Taxation and expenditure policy choices
Sir, – Ireland continues to move upwards in the annual United Nations Human Development Index and is now ranked second. We have the most redistributive taxation and welfare system in the EU, according to the ESRI.
It cannot be argued that Ireland has anything other than very high personal taxation levels. And notwithstanding that it is absolutely appropriate to support people affected by income loss during the pandemic for as long as the pandemic continues, Ireland is now truly a welfare state and is increasingly becoming welfare dependent. The demands for new and additive welfare schemes and State-sponsored housing continue to grow. We can all presumably agree that it is a positive policy outcome that Ireland does more than any other EU country to reduce inequality, but Government expenditure this year will exceed €100 billion.
The personal tax payer – now a narrow base of citizens – has in all likelihood had enough of taxation, particularly those paying 52 per cent marginal tax on income and who increasingly feel that they are at the tipping point. With approximately five million citizens, we have about 0.5 million people paying the higher rate of income tax, while we have around 0.9 million workers exempt from income tax.
Ireland is becoming very comfortable with free and easy money, and your columnist Chris Johns wisely notes that “the era of free-and-easy government borrowing” may soon come to an end (“Era of free money could be coming to an end”, Business Opinion, February 28th).
Significant taxation and expenditure policy choices will be faced by politicians. The left will demand and promise even more and higher personal taxation (on higher incomes, wealth and capital), along with more State spending on welfare programmes. Those in the centre of the political spectrum, having introduced all the existing welfare programmes and State spending, know that we have reached the tipping point for many entrepreneurs, multinational managers and executives and domestic investors. Capital, talent and entrepreneurship are mobile – many will depart, with their businesses, ideas, income and capital, if policy choices push through the tipping point. – Yours, etc,