Who will pay for missing millions? - Missing, $650 million lost by careless owners.

BY ROBBIE SMYTH

Inflation figures released by the Central Statistics Office (CSO) last week showed slowing price rises and an annual inflation rate of 3.1%. This gives the Dublin government another financial headache, with potentially serious consequences for the ordinary consumer and the PAYE worker. The problem is that there is in the economy this year an ever growing gap between tax revenue and government spending.

It is generally acknowledged that it is good that inflation is falling, especially as it kills the lie that wage rises were pushing up prices, however it also means that as prices in retail shops fall, so does VAT revenue.

Austin Hughes, chief economist with IIB Bank, believes that the falling inflation could take €150 million from annual tax revenue. Coming on top of Central Bank figures predicting a €500 million fall in tax revenue already this year, it leaves an ever greater gap to be filled, but by whom?

It clearly will be those with the weakest voice at the cabinet table, the ordinary working households who already pay the highest proportion of tax revenue in the 26 Counties.

Last December, in Charlie McCreevy's budget and the following Finance Bill, a range of stealth taxes were introduced that penalised workers and consumers proportionately more than business or the super rich, who pay little or no tax in the first place.

VAT and excise increased, the first-time buyer's grant was cut. Health and education costs increased. Water and refuse service charges grew by nearly 20%. The adjustment of tax bands for inflation was minimal, leaving most workers worse off in real terms. The one tax cut was for business profits.

In the current heatwave, it is hard to focus on the bleakness of December's budget day, but it is now that the Department of Finance is beginning budget planning. The lobby from the business community against carbon taxes is growing, so that closes one avenue. The cabinet are astute enough not to change income or business taxes, so it all goes back to the levies and charges to make up that €650 million.

So expect more increases in health and service charges, more VAT increases, higher education costs and once again, no consequences for the wealthy elite, who will still not be troubled to pay their way.