You Get What You Pay For

The New Year finds us with our noses being rubbed into austerity. Those taxes and impositions announced in the Budget last December have found their way onto prices pretty quickly. The next inflation figures will not make for easy reading. And there’s more. Pensioners are being stalked by the taxmen. The house tax and predicted water charges will only add to the general feeling of woe.

The thing is, thanks to decades-long profligacy by You Know Who, the country doesn’t have a stable tax base and, like everywhere else, it needs one. To have nurses and teachers and Gardaí and social workers and all the rest, the Government has to have income and it is duplicitous of many politicians to suggest that these services can be maintained without raising money.
Often, it’s quite personal, with people feeling put upon and oppressed by taxes and charges. It’s a lush breeding ground for the populist rhetoric that increasingly passes for political debate in Ireland.
The resistance revolves around two broad themes. The first of these is that taxes and charges erode our income and, thanks to the stupidity of previous Government policies and the incompetent rapacity of bankers and speculators, most ordinary people are already at the limits of their capacities and therefore resent any increases.
The second seems to be about the personal and family impacts of the erosion of statutory welfare provisions across every Government Department and state agency.
The thing is, you can’t have State welfare provision without taxation. But many in Ireland appear to believe that paying taxes is someone else’s responsibility. When it comes to tax, there is a tendency to want to have it every way, demanding the services that taxes fund… but resenting having to pay the taxes.
Some explain this as a hangover from colonial times but in truth, after almost a century, this explanation is getting a bit hoary. It’s as though a vast swathe of the population hasn’t bought into the duty aspect of citizenship in an independent state. That’s the other side of the coin from rights and entitlement.
This (essentially peasant) culture seems still to be widespread in Ireland, Greece, Italy and, to a slightly lesser extent, Spain and Portugal. Although exceptionally loyal to their villages and communities, people in these countries view their national Governments with huge distrust. It may or may not be coincidental that these are the countries at the heart of the Eurozone crisis.
But there is also an even more pernicious perspective, espoused with great vigour by hard-right media buffoons, that taxation is a form of robbery. This is generally stated in the interests of very rich people who have no need of social solidarity or welfare state supports, and who believe that provision for the needy is best done through giving to tax-deductible charity organisations.
Many adherents of this perspective think that poor people largely have themselves to blame. It often seems that this is the dominant view in Irish political and media circles and anyone who disagrees is dismissed as a softie.
The tax marches of the 1980s are often used as a way of justifying these right-wing views.
But this is to miss the point of those marches. In fact, they weren’t against taxation itself, they were against a tax system that imposed ever greater burdens on the PAYE sector, while farmers, professionals and the self-employed paid little or no tax and the black economy flourished.
This trend was fatally exacerbated by the crazy, politically motivated decision by the Fianna Fail administration of 1977 to abolish rates (ie local property tax) and to fund local government from the central exchequer. Ultimately, this imposed a huge extra burden on ordinary taxpayers.
Far from establishing a more equitable tax system, Jack Lynch’s government made the PAYE sector carry the can and they let their support base – farmers, professionals and the self-employed – out of the tax net, back into which some of them are now most reluctant to be drawn. They want everyone else to pay for them (and their student children, for that matter).
No, what those PAYE tax marchers wanted was a tax system that weighed on everyone fairly and progressively. It must be truly galling for survivors to find their movement misappropriated into the anti-Welfare State agenda. That wasn’t the point at all.
But why let history get in the way of a good story?
The Irish media are marinated in hard-right economic libertarianism. So pervasive is the culture that it has almost fully squeezed out alternative voices.
Many of the swashbucklers ascribe to Mary Harney’s jaunty association of Ireland with Boston rather than Berlin. The thing is, Harney spoke with little reference to American economic history. For example, up until the late 1970s, California had a high-tax high-service economy that was remarkably close to the Scandinavian model. Until it was fatally undermined by the anti-property taxation measure known as Proposition 13, California’s services, especially in education, were the envy of the rest of America.
Those who opposed Proposition 13 warned that, if the measure was introduced, public services would be gradually degraded and they were right, just as the libertarians undermined public services in Ireland.
There is a particular irony in finding socialists opposing property taxes in terms that are not much different to the rhetoric of right-wing politicians in the USA in the late 1970s and early 1980s – the Reagan era that, more than any other, generated the low-tax, light-touch regulation culture that has brought western capitalism to its knees.
Payment of taxation is part of a citizen’s social contract with the State. But the corollary is equally crucial, that the State should deliver value for money and quality in its services to citizens. If these were more clearly evident, along with fairness and progressiveness, people would have less difficulty paying up.
And that’s the debate we need to get going.