Sir, - Media reaction to Charlie McCreevy's disappointing Budget has perpetuated major misconceptions about the nature of the taxation system. The Budget has been broadly welcomed on the basis that the Minister, through a substantial giveaway in the form of tax concessions, has put more money in the pockets of lower- and middle-income workers in particular.
However, the perception that ordinary people are overtaxed is mistaken. The reality is that they are underpaid and, with few real avenues to push for higher wages, the money lost in taxation seems ever more onerous.
The idea that money given through tax concessions will stay in the hands of ordinary workers is false. All that will happen is that real wages will gradually fall (or increase at a slower rate), either eaten away by inflation or bargained down in the face of a disadvantageous labour market. Mr McCreevy's tax breaks will merely act as a signal to employers that they can cut wages.
Anybody who doubts this need only look to the example of the United States, where, despite radical tax reductions throughout the 1980s in particular, living standards have remained almost stagnant since 1973. - Yours, etc., Damian Byrne,
Belvedere Place, Mountjoy Square, Dublin 1.