Sir, - The proposed new tax rate for middle-income earners (The Irish Times, July 16th) raises two issues. First, it will be regressive. A new tax rate aimed at earners of £30,000 to £50,000 will not assist anyone below that amount and will benefit those on the highest incomes. It is difficult to see what equity this will produce, given the Government's intention to reduce both the standard and higher tax rates which will disproportionately benefit those on higher incomes.
No one can doubt the necessity to reform the tax system. Unfortunately, equity and reform have given way to bald demands for crude tax cuts. Last year a number of trade unions, including the ATGWU and MSF, called for a new low tax rate of 10 per cent combined with a radical extension of the standard rate tax band. We also called for an extension of the tax base to those groups who were underpaying tax, either through the use of regressive allowances and reliefs, or simply through evasion. This is the meaning of tax reform - the extension of the tax base to pay for relieving the inequitable burden on low and average incomes. Furthermore, tax reform is necessary to maintain an appropriate level of Government revenue.
And this raises the second issue - how to use the fruits of our economic growth? We are already one of the lowest taxed economies in the EU. What is the benefit of a few more pounds a week in our pockets (more for the wealthier pockets, of course) when we spend more time in traffic congestion, can't find creche space for our children, wait months and sometimes years for a medical operation, legal aid or a house? What is the benefit of tax give-aways for those living within, as the UN reminded us yet again, the highest level of poverty in the EU? How is this going to modernise our out-of-date infrastructures or create investment in our under-funded primary school system? The answer is it won't. - Yours, etc., Michael O'Reilly,
Regional Secretary, Amalgamated Transport and General Workers Union, Dublin 1.