Water charges… redux

IELB raises an important point in this post here, given the lack of take up of the property tax what are the prospects for the cost of €300 per household for water meter?

Or as announced last night, the even more remarkable figure of €780 spread across 20 years (and let’s not even get into the issues surrounding the idea of the “assessed charge” as detailed in the article linked to directly above).

It’s almost a perfect storm for the government. I’d noted earlier that even from an orthodox perspective the amount of political capital expended by Hogan and the Government on the household charge was odd. That’s certainly the read of a recent analysis in the Sunday Business Post and it’s hard not to concur.

But the broader problem is that having had a significant set back – and to be honest at the start of the household tax campaign I was dubious that it would see anywhere near the level of non-payment that it has, though also being honest I thought a few weeks from the payment date that fewer people would sign up than did – they now have to face into another potential campaign with almost precisely the same people.

And whatever about €100 and its relative significance or insignificance to household budgets it is worth reflecting on the results of the Irish League of Credit Unions first quarterly spending survey of 2012 which notes that :

Almost two-thirds of the adults surveyed have less to spend now than they did last year, while 16 per cent of those surveyed said they had nothing left at the end of each month and 6 per cent said they have less than €20 left.

Nearly 70 per cent of respondents said they were worried about not paying their bills, while 24 per cent said it left them “really worried and stressed”.

On savings, the situation was not much better, with 46 per cent unable to put any money aside.

This points, however imprecisely, to very real financial problems extant in the society. But a further €300 on top of that? Or €780… Plus whatever charges are likely to arrive in the wake of the implementation of both the property and water charges schemes? And the former is likely according to the Sunday Business Post this weekend… well, I’ll let them outline it…

Assuming that many of the lowest-income households are excluded – and as relatively little tax will be paid on a lot of lower-valued property – the tax could thus come to Ђ8 to Ђ10 a week – or roughly €400 to €500 a year – for many middle-income earners in 2013, a big jump from the €100 household charge. The government will argue that the alternative is to raise taxes elsewhere, but a huge debate looks set to kick off on this one when the outline options identified in the Thornhill report are put up for debate.

There’s an interesting aspect to all this. In the US and indeed in the UK one of the reasons for shifting from general/income taxation to taxes on individual ‘services’ was – on the part of some who championed them – to delegitimise the concept of taxation and to try to push rates as low as possible. But here we have the opposite dynamic, at least in the main part – though one might wonder as regards the long term objectives of some in FG, where the government seeks to pull in as much tax as is humanly possible from a broad range of sources. But they’re hung on their own petard to a large extent. The anti-income tax rhetoric of the centre and centre right (and a nod too to a Labour Party which sought in 2007 to lower the lower rate of income tax) across the last three decades has led to a situation where for some any taxation, and not merely income tax, is regarded in a profoundly negative light.
Throw in the overtly inequitable aspects of the current form of the household ‘charge’ and that makes for a lot of disgruntled people.

Small wonder that the government appears so oddly divided over this all.

ENDA Kenny has added to confusion over the cost of water meters, saying households would have to pay for meters but their installation would be free.
Mr Kenny’s comments contradict statements made yesterday by Tánaiste Eamon Gilmore and the Department of the Environment.

They must be very very conflicted as to how to progress not least given the response they’re getting. Take the Phil Hogan approach of ‘everything will work out fine’? Well, not so much as it has transpired. Or take a softer more emollient line? But what if the household charge debacle has embedded an anti-tax approach in the electorate.

And what of the political consequences? Because none of this is going to go away.

Would it be an easier ask on the government to cut to the chase and raise incomes taxes? Well, I suspect it would. At the least it would be considerably easier to implement – not least because the income tax system in and of itself is remarkably comprehensive and efficient, albeit with the obvious blind spots, as a means of ensuring taxes are paid – and more than obviously so than the dismal efforts made as regards the household charge. But, of course, that anti-income tax rhetoric so beloved of Fine Gael in particular, but not restricted to them, then kicks in.

A problem, very much of their own making. No mistake.

And while we’re on this issue, what of a piece in the Irish Times by Dan Hayden and Colin Scott which, as might be expected, makes a case on ‘why people avoided paying household charge’ entirely positioned within the orthodoxy and in terms of the processes of paying rather than considering why ideological responses – however attenuated in some instances – might have shaped the fact that ‘almost half of all Irish householders have avoided paying the €100 household charge to date’. But it is impossible to consider the enormous rate of non-payment without considering those ideological responses (and as noted above they are of both left and right however inchoate and nebulous when one looks at the motivations in play closely). It wasn’t simply that the charge was web oriented at first, that fines were low (and by the by, never good, to see Freakonomics quoted in an article on these matters. I’ve no problem with the book, it’s highly entertaining as is a complementary pod cast by the same folk, but it’s not what I’d be using to validate a piece that self-positions itself in ‘regulatory governance’). There’s no doubt that the government ‘really didn’t give it the best chance for success’, but the 50/50 split on payment/non-payment wasn’t simply the result of process. And it’s hard to entirely accept their contention that:

While it’s important that people are taxed at fair levels, the response to the household charge shows that it’s equally important that money is collected in a way that makes people confident that everyone will pay their fair share and if they don’t that they’ll be punished for it. To mistake technical weaknesses for mass revolt would also be an example of policy failure.

But that sense of ‘fair levels’ – something, again as noted above that plays to both left and right, is central to the non-payment campaigns.

By the way, what does the Memorandum of Understanding say about water charges? Turn to p.30 and you’ll read the following:

In advance of the introduction of water charges
– The government will have undertaken an independent assessment of transfer of responsibility for water services provision from local authorities to a water utility, and
prepare proposals for implementation, as appropriate with a view to start charging in 2012/2013.

A shade less less proscriptive then than the way it’s being put in the Irish Times.

More than a million homes will have to have water metres installed by the end of next year if charges are to be introduced on schedule in 2014, as set out in the EU-ECB-IMF deal.