The values underlying the Commission on Taxation

Slí Eile08/09/2009

Slí Eile: The Commission on Taxation (CoT) Report is another winter blockbuster following the Summer Bord Snip. A pattern has been witnessed - outsourcing of 'hard choices' to some special Group (but clearly heavily orientated with an ideological terms of reference) followed by months and months of anxious waiting, leading up to a series of early leaks to prepare the people. By the time the tome eventually appears the 'wow' factor is greatly diminished. Then we are into talk of a 'menu of options' for further consideration.

Just options, except that some options are getting early dismissal such as taxes on property. The very notion of taxing capital, land, property, wealth of any sort is anathema, and any proposal to extend existing taxes in these areas runs straight into a political and economic interest group wall. This was as true in the 1970s as it is today. The 'old reliables' used to be the pint, the cigs and petrol. Now it is focussed more than ever on taxing incomes - especially incomes that can be measured, assessed and levied.

There are many positive aspects to the CoT Report in my view, not least:
o The move in thinking towards taxing bads such as polluting consumption and production and not just goods like employment and income
o The move towards more property-related and local level taxes (where we are well out of line internationally); and
o The move towards closing some of the more obscene tax breaks and inequitable tax reliefs for those paying tax at above the standard rate.

Still, there is much that is left untouched. The scale of likely additional taxes is limited and the tax-neutral objective means that there will be some losers and some winners.

The very real danger is that this government - any Government - will pick and cite those parts of the package that fits most easily while neglecting the larger issues such as equity and sustainability.

The purpose of taxation should be seen as a threefold mandate:
o To fund public spending on key services and goods;
o To redistribute income and wealth; and
o To influence behaviour in a socially positive way (incentives/disincentives for different types of work, consumption, investment).

These purposes should reflect a philosophy based on:
o Equality of opportunity and condition;
o Solidarity with those who are poor, sick, very young, very old etc;
o Capacity of enterprises to innovate, compete and provide employment at home and abroad;
o Freedom to participate in society as an equal citizen with rights and responsibilities; and
o Service of the common good where collective effort is required in the provision of public goods.

Neo-liberals have to concede that even Adam Smith reserved certain roles to Government including defence and schooling.

Posted in: Taxation

Tagged with: commission on taxation





Robert Sweeney

Robert Sweeney is a policy analyst at TASC and focuses on issues surrounding Irish …

Paul Sweeney

Paul Sweeney is former Chief Economist of the Irish Congress of Trade Unions.  He is …

Vic Duggan

Vic Duggan is an independent consultant, economist and public policy specialist catering …