Household tax fallout shows sad lack of understanding

 

INSIDE POLITICS:Kenny and Co must not shy away from tough decisions and public must finally grasp need for fundamental change, writes STEPHEN COLLINS

THE LEVEL of controversy generated by the modest €100 household charge is depressing. Three years after the crisis began it seems many people are still incapable of grasping the need for fundamental change to deal with the crisis facing the country and ensure that it never happens again.

One of the prime reasons for our economic disaster was the failure to control the property market over a long period. The interim household charge is just a small first step in the direction of a much-needed and comprehensive system of property tax.

A property tax is an essential component of any attempt to broaden the tax base and it is also necessary as an end in itself to give the State a weapon that can help to control property prices in the future.

Minister for the Environment Phil Hogan put the household charge in context when he pointed out that it amounts to less than €2 a week. Another way of looking at it is that it is considerably less than the television licence fee of €160 a year that funds RTÉ.

It is a pity the same charge applies to all houses. While it will certainly take some time to gather the information required to bring in a site-valuation tax, the interim measure could easily have contained a simple mechanism for a tapered payment system based on house size.

Still, a charge of €100 a house can hardly be regarded as a great imposition for the majority of households. The debate over it, coming on the heels of the disproportionate response of the political and media worlds to the closure of the accident and emergency service at Roscommon hospital, shows the challenge the Government will face over much more difficult decisions in the autumn.

The last government was never able to get a hearing for its arguments about reform because the voters held it responsible for creating the mess in the first place. The Fine Gael-Labour Government does not have that disadvantage but it does have to deal with the self imposed burden of election promises.

It is probably a blessing in disguise that the EU-IMF programme leaves the Government with little room for manoeuvre. The programme of reform it lays down represents not only a map out of the morass into which we have got ourselves but a foundation for the creation of a more healthy democracy.

Now that the bailout terms have been eased, Enda Kenny and his Government have to get down to the task of implementing the programme. The signals coming from Ministers indicate that they intend to deliver on the targets but in order to do so they will have to make difficult choices.

Going on past performance, rational debate will be difficult. Any reductions in spending will almost inevitably be represented by the Opposition as an attack on the poor and the vulnerable. Of course, before being in power Fine Gael and Labour played the same game of misrepresenting the real choices available but they now have to deal with reality.

In order to avoid another boom and bust cycle in the future, Irish politics will have to be dragged from its tribal, clientelist preoccupations into the modern world and the political system made to work in the interests of society as a whole.

It will also require balanced debate in the media. The standard response by much of the media to any attempt to reduce public spending is to focus solely on the individuals or groups who will lose benefits or entitlements with little attempt to explain the range of difficult options available to policymakers.

An honest appraisal by politicians, interest groups and the media of the choices now facing the Government as it attempts to get the public finances in balance would be an enormous help in putting the country back on the road to economic health while taking issues like equity and fairness into account.

In a thoughtful speech at the MacGill Summer School, Green Party leader Eamon Ryan reflected on the inadequacies of the political system. He didn’t take the easy option of blaming the usual suspects, like the electoral system, but called for honesty from politicians in what they promised people and honesty from the people in what they expect from politicians.

Ryan reflected on the roots of our political system in the 19th century, when constitutional nationalists began the process of winning independence from the UK by setting up the first mass democratic movement in Europe. The development of a ward-based political system, which was exported to Australia, the US and the UK itself, was a key part of the process.

“Under our own rule those traditions came together to create the localised, clientelist political system we have today. You could not call it corrupt because the Irish people have democratically voted for it every time. We may know that the promises don’t add up but we still vote for our local man or women in the hope that we will draw the long straw and at least get our bit of the pie. But if we are honest we would admit that this way of voting no longer works well, if it ever did. It is one of the reasons we are in the crisis we are in.”

Irish society has overcome huge challenges in the past and there is no reason to believe that it cannot do so again. One of the heartening things about society’s response to the crisis is that, in spite of the enormous shock to the system, the centre has held and anarchy has so far been kept at bay.

If Kenny and Co present their case with conviction when really tough decisions are unveiled in the budget there are grounds for optimism that common sense and the common good will prevail.

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