Covid and income taxes

 

Sir, – Fiona Reddan asks if income taxes will have to rise to pay for the Covid-19 crisis ( Business, December 2nd).

The Minister for Finance has warned that reducing the budget deficit will become more important next year and that “difficult choices” will be required to repair the public finances (News, October 24th).

Tax increases may be the dog that didn’t bark in the last budget but it could be heard clearing its throat. New taxes and levies usually take effect from budget night or from the following January 1st. Unusually this year we have been given, silently and without fanfare, perhaps a year’s notice.

We are all Keynesians now and I’m not aware of any serious opposition to the idea that, at a time when consumers can’t or won’t spend, the Government should take up the slack and borrow whatever is necessary. That we are doing to finance capital expenditure programmes and what we must hope are once-off current expenditures demanded by the pandemic.

As to the latter, anyone who expects the HSE to cut its budget by billions when we have beaten Covid hasn’t been paying attention.

But, looking beyond the next year or two, I think the most striking feature of Budget 2021 is the huge commitment to new current expenditures which have little or nothing to do with Covid but which will endure beyond the lifetime of anyone reading this letter.

It is not my point to argue against the recruitment of thousands of additional staff in health care, education and policing. Rather it is to note that in any other year we might reasonably expect the two relevant Ministers to drop at least a hint as to how they will be paid for. But this year that merited hardly a mention as these non-Covid expenditures were slipped through under cover of Covid.

When we return to the real world it will be accepted, as the Minister for Finance points out, that these expenditures cannot continue to be financed from borrowing.

An alternative would be cutting useless or wasteful expenditures elsewhere in our enormous State sector. But this will not get serious attention – our politicians and senior public servants find it easy to spend taxpayers’ money but difficult or merely unpalatable to cut out waste.

That leaves taxation. The usual suspects on middle and high incomes should fasten their seatbelts. – Yours, etc,

PAT O’BRIEN,

Mooncoin,

Co Kilkenny.