Budget decisions – spending and taxation

Keeping the show on the road

Sir, – I read with great interest the piece by Owen Reidy, the general secretary of the Irish Congress of Trade Unions (“The last thing Ireland’s booming economy needs is tax reduction”, Business, Opinion, September 18th). I was impressed that a litany of what might be described as economic orthodoxy was coming from the pen of a senior union official.

He writes that the time for tax cuts – if ever – is during a recession and not when the economy is operating with significant capacity constraints. The corporation tax yield is robust but potentially unsustainable and should not be used “to fund current spending increases or permanent tax cuts”. Our public finances need to deal with long-term challenges – our creaking infrastructure, climate change and increasing age-related expenditure.

A few thoughts occur.

The recession which followed the financial crash led not to tax reductions – the medicine suggested by Mr Reidy – but to a very significant increase in the tax burden of the 60 per cent of Irish income earners who pay taxes on income. We are now awash with tax revenues. Those paying very high levels of taxes on income in a time of plenty and hoping for some recognition of their contribution might well ask, “If not now, when?”


Mr Reidy cautions against current spending increases – after listing those he would like to see introduced – and against permanent tax cuts. I think he may have misplaced the word “permanent”.

As we all know, current spending increases are almost impossible to reverse. Taxpayers have seen to their cost that no such difficulty attends reversing tax cuts.

In itemising the current expenditures which he believes should be increased it was notable that there was no reference to public sector salaries. I have a shrewd suspicion that he is confident – and with good reason – that this argument has been won even before battle is joined.

Finally, he writes that Ictu sees the need to increase taxes to deal with our long-term challenges.

He sees the greatest scope to do this from employer and self-employed PRSI, a wealth tax, reforms to capital gains tax and capital acquisitions tax and the abolition of the Special Assignee Relief Programme and of entrepreneur tax incentives. It strikes me that few if any of these tax increases would have any impact on Mr Reidy’s members.

As ever, the call from the left is for the other fellow to pay more in taxes to keep the show on the road. – Yours, etc,



Dublin 6.

Sir, – The most tiresome aspect of the budget cycle is surely the pattern of left-wing opposition TDs (salary €107,000) and the CEOs of State-funded social justice NGOs (average salary €120,000) uniting to tell us, with straight faces, that workers earning the average wage of €45,000 don’t need tax cuts and should instead continue to pay tax at the higher rate so that public spending can continue to rise.

The latest to jump on this annual merry-go-round is Holly Cairns, leader of the Social Democrats, a party which claims to represent ordinary working people (News, September 14th).

Public spending is already completely out of control, having risen from €77 billion in 2019 to €102 billion this year, about 20 per cent more than it was at the height of the Celtic Tiger.

Perhaps Ms Cairns and others on six-figure public sector salaries can clarify: exactly what level does public spending have to reach before private sector workers should expect any kind of significant tax cuts? – Yours, etc,



Dublin 3.

Sir, – The proposal to reduce or abolish the USC is a deeply regressive initiative slickly marketed in the name of assisting hard-pressed working people.

The USC is one of the few social contributions that those who can pay clever accountants to help them avoid paying their fair share cannot escape.

If the Government is serious about assisting hard-pressed families they should use the revenue largesse currently available to them to subsidise the cost of childcare and other essential public services.

It is critically important to recognise the difference between fair taxation and cleverly camouflaged measures which are actually simply about gifting the rich. – Yours, etc,



Co Kildare.