TAX AND THE CELTIC TIGER
Sir, - I read with interest the comments by the business and economic correspondents on the prospects for a so called giveaway budget" which simply translated means that the Minister for Finance will continue to take more of the hard pressed PAYE sector's wages in 1997, but not as much if he did not make some tax adjustments.
The reality is that tax adjustments are made in every budget. However the tax take by Government from the PAYE sector continues to rise each year ahead of inflation, resulting in the PAYE sector paying up to 86 per cent of the national tax take and over the past number of years paying more to the State than budgeted for.
Over the past ten years Government has made it a condition of tax adjustments to the PAYE sector that workers accept low wage increases as a condition for tax concessions, the threat being that if workers ask for more of their employers that Government will step in and take it back through extra taxation. Bottom line workers in the PAYE sector lose.
With the exception of the PAYE worker who pays 86 per cent of the tax take, no other section of the economy - farmers, self-employed, managerial and directors' salaries are restricted to the tax for wage trade off. With growth rates of 6 per cent in the economy the benefits of the economic boom or the so called Celtic Tiger is not going to the PAYE workers who are making a significant contribution to the economic success which has given rise to an uneven spread of our new found wealth. Yet everything which has gone wrong, from the beef fine, the tax amnesty and BSE crisis, has been paid for by the PAYE sector.
The general economic statistics tell an interesting story. Government despite all its lecturing to the PAYE sector on pay moderation requires a 6 per cent annual increase in its own budget to maintain spending. The number of low paid workers in our economy is growing as fast as the economic boom mostly concentrated in the service sector and amongst women. The number below the poverty line in Irish society has increased over the past ten years from 31 per cent to 35 per cent.
At a recent discussion on low pay a speaker observed that "tax adjustments mean nothing if you are unemployed and a low percentage wage increase for a low paid worker equally has no value". Either way those excluded by unemployment or low pay are losing out in our new found success.
So journalists, when you are exercising your right of informed comment, please call a spade a spade. More to the Government does not mean "a giveaway to the PAYE worker". Please bear in mind that you will never get rich or require a tax amnesty if you are a PAYE worker. - Yours, etc.,