Tax equality not just cuts
BY ROBBIE MacGABHANN
Mary Harney wants to cut tax rates, by 2% on the 44% and 22% rates. Bertie Ahern wants to widen tax bands and increase allowances while leaving tax rates unchanged. The European Central Bank wants the Dublin Government not to cut taxes at all.
The flurry of pronouncements on tax this week is a getting a bit like Christmas. You know a budget is coming by the scale of leaks from various sections of the government about tax cuts, and like Christmas, they get earlier every year.
All of the years Fianna Fáil were in power during the 1990s were characterised by massive tax cuts for high earners and the wealthy minority in society
A clear difference has emerged between the Fianna Fáil and Progressive Democrat coalition partners. PD leader Mary Harney wants to cut both the higher and lower rates of tax. While this would benefit most workers, those on high wages will benefit far greater in sheer money terms than the low paid.
Bertie Ahern's proposal to widen tax bands and increase allowances is a much more egalitarian and welcome step. It is also a unique step for Fianna Fáil to take because all of the years Fianna Fáil were in power during the 1990s were characterised by massive tax cuts for high earners and the wealthy minority in society.
Ahern has now decided that his priority is to remove the low paid from the tax net. This is an interesting position because this has been the advice from the Economic and Social Research Institute (ESRI), Combat Poverty, the Irish National Organisation for the Unemployed (INOU), the Conference of Religious in Ireland (CORI) and others for the last four years.
This week CORI has produced a report that shows ``reducing tax rates would ``substantially widen the enormous gap that already exists and worsen an already unacceptable situation''.
CORI proposes increase the tax allowances and widen the bands at which people pay tax. A widening of the 22% tax band would take many families out of the higher tax rate category.
We won't find out until December if Bertie Ahern has finally decided to take the first steps to putting equity at the heart of tax system. First though, he has to break the news to not only Mary Harney but also Finance minister Charlie McCreevy as well. They have to decide if they want a budget that could start to create tax equality rather than just tax cuts for the wealthy. Watch this space.