consequence for economic growth.
If Mr O'Leary wishes to argue in favour of the continuation of poor public services, for no further funding for their improvement and for gross tax inequity, he should be more forthright. - Yours, etc.,
PAUL SWEENEY,
Economic Adviser,
ICTU,
Parnell Square,
Dublin 1.