June 2006 Archives

Tax, Property & Tribunals

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A few themes have emerged in recent days.

Firstly, the failure of the Government to address findings of the Oireachas report on private property and land prices as eloquently explained by James Pike (27th June). In effect, the Government has presided over a housing land grab by speculators which has contributed hugely to the surge in house prices and has resulted in an additional debt burden on hundreds of thousands of voters for decades to come. It is not too late for the Government to take concrete action on this before the next election. However, if it only becomes an election promise, nobody will believe it.

Secondly, the axiom that the more people earn the more taxes they pay clearly does not apply to Ireland. Instead, millionaire earners can hide behind Government-inspired tax shelters and avoid tax while Sean Citizen pays the full whack. To add insult to injury, Sean has to compete in the housing market with investors whose purchases are being part-funded by his taxes. From a national viewpoint, this  taxpayer-subsidised property bonanza has enabled many investors to use their tax-relieved gains to leverage massive investments abroad which bring absolutely no benefit back to the nation. Why should someone earning €50,000 pay tax at 42% while an earner of €250,000 might only pay at 20% on income and capital gains? Surely, a top rate of tax should do what it says on the tin. If all personal tax allowances are eliminated, a new top rate of, say, 35% on income and capital might give the same return to the Exchequer as the present inequitable regime. If individuals wish to make investments, let them do it through companies where the tax rate is only 12.5% and let the distributions be taxed at the standard rate.

Thirdly, the tribunals trundle along on a wave of perjury and forgetfulness. In any other civilised country, the full weight of the law would be thrown at these issues and instead of "slaps on the wrist" we'd see guilty people making "perp walks" and enjoying State-funded hospitality. If the authorities lack resources and expertise, they could seek support from the prosecuting teams used in recent high-profile financial trials in the US. Where is the anti-corruption agency promised years ago by the Taoiseach and where is the long overdue legislation to protect whistle blowers? Probably being dusted off as election promises (again).

What is common to these themes is a complete failure of Government to govern fairly. Instead, it has pursued a policy of making the wealthy richer and ignored the fact that, as Fianna Fail backbenchers are belatedly discovering, the rich account for few votes.

Lead letter was published in the Irish Times on 30th June 2006.

Property Prices

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Do the estate agents selling their businesses and the banks selling their properties know something their customers don't?

Privatisation of Hospitals

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Following Susan Mitchells' article (11th June) about plans for eleven co-located private hospitals, it is clear, but not surprising, that the Government has learnt nothing from the ongoing decentalisation debacle. While decentalisation could be disruptive to thousands of public servants and families and to the operation of relocated departments, the roll-out of these private hospitals is potentially far more serious.

At a time when inequitable property tax breaks are being closed off, a new break for hospitals is being ramped up. This will result in the State losing taxes equivalent to 48% of the cost of developments. In addition, it will have to give away prime sites, be obliged to pay full commercial fees to use the facilities and have no ownership or managerial rights notwithstanding having contributed almost half the total capital cost. How can this be remotely described as either progress or value for money? It is patently clear that co-locating private and public hospitals is like trying to mix oil and water. It will give rise to fragmentation, duplication and staffing and operational problems on a huge scale and, most critically, drive an even deeper wedge into our inequitable health service.

Based on your report, many key bodies have reservations or are outrightly opposed to the proposals and the only people in favour seem to be the Tanaiste, consultants, builders and investors.  As the proposals seem to driven by ideology and profit and are being pursued without any popular mandate or genuine debate, the major political parties should pledge to unwind them and the Dail should ensure that no binding commitments are entered into ahead of the next election and a comprehensive review. If, in the meantime, the Minister and HSE have the luxury of surplus resources and energy to pursue these risky and unproven ideas, they should be immediately redeployed to provide more public hospital beds, improve services and develop a more unified health service.

Letter published in the Sunday Business Post on 19th June 2006.

Benchmarking Data

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The CSO's recently published National Employment Survey found that average public sector pay was 40% ahead of private sector pay back in 2003. As this survey was completed before benchmarking increases averaging 9% started to take effect, the implication is that average pay could now be about 50% higher for the public sector than for private sector. This is on top of secure employment and underfunded, earnings-related pensions.

The survey findings, even after taking account of undoubted differences in education and experience, undermine the first benchmarking exercise which, based on unpublished studies, has already resulted in mutli-billion euro handouts to the public sector.  Will the second benchmarking exercise roll back these unjustified pay increases and restore equity between the public and private sectors or will it just further widen the gap?

Letter published in the Sunday Business Post on 4th June 2006.

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