Proposed tax measures 'unfair'

A senior trade unionist who was a member of the Commission on Taxation said today he did not sign the report because many of the measures it contained were “unfair”.

Siptu vice-president Brendan Hayes, who was the only member of the 18-person commission not to endorse the report, said the commission’s recommendations reinforced a low tax model of the economy and of society that he could not support.

Mr Hayes’s reasons were set out in a letter to commission chairman Frank Daly, which was included in an annex to the report. “For these reasons I have severe reservations on the report of the commission and respectfully decline to sign it,” he wrote.

Speaking this morning, Mr Hayes said while the commission had undertaken its task with honesty and integrity, it struck the wrong balance between fairness and efficiency in its recommendations in a number of areas.

He said he felt the proposed new tax system contained in the commission’s report would not be fair. In particular, he said the suggested third rate of tax, which would be applied either between the current 41 per cent and 20 per cent bands, or below the lower rate, would not target those who were earning “very significant amounts of money” and could afford to pay.

Secondly, Mr Hayes said Ireland has a very unequal society. In most advanced European countries, he said, the way this inequality is rebalanced is through significant state intervention. "If these tax amendments were implemented, we would not significantly change that unfair and unequal society," he told RTÉ's Morning Ireland. "The distribution of income would be pretty much the same."

Mr Hayes said he wished to see society engage in a debate about what future it wants for the country. “As a society, we cannot repeat the last 20 years,” he said.

“My big problem is this: the State pretends to provide a social infrastructure and the citizens pretend to pay for it,” he said. “We pretend to provide an adequate health system and yet 50 per cent of the population decides that they don’t trust it and buy private voluntary health insurance. We pretend to provide an education system, yet we have schools all over the country in pretty poor states.

“We need to say what kind of society we want. What sort of social services and what sort of public services can we have and are we prepared to pay the taxes to achieve that.”

“In order for us to develop our economy, we do need to have social infrastructure that support economic growth,” he said.

Mr Hayes said he did not agree with the commission’s proposal for a property tax and would prefer a land or site value tax.

“I don’t think we have a fair tax system. The tax system is essentially the outcome of political lobbying by very powerful groups in our economy and that’s shown in the list of tax expenditures that the commission has recommended should be closed down,” Mr Hayes argued.

Despite this, he said there were a number of taxation measures recommended by the commission that still favoured the wealthy, including the earned income allowance which would be given to the self-employed.

“If that were given to the self-employed at the current level, that would probably cost the Exchequer around €600 million a year. That would be roughly the equivalent of the net return of the property tax.” Transferring money from property owners to the self-employed in this way would not be acceptable, he said.

“My difficulty is that the reallocation of the tax burden in the proposals is still unfair.”