Two-tier Ireland - Tax, childcare and education policies favour the rich

BY ROBBIE SMYTH

So which Ireland do you live in? Are you a single male with parents from a professional family or just a high income earner? Well then, the chances are that you can benefit from living in the better of the two Irelands on this island today. However, if you are a woman, married with children, you might have to settle for a considerably less comfortable existence.

The recent week's news coverage of the Meath and North Kildare by-elections highlighted this other Ireland. News bulletins, constituency round ups and radio talk shows reported daily the reality of long travel to work times because of a failure to invest in road infrastructure and public transport, meaning that children are being dropped in crèches at 6am, as both parents work long hours to pay mortgages on overpriced houses and the highest childcare cost in the EU.

The scale of the difference between these two Irelands has been highlighted in the past week in reports and surveys on childcare, taxation and third level college access figures.

The cost of a child

Irish childcare costs are the highest in Europe, according to a report published by the Forum on the Workplace of the Future, which also concluded that these costs are keeping women out of the workplace.

Irish parents are spending double the EU average on paying for childcare. The cost is on average nearly 20% of annual income, compared to an EU average of 12%.

The Forum report also found that women are paid lower wages on average to men and that, surprise surprise, Irish women workers are very much under-represented in managerial positions. In addition, the forum report found that women with education and skills are seriously underutilised in the workforce

The 26-County state was ranked last of the 15 pre-enlargement EU states in terms of government supports for working parents.

So which states came top for child support? It was, of course, those nasty high tax economies like Denmark, Sweden and Finland, which are also some of the most competitive economies in the world.

Tax Free Millionaires

Before we begin a debate about what sort of childcare strategy the state should implement to deal with this problem, there is the question of where the money will come from, and this raises the issue of tax.

Two reports, from the OECD and the Revenue Commissioners, revealed the extent of low tax policies in the 26 Counties and why maybe we don't have the money for roads, public transport, childcare, education, etc.

The OECD found that some Irish workers pay the lowest income tax and social insurance contributions among industrialised economies. Germany was among the highest.

An Irish Revenue Commissioners study of high income earners found that 29 of the state's top earners paid no tax in 2001 and more than 100 used property-based tax breaks to legitimately avoid paying income tax. The 115 top earners claimed property tax relief of €42 million last year.

Each member of this elite group earned more than €500,000 each last year but paid an effective tax rate of 30%, which brings us back nicely to the commuter voters of Meath and Kildare, many of whom are living outside of Dublin because they can't afford the high property prices in the capital.

These taxpayers do not qualify for the lucrative tax reliefs available to the car park, hotel and nursing home builders in the city. They cannot claim tax relief on the extraordinarily high childcare costs they incur either.

Worse still, if an employer actually did provide childcare or seek to subsidise the costs, it would be taxed as benefit in kind. How's that for equality in the tax system!

Educational Inequality

The question of equality or the lack thereof was shown in a report from the Higher Education Authority (HEA) last week. Despite increases in the number of people attending third level colleges and despite eight years of free fees, there is still huge inequality in access to third level education in the 26 Counties.

The HEA survey studies college entry data for 2003. Most telling are the trends for educational access in Dublin. There has been some marginal increase in numbers from low income and poor households but numbers are still hugely disproportionate compared to the participation rates of wealthier households. Only one in five school leavers went on to third level from Dublin 1, 22, 20, 17 and 10, compared to high participation rates in Dublin 14, 18, 6, 3, 15 and 4.

Dublin as a whole has, at 45%, one of the lowest levels of third level participation, compared to a high of 75% in Leitrim.

The report also found that though the highest social class of professional workers account for 8.8% of the population, they make up 14.5% of new college entrants. The children of low skilled workers make up only 2.5% of the new college entrants, even though they account for 4.8% of the population. Similarly, the children of other non-manual workers are also under-represented in the numbers of new college entrants, as were the children of unemployed parents.

What the HEA report shows is that free fees have provided a nice subsidy for the wealthy in Irish society, who also pay less tax, live in the more affluent areas of Dublin and don't have to sit in a car for hours a day.

Ever get the feeling you were being taken for a ride? In this state, it's bound to be a long, slow one.