THERE IS a wilful resistance to acknowledge the scale of inequality here in the debate on how to fix the fiscal hole. And a wilful denial of the lethal consequence of that inequality, writes VINCENT BROWNE
The latest data comes from the Organisation for Economic Co-operation and Development and it relates to the year 2007. Because of the leap in unemployment numbers in the last year it is likely that the inequality it shows is now even worse but let’s just take the 2007 data on its face value. There is a measurement known as the Gino coefficient. It measures income inequality on the basis of zero being absolute equality and 100 being absolute inequality (one person having the total income).
The figures show that for Ireland in 2007 the inequality as measured by this standard was 31. And the significance of that can be understood by reference to the measurements for other developed countries. For Sweden and Slovenia it was 23. Slovak Republic 24. Czech Republic and Denmark 25. France, Hungary, Malta, Austria and Finland 26. Luxembourg 27. Netherlands 28. Germany and Cyprus 30. And then Ireland, along with Spain on 31.
Only Italy, Poland, Estonia, the UK, Greece, and three of the Baltic countries, Lithuania, Latvia and Estonia, were worse, ie more unequal.
If we readjusted the distribution of income here to the level of, say, Denmark or France, then a large part of the fiscal hole could be filled in by that alone. And this can be done only through the taxation system (including the levies) in conjunction with adjustments to pay in the public sector – say, everyone earning over €120,000 (including Ministers, senior civil servants, hospital consultants, RTÉ employees and RTÉ contractors, other highly paid people in the public service) to be brought back to €120,000.
The latest data from the Revenue Commissioners confirms the scale of income inequality. It shows that over 6,000 people (a fraction of 1 per cent) get 7 per cent of all income, an average of over €1 million per head. And they pay just over 38 per cent of their income in taxes and 2010 levies (I have done the levies calculation myself – the other data come from the Revenue Commissioners). What would be so bad if these high earners were to pay 50 per cent of their total income in taxes and levies and that alone would bring in an additional quarter of a billion? (I will upload the relevant tables to the website www.politico.ie).
The Revenue Commissioners’ figures show that 47 per cent of all earners (this could include people working part time and retired people who earn income, aside from the State pension) earn, on average, less than €15,000 a year. The figures also show that 70 per cent earn €50,000 or less.
Ireland's overall tax take (including social security contributions), according to Eurostat ( Taxation Trends in the European Union, 2009 edition), for 2007 was 31.2 per cent of GDP. Belgium's tax take was 44 per cent of GDP, Denmark's was 49 per cent, Germany's 40 per cent and Sweden 48. Even the UK was higher than Ireland at 36.3 per cent. The levies here certainly have added a few percentage points to our total tax take but we still are far behind the Scandinavian countries, Germany and France. There were only four countries in the EU 27 that had a lower tax take than Ireland's – Latvia, Lithuania, Romania and Slovakia.
On the issue of cutting public service pay, according to figures released by the Revenue Commissioners recently, 44 per cent of public servants (183,629 out of a total of 414,623) are earning €30,000 or less. Is it seriously proposed that the pay of these people would be cut?
A further 30 per cent (125,540) earn between €30,000 and €50,000. What margin is there for cutting there? So three quarters of public servants are earning salaries that are relatively modest, so what is this hullabaloo about subjecting them to wage cuts when there is no room for wage cuts? All the more so given that the foremost advocates of wage cuts for public servants are people who earn multiples of the highest paid of this 70 per cent of public servants.
The consequence of the inequality described above is lethal. For reasons that again are incomprehensible, the data on premature deaths arising from inequality remains, again, wilfully ignored. What is the point of the State funding research and then systematically ignoring the insights that result from that research?
I have referred repeatedly in these columns to the report of the Institute of Public Health, Inequalities in Mortality, published in 2001. It showed: "In both the North and the South (of Ireland) the mortality rate in the lowest occupational class was 100 per cent – 200 per cent higher – than the rate in the highest occupational class."
It continued: “For circulatory diseases it was over 120 per cent higher; for cancers it was over 100 per cent higher; for respiratory diseases it was over 200 per cent higher; for injuries and poisonings it was over 150 per cent higher.”
This results in more than 5,000 premature deaths every year and is to do with inequality in this society. Does it not matter? At all?