Nordic-style public services need dramatic tax hike, forum told

Irish people cannot expect Nordic-style public services unless they are willing to pay dramatically more in taxes, the national economic dialogue at Dublin Castle heard yesterday.

A seminar on how to manage economic and social priorities for a fair society, chaired by Tánaiste and Minister for Social Protection Joan Burton, heard a number of suggestions from interest groups on where investment should be targeted.

While ramping up spending on childcare and housing emerged as key priorities among some interest groups, Robert Watt, secretary general of the Department of Public Expenditure, warned that Scandinavian-style public services require vast sums of money.

Falsehood

“If people want a Nordic model, then we all have to pay for them,” Mr Watt said. “It’s a falsehood to suggest that we can have the best services in the world without paying for them.”

He also said much pre-budget discussion becomes “unreal very quickly” by not acknowledging the scale of investment needed just to keep services or supports at their existing levels.

In the case of State pensions, for example, he said the cost to the exchequer of maintaining the payments will rise by about €2.5 billion by 2028, or about €1 billion every five years.

Dr Dónal de Buitléir, chairman of the Low Pay Commission and director of publicpolicy.ie, also said a hollowing out of the tax base meant there was limited scope for policymakers,

He said a single person on average or below earnings in Denmark paid up to 13 times more in tax than an Irish person on equivalent wages.

Age profile

While Ireland’s relatively young age profile meant we were able to provide good public services at present, he said this will become more challenging in the years ahead as the population ages.

He also said it was important that lobby groups publicly supported “sensible” government policies – such as charging for water or taxing property – and didn’t remain silent on these issues.