Protecting the fat cats

By eirigi

The revised programme for government in the Twenty-Six Counties was supported by an overwhelming majority of Green Party members when put to a vote at that party’s recent special conference.

Green Party members dutifully signed up to a programme that rehashes much of the original programme agreed over two years ago but which offers nothing to the thousands who have lost their jobs over the last 12 months and face losing their homes.

The truth is the Greens need this government to serve out its full term; otherwise they face the same fate as Fianna Fail’s former junior coalition partners, the Progressive Democrats. Green Party members signed up for a deal that might offer their party a temporary stay of execution, but which condemns workers and their communities deeper into poverty.

The programme is strong on aspiration and short on detail. According to the opening lines of the agreement: “this is an unparalleled programme of reform in all areas of Government activity - in politics, economics and across our society. We will return this economy to a position of sustainable recovery. Never again will we find ourselves overly reliant on one sector or stream of revenue.”

Fine words, but they are utterly meaningless. If the Dublin government did not intend to once again attach our future to the vagary of the property market why, then, is O54 billion of tax-payers’ money being pumped into NAMA?

That there exists in the Twenty-Six Counties a deluded, deceitful and utterly incompetent government was reaffirmed just days after the publication of this document when minister of finance Brian Lenihan, with a straight face, announced in Leinster House that NAMA will, in fact, turn a profit of O5 billion.

Loans being taken on by NAMA include the former site of the Irish Glass Bottle factory in Ringsend, Dublin, bought at the height of the property madness by Bernard McNamara, a former Fianna Fail councillor and a regular at Fianna Fail’s annual Galway tent jamboree, for O413 million. Last week, it was valued at O60 million, representing an 85 per cent drop in value. In these circumstances, it is difficult to see how Lenihan came to his conclusion.

That such a vast sum of tax-payers’ money is being gambled on the property market suggests that, far from learning any lessons of the Celtic Tiger property-fest, the Twenty-Six County government is intent on hitching the future of the economy inextricably to the private property market.

In relation to taxation, the programme states that “taxation will be simpler, fairer and have a redistributive effect”. There is no detail as to how it will, in future, be fairer and redistributive.

After all, Dublin government spokespeople have been at pains to emphasise that the focus of the forthcoming December budget will be cuts to public services rather than an increase in taxes. This programme confirms that position and will obviously be of some comfort to the coalition’s allies in IBEC.

Indeed, egalitarian speak of redistribution of wealth is nullified just a couple of pages later. The business class will be content to read that their interests are being protected with a guarantee that the shockingly low level of taxation will be maintained: “the multinational community will continue to be incentivised to intensify innovative, high-value activity and technological convergence which will provide quality jobs. We recognise the vital role played by low taxes in our economic success. We guarantee that the 12.5% rate of corporation tax will remain.”

So, while the ordinary tax payer and those reliant on public services are left wondering how they will cope come December when Lenihan intends taking a hatchet to the public sector, the business class is given absolute guarantees about taxation rates. At a Dublin Chamber of Commerce event last Thursday [October 15], Lenihan was the main guest and used the occasion to send a message to the wider public that further pain lies ahead. There is little comfort to be taken from his assertion that “we are all in this together”.

Another guest speaker at the Chamber of Commerce dinner was tax exile Denis O’Brien, a man who certainly won’t be making any contribution to the common good. O’Brien bemoaned the media treatment of Dublin government ministers who had been exposed for their profligate use of tax-payers’ money.

The resignation of John O’Donoghue upset the cosy boys’ network that has existed for so long in Leinster House; it made O’Brien a tad queasy; it was, he suggested, like “witnessing human hare coursing”. That government ministers have been belatedly held to account for their extravagant expenses offends O’Brien’s sensibilities. Considering the fact that he pays no income tax in the Twenty-Six County state, it is little wonder he’s not too bothered how it is spent.

O’Brien also likes to avail of the 12.5 per cent corporate tax on offer in the Twenty-Six Counties. His aircraft leasing company, Aergo, which has a head office address in Dublin but actually operates in Johannesburg, Chile and Nairobi, last week filed after-tax profits of US$15 million (O10 million; #9.1 million). Essentially, Aergo is a shelf company.

The purpose of this little arrangement is so that he can avail of the ridiculously low level of corporation tax in the Twenty-Six Counties. Tax on profits in the United States is set at 35 per cent; this is almost three times the 12.5 per cent rate in the Twenty-Six Counties.

O’Brien is not alone in his astounding arrogance; it seems to be a particular trait amongst Ireland’s ruling class. The CEO of the Health Service Executive, Brendan Drumm, pocketed a bonus of O70,000 (#63,775), which is almost twice the average wage. He is paid an annual salary in excess of O300,000 (#273,355). Meanwhile, the health service remains chronically under-funded and beds in Crumlin Children’s hospital are being closed.

Prior to their elevation to the lofty heights of government, the Greens used to be stringent in the condemnation of the inequalities in the Twenty-Six Counties. Those inequalities were a direct result of the low tax system in the state. One doesn’t have to be an economist to figure out that low taxes mean less money for public services. Low tax on profits, coupled with ‘wage restraint’ for workers, means greater wealth inequality.

Over the course of the Celtic Tiger, company profits far outstripped any rise in wages. Public spending in Twenty-Six Counties lagged far behind other EU states. In 2007, public spending was just 26 per cent of GDP; the United States, a country hardly renowned for its comprehensive provision of services, has, over the last 20 years, spent between 34 and 38 per cent. Bizarrely, the ‘new’ Programme for Government “recognises the vital role played by low taxes in our economic success”. Those who benefited from the low tax regime are the same people who are benefiting from the NAMA bail out and fat cat tax exiles such as Denis O’Brien.

Another proposal cooked up by the Fianna Fail/Green alliance is the imposition of domestic water charges. This is simply another form of regressive taxation that does absolutely nothing to preserve water. Domestic users account for just 10 per cent of total water usage in the Twenty-Six Counties and leakage from old pipes continues to be a considerable problem. While the Greens are proposing to install water meters in every house in the state, the failure of their Fianna Fail partners to insist on the installation of dual flush toilets during the house building frenzy means huge water wastage.

Households in the Twenty-Six Counties already pay for the provision of essential services such as water and sanitation through income tax. Imposing an additional domestic water charge further places the tax burden upon those least able to pay. The Water Services Act 2007 already makes provision for the private sector in the delivery of water services. During the course of the debate on the Act, the then minister of the environment Dick Roche denied that the long-term purpose of the Act was to facilitate the introduction of domestic water charges: “I stress that the Bill before the House does not provide for or facilitate the re-introduction of domestic water charges,” he said.

During the course of the debate Roche had his George Bush Snr ‘read my lips’ moment when he asserted, “I repeat that the Bill is not a Trojan horse for domestic charges.” We have learned to treat the promises of Fianna Fail Ministers with the contempt they deserve. It is likely that the long term plan is to privatise the service. For all of these reasons, attempts to impose water charges must be vigorously opposed.

The ‘new’ programme for government is simply more of the same. Workers are being forced to take the burden so that people like Denis O’Brien can continue to live in their tax exile status and avail of low corporate taxation. Trade unions have called a day of action for November 6. A maximum turn-out is essential. Enough is enough.

Urgent Appeal