Real tax reform should top coalition agenda

     
Real tax reform must have at its heart a commitment to the principle of equity where everyone who earns an income from whatever source should be taxed on all their earnings.
A giveaway budget, a tax cutting budget, a pre-election budget - what about a fair and equitable budget that caters for all sectors of the economy and doesn't just pander to the corporate sector while throwing small crumbs to the overtaxed workers and piecemeal gestures to those dependent on social welfare payments?

Cuts in corporation tax, PRSI, the standard rate of PAYE tax and increases in tax free allowances were all announced by Ruairi Quinn. He delivered the promised £490 million ``giveaway''. However, this pales considerably when you consider the £850 million that AIB were able to pay for their new US retail banking acquisition. It pales further when you consider that Quinn was in fact announcing £13 billion of government spending for 1997.

Ruairi's fairytale


Quinn outlined yet again his policies of ``rewarding work, promoting enterprise and strengthening social solidarity''. He told us that the ``dynamic low inflation economy'' was ``a national and international success story'' which ``had the admiration of commentators abroad''. Here then was the essence of Quinn's economic fairytale.

Quinn's vision was of an Ireland creating ever greater levels of economic wealth, creating more jobs and fulfilling its destiny to join the EU single currency. Yes, there were social and economic problems but these were being contained, claimed Quinn.

Economic truth


The truth unmentioned by Quinn is that the 26-County economy is driven not by the successful application of his government's policy. It is in fact driven by the success of short run cyclical factors over which Ruairi Quinn has little real control.

We have one of the most open export-dependent economies in the world and the world economy is ever fickle and prone to decline. The goods the economy is currently exporting, particularly computer sector products, financial services as well food and drink products, are in high demand as the global economy pulls out of recession. Any length of a global economic downturn will gut our economy as it is consumption of these goods that will suffer in a recession.

The only real success - if you want to call it that - of recent governments is that no stone has been left unturned in the relentless campaign to make the 26 Counties a comfortable, profitable and easily escapable location for multinational companies.

Ruairi Quinn talked of the increase in jobs, in the role that small firms play and the IDA's record year of job creation. He did not mention that many of these small companies do not receive IDA funds, that nobody builds them forward factories. He did not mention the regional imbalances in recent years of economic growth, the forgotten border and north west areas. He did not mention the ongoing devastation of the rural economy which cannot support small farmers but can support and fuel the profits of multinational food processors

Inequitable tax burden


Much of what Ruairi Quinn did say was dominated by his swaggering proclamations about tax. The inequitable tax burden which falls disproportionately on PAYE workers has been a feature of the 26-County economy for decades. Why then did Minister Quinn announce the second cut in corporation tax in two years? Surely every possible effort should be made to equalise the rate of tax on income with that of tax rate on profits not to cut an already low corporation tax by 2%.

Cuts in the rates of PAYE will be greeted by workers. However, decreases in the rate of tax should not be confused with genuine tax reform. Real tax reform must have at its heart a commitment to the principle of equity where everyone who earns an income from whatever source should be taxed on all their earnings.

Ruairi Quinn might have done all he can to bolster Labour's sagging electoral chances. He has made some workers marginally better off, but tinkering with a system that propagates inequality that favours the multinational over the domestic, that ignores growing regional imbalances and the massively underdeveloped urban and suburban areas of our state means that he has failed all of us.


Wildcat rail stoppages


Two thirds of all Dublin's DART and suburban train services ground to a halt yesterday as train drivers took unofficial strike action in protest at CIE's planned £44 rationalisation plan. Some Dublin bus drivers and intercity drivers also took part in the protest.

CIE unions had planned a late morning protest on budget day with workers marching to Leinster House to hand in a letter of protest to Transport Minister Alan Dukes. Peter Bunting, General Secretary of the National Bus and Rail Union (NBRU) told An Phoblacht that the planned protest would have caused only reduced services for an hour or two during an off peak period.

Unfortunately, the union had been threatened with legal action under the 1990 Industrial Relations Act and had to call off the protest and tell the workers to attend work as normal. The result, according to Bunting, was that ``a vacuum had been created'' whereby workers were left with no legal avenue to protest and that CIE now had to contend with ``stoppages on a far greater scale than was initially envisaged under the planned two hour protest''.

Bank Hostage


Most of us have at some time felt hostage to the dictats of our banks so it comes as a welcome surprise to see the tables turned.

Last Friday 17 January, the Governor of Credit Foncier de France, Jerome Meyssonier, and seven of his directors had their board meeting interrupted when several hundred employees occupied the bank's Paris headquarters.

The workers have taken the governor and directors hostage in protest at plans to break up the banking group and cede it to one its commercial rivals making 1,800 of the 3,300 workers redundant. The bank, which provides low cost loans for house buyers, was set up in 1852 and though a private sector bank, is funded by the French Government. The bank has in recent years run up substantial losses but was in profit for 1996.

Workers have held out for a week now with hundreds staying in the bank's headquarters. They have brought provisions, bedding and in some cases, their children, to the occupation. The staff argue that it is previous management who caused the crisis at the bank and that the staff should not be made to pay. I wonder how well the board members of Irish banks slept this week.