The Cedar Lounge Revolution

More on household charges… December 21, 2011

I’d sort of pegged this week as a calm one, not too many posts to be written in the run-up to Christmas, and a bit of a wind-down. But it’s a bit like when Michael Corleone says ‘Just when I thought I was out… they pull me back in.’ Because God knows this stuff writes itself given the target rich environment we’re currently in. If it wasn’t so grim it would be… well…

Let’s start with that none less critical tribune of the orthodoxy, Stephen Collins writing in this mornings Irish Times.

The €100 a year household charge is likely to be replaced in a little more than a year by a comprehensive property tax, The Irish Times has learned.

The property tax will be on a graduated scale based on the size or value of a house and the details are due to be worked out over the next few months.

Under the terms of the EU-IMF programme a graduated system of property tax was not due to be put in place until 2014 but Ministers have taken a decision to speed up the process.

Let’s note in passing the vagueness of this, but also the extended timescale. At the least the flat charge was intended to be implemented over two years, perhaps more. And even now who is to say that ‘details’ can be worked out over ‘the next few months’. It somewhat undercuts the arguments that the €100 charge was a smooth path to a progressive tax.

Note also, as ever, the absolute aversion to increased income taxes… Collins paraphrases, incorrectly IIRC, the terms of the EU/IMF intervention.

The absence of a property tax is widely regarded by economists and policymakers as one of the weaknesses of the Irish tax system. One of the key ambitions of the EU-IMF programme is to widen the tax base so that extra taxes do not fall on work as the Government tries to raise extra revenue.

My sense of the ‘programme’ was that while broadening the tax base was indeed a stated aim the EU-IMF were fairly agnostic as to where taxes fell, indeed it seemed to point towards an approach where more workers should be brought into the tax net by taxing those on lower incomes who have escaped it [due to the low tax approaches of the PD/FF governments]or were paying lower rates. But I guess ‘taxing work’ only counts when it applies to those on middle and higher incomes.

Anyhow, it’s hard to think of a better example of how distorted the discourse on parts of the left has become than to contemplate the words of Pat Rabbitte as regards the household tax yesterday. His complaint is that:

“People who think like Joe Higgins and Clare Daly have been campaigning across Europe since the French Revolution for a tax on property,” he said. “It seems to me that we’ve a lot of challenges because of the economic situation that this Government inherited, and a lot of rich pickings for people who want to protest only. But I don’t think that the household charge is the one that I would pick first.”

But is this not to miss the point entirely. Higgins and Daly aren’t protesting against a property tax, they’re protesting against this property tax, a tax that is effectively a poll tax given that it is entirely regressive. Indeed Higgins made it clear that:

A progressive tax should be imposed instead on the 5 per cent of the population who owned almost 50 per cent of the wealth in the State, and not on “ordinary householders on low and middle incomes”.

It’s hard to know what to make of his further comment:

The Minister added: “The last time Joe Higgins and Clare Daly engaged in a similar protest was in respect of the bin charges in Dublin and it was successful in privatising the bin service right across the city.” Mr Rabbitte was speaking in Newbridge, Co Kildare after the launch of a Bord na Móna initiative to create 91 jobs.

Is he saying that the protests were the reason for privatisation? Really? As Higgins noted:

Denying that the anti-bin charges campaign had brought about privatisation, Mr Higgins said: “Imposing charges is a set-up and a preparation of the ground for privatisation.”

And that has proven to be the case and by the way has been a trope on the left with currency across both social democrat and further left formations across a long period of time, which somewhat undercuts his right to blame others on the left.

And it’s this debasement of the discourse that is so disconcerting. Rabbitte knows full well what the problem from a left perspective with the household tax as currently formulated is. His apologia is tissue thin:

His Cabinet colleague Mr Rabbitte said: “Remember that the intention is to evolve and develop the tax so that people who can pay most will pay most. This is a temporary flat charge because of the strictures on the exchequer to raise revenue. But the intention is that it will be a graduated tax, depending on the size of the home and so on.”

If there was a pressing revenue raising need then why not simply add what would be a marginal increase to income tax, and one that would be both progressive in tax terms and politically? Why not? Because Fine Gael won’t wear it. Because the orthodoxy will not allow for income tax increases. And that calls into question what is the function of social democracy in this context? Making up numbers? Providing an oppositional voice? Protecting those least able to bear this weight?

Indeed this brings me to another point. Michael Noonan made great play about how income taxes wouldn’t be touched in the Budget in order to bring stability and ‘certainty’ as regards income. That’s a crock in two respects. Firstly there’s far too many people facing redundancy and wage cuts for that to give any sense of confidence at all in the economy, but as importantly the raft of increases in utilities, VAT increases and indeed the household charge et al make it near impossible to work out just how severe the impact on incomes is going to be. I keep a tight rein on my finances and I have little idea of how those cumulatively will affect me. But it’s not going to be pretty.

Moreover, as has been noted previously, these are approaches which are intrinsically regressive bearing most weight on those who have the least. That Rabbitte cannot admit – though he is clearly far too intelligent not to know it – to that is a grim indictment of where he and his party now stand. That he finds this an opportunity to put the boot, however ineffectively, into others on the left is dispiriting. But not unexpected.