The view from Fine Gael… September 15, 2012Posted by WorldbyStorm in Economy, Irish Politics.
Brian Hayes has opined once more on matters economic. Tax this time, and pensions. Others have dealt with his thoughts on pensions – not least to point out that the large tranche of pensioners who have indeed been affected by cuts, but the ones on tax are as interesting.
First up, what are his limits?
Mr Hayes said the Government’s taxation and social welfare policies must be based on making it beneficial for people to work. “It’s crucial that we do not increase tax on income further,” he said.
People could not give any more on the taxation side but “much more” needed to be done on the expenditure side, where the scale and universality of social welfare benefits had to be considered. “Everything needs to be on the table if we’re really serious about not only hitting our targets but creating the culture where work actually pays,” he said.
So not quite everything on the table then.
Problem is that the last time FG were in power income taxes were considerably higher, and yet the economy was growing fast. Even at the turn of the century and for some years after taxes remained considerably higher. And yet still it grew. To return to that status quo ante though is now regarded as anathema.
There’s also a rather depressing subtext that enters into his thoughts.
“We’ve got to make it clear to people that if they move from benefit back to work that it pays for them and their families. Not just on the issue of income tax but also on secondary benefits like medical cards.”
“The priority for the Government is not to have further tax increases on work because you create this dreadful disincentive that encourages people to stay on benefit.
To be honest I’m not sure what he means by that last sentence. I’d have thought the most significant factor ‘encouraging people to stay on benefit’ is lack of employment opportunities, and it is hard to understand given how low tax the economy has been (with still relatively low tax rises over the past four years – albeit some hugely distorting ones like the USC) how there have been any disincentive involved. Ah, except for the fact that we’re also talking about extremely low paying jobs. But then those sorts of jobs are unlikely to offer the sort of long term solution (or even short term) that is needed for those who are unemployed.
Fairly telling. What though about his partners in Government. What do they make of this?