Householders should not have to subsidise cheats

INSIDE POLITICS:The waste service was privatised in the first place because politicians made it impossible for public authorities to enforce payment

THE HULLABALOO in the Dáil over the householders in Dublin who won’t have their bins collected because they refuse to pay for the service is a typical example of the way the Irish political system panders to the cheats while taking law-abiding citizens for granted.

The big majority of households in Dublin have signed up to pay the charges, but the reason for uproar in the Dáil on Thursday was the prospect that those who refuse to pay won’t be subsidised indefinitely by their honest neighbours.

It was all of a piece with the controversies over the €100 household charge and the septic tank charge with Opposition politicians, and even some on the Government side, lining up to express solidarity with those who want to shirk their civic responsibilities.

Many of the 18,000 households in Dublin that failed to meet the deadline for the bin payment probably just didn’t get around to it in time, and the final number of defaulters is likely to be much smaller. At the end, though, there will be a hard core of non-compliant householders and the service providers have to be able to deal with them, as the ESB, Bord Gáis or UPC would do.

The attack by a variety of politicians on the private refuse company Greyhound for its refusal to collect the bins of defaulters is a bit rich. The reason the service has been privatised in the first place is because politicians made it impossible for the public authorities to enforce payment. Some openly encouraged householders not to pay, while others opposed the enforcement of the law by councils for fear of the bad publicity that might ensue.

Tánaiste Eamon Gilmore summed it up in a broadside against Joe Higgins during the Dáil exchanges on Thursday. “The deputy spent years encouraging people not to pay their bin charges to Dublin City Council and other local authorities, and as a consequence undermined the viability of the service being provided by the local authorities.”

Higgins responded by pointing out that Gilmore had himself opposed local charges in the past and had deplored the non-collection of defaulters’ bins. The Labour leader is finding that the responsibility for running the State has changed his perspective a bit. Whichever way the blame is apportioned, the net effect of the anti-charges campaigns over the past three decades is that bin collections have been privatised by almost all councils.

It also seems that people are much more willing to pay up when the bill comes from private operators rather than public bodies. The level of compliance is related to the sanctions applied for non-payment as well as the prevailing attitude in society to defaulters. The inability of councils to ensure widespread compliance is what has led to the privatisation of their services.

One of the reasons for the scale of our last recession back in the 1980s was the inability of the State to collect the income tax it was legitimately owed. The indulgent attitude to tax evasion was one of the problems. Charles Haughey and other wealthy individuals were able to dodge tax through offshore accounts partly because there was a level of tolerance for such behaviour. Attitudes to income tax evasion have changed considerably since then. Much tougher penalties and far stricter enforcement have been crucial in changing public attitudes. While nobody likes paying income tax there is now a sense that the system is broadly fair and people exposed as tax cheats are not treated with the same level of indulgence as of old.

The argument that people pay enough income tax and so shouldn’t have to pay other levies or charges simply doesn’t stand up. The statistics show that Ireland is not an overtaxed country by comparison with its EU neighbours, and in almost all of them a range of local taxes or service charges are accepted as normal.

The fairest and most efficient way of supplying services to people is if they are charged in proportion to usage. People will use water more efficiently and engage in recycling if the charging system encourages them to do so. If water and refuse services are paid for out of general taxation there is no incentive to use them prudently.

The thrust of the campaign against the charges by Sinn Féin and the hard left is mainly directed against the Labour Party but all Government TDs had better be prepared for a long fight. The reduction in the septic tank registration fee from €50 to €5 was a big mistake as it sent a signal that threats of non-compliance can work.

Fairness is an essential component of the tax system. If citizens conclude that the cheats are getting away with and not paying charges, then non-compliance is likely to spread.

Greece provides a stark example of the kind of problems that arise when a taxation system doesn’t work. A key reason that Ireland has managed to decouple itself from Greece as one of the “sick men of the EU” is that we have an income tax system that works and is fair. The top 5 per cent of income earners here pay 40 per cent of the tax, and that is as it should be.

In Greece the professional classes and the wealthy engage in tax evasion on a grand scale. The result is that the state has been bankrupted, a worrying level of political violence has developed and the very survival of democracy could be in question.

Our problems are of a different order, but politicians might make their task of getting to grips with them a bit easier if they focused on the problems facing the majority of decent citizens who try to pay their way rather than indulging those who can but won’t pay.