Why half of Irish people are willing to pay more taxes

Fifty-five per cent of us support a maximum wage to cap the amounts paid to high earners

Most people want Ireland to be more equal, and they want this to be achieved by boosting the minimum wage, capping high pay, raising taxes and providing a wider range of high-quality public services, according to a recent survey.

The survey – commissioned by the Think-tank for Action on Social Change (Tasc) and carried out by research company Behaviour & Attitudes – found that the majority (83 per cent) felt that income in Ireland was unfairly distributed, with close to half (46 per cent) believing it was “very unfairly distributed”. This was when they were asked the question out of context. When informed that the incomes of the top 10 per cent were, on average, seven and a half times greater than those at the lowest level, 88 per cent felt income was unfairly distributed.

This sentiment is close to the pulse, as Ireland is the most unequal among all members of the Organisation for Economic Cooperation and Development when it comes to incomes from work and investments. However, taxes and social transfers – in the form of social welfare payments and public services, such as health and education – reduce income inequality to lower than the EU average, a factor that shows the importance of maintaining both tax levels and public services.

Economics has always been about who gets what, when and how, and there is now persuasive evidence that our wellbeing as a society depends on our level of equality. More equal countries do better on a whole range of social issues, with lower crime rates, better health outcomes and more cohesive societies.

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Now, in the aftermath of the global economic crisis, inequality has become an important focus for understanding how economies can do better. The World Bank, the IMF, the OECD and financial institutions are becoming increasingly concerned that the concentration of income and wealth in fewer hands is damaging the potential of many countries.

Yet measures to reduce inequality – such as progressive taxation, minimum wages and strong public services – have been under attack across the developed world for many years. As a result, the share of income and wealth held by the top 10 per cent, and particularly the top 1 per cent, has been rising in most developed countries, including Ireland. This is not only damaging to our economy and our society but goes against the tide of public sentiment as revealed in this survey, a nationally representative study of 1,000 adults aged 16-plus, conducted between October 27th and November 5th.

Active steps

People in Ireland strongly believe that the Government should take active steps to address economic inequality. More than 90 per cent are in favour of either increasing the statutory minimum wage, establishing a maximum wage, or both, with only 7 per cent opting for neither of these measures. Compared to 2010, when the same question was asked, there was a rise in support for increasing the minimum wage from 65 per cent to 84 per cent .

This may reflect the fact that the €8.65 minimum wage is no longer linked to average wages, and remains at the same level as 2006. It might also indicate a growing awareness that the minimum wage is not the same as a living wage. In Ireland, a “living wage”, which would enable a single person to have a minimum but decent standard of living based on full-time work, has been calculated at €11.45 an hour for a 39-hour week. The problems faced by many workers on the current minimum wage are made worse by the reality that many of them are not given full-time hours on a regular basis, yet are not always eligible for State income supports.

Another key finding in the recent survey is that the majority of people (55 per cent) support the establishment of a maximum wage to cap the amounts paid to high earners. The idea of a maximum wage is gaining serious attention elsewhere, too. For example, Switzerland passed a referendum last year – with 68 per cent in favour – that imposed some of the world’s strictest rules on executive pay. It gave shareholders a veto over salaries and forbade golden-handshake payments to departing managers.

Top tax rates In relation to tax, nearly two-thirds of Irish people (63 per cent

) are in favour of a top rate of 60 per cent (combining income tax, USC and social insurance) on that part of income in excess of €100,000 per year. This finding reflects similar sentiments elsewhere. For example, shareholders in Switzerland and elsewhere have been frustrated by extremely high payments to bankers who played a lead role in the global financial crash of 2008.

Sceptics will point out that of course people want the Government to intervene to reduce inequality and provide better services, as long as this doesn’t affect them. The focus on tax cuts in the recent Budget and the vocal opposition to water charges are presented as evidence of this.

But the survey finds that people are willing to contribute to making Ireland a more equal country. Half of respondents indicated that they would be in favour of “paying more taxes” themselves if guaranteed high-quality public services or new services, such as pre-school education or social housing. This is a significant increase on the 35 per cent who were willing to pay more taxes in 2010.

What all of this demonstrates is that there is a strong constituency in favour of a more balanced economic model for Ireland, not just one based on tax cuts and reduced solidarity, but one founded on the provision of quality public services for all.

Nat O’Connor is research director with the Think-tank for Action on Social Change (Tasc); see tasc.ie