20 October 2005 Edition

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Low tax, low quality Ireland - O Caoláin highlights sweeteners that squandered millions


Labour leader Pat Rabbitte

Labour leader Pat Rabbitte

With the ninth budget from the Fianna Fail/PD coalition less than two months away, the government leak and spin machine is cranking up while those lobbying for changes in government spending are also upping gears.

It is now clear that successive Governments policies of cutting taxes and no transparency in public spending is damaging the economy.

In the budget leaks corner stand government plans for increased child benefit which possibly supplemented by tax breaks for parents paying crèche fees. Minister John O'Donoghue has publicly defended of artists tax exemptions. While both might have merit there is the danger that in coming weeks we get sucked into a leak-by-leak analysis of government policy without serious examination of tax and budget policies.

Sinn Féin Finance spokesperson Caoimhgin O Caolain TD highlighted one of these inconsistencies last week when he raised the €315 million in lost tax revenue because of Governments tax relief for seaside holiday homes. O Caolain described the scheme as a particularly "lucrative sweetener for the development and speculator community".

O Caoláin also said it was ironic that those criticising Sinn Féin's economic policies are the ones who "introduced and sustained these tax reliefs that have cost the Irish tax payer a fortune".

Labour leader Pat Rabbitte was a minister in the 1994 to '97 coalition that introduced the holiday home tax reliefs. This week he had a change of mind on tax policy, coming on board with a long standing Sinn Féin policy of rescinding Charlie McCreevy's halving of capital gains tax introduced in 1997.

In their pre-budget submission the Conference of Religious in Ireland (CORI) are seeking social welfare increases to tackle the situation of 900,000 people living in poverty. They say that in the EU only Lithuania collects less tax as a percentage of annual Gross Domestic Product (GDP) than the 26 Counties and propose increases in capital gains and tax on wealth, property and carbon taxes.

The right wing Organisation for Economic Co-operation and Development (OECD) annual tax revenue statistics has found that Scandinavian states continue to have the highest tax as a percentage of annual wealth. This is interesting as the World Economic Forum revently found the same states to be among the most competitive economies in the world.

The survey also found that OECD businesses are paying a larger share of total tax than at any other time since the 1960s, except Ireland where business taxes have been cut hugely in the last decade.

It said Ireland and Britain were unique as deriving all funding for local government from local property taxes (rates).

The World Economic Forum report cites the characteristics that make high-tax Nordic states so competitive as being: general agreement on spending priorities; transparent public institutions and that high taxes are not damaging business. This is a world away from modern Ireland.

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