This is a quite wonderful intellectual world we inhabit. We engage in a reality of Thatcherite economics to the sound of virtuous babble from television studios fuming about the immorality of large incomes and at the failure of the Government to tax the rich to pay the poor. Such talk makes one feels so good; so the Conference of Religious of Ireland probably felt quite wonderful when it denounced the Budget as a triumph of greed over need which had consciously redistributed the benefits of economic growth to the better off.
This suggests there is some central cake which magically grows, and the Government says, "The poor will have this, but the rich will have that and that and that. In reality, we know there is no central cake, merely our own incomes, into which the Government makes raids. Usually, the higher the income, the more valuable the contribution to the economy. That is the rule of the marketplace.
High taxation
Nonetheless, we have seen repeatedly, here and in other economies, that ideologically-motivated high taxation of productive people to engineer economic equality (rather than to protect the weak and needy, which our social contract obliges us to do) is actually counter-productive: it penalises enterprise, stimulates avoidance or evasion of tax, and eventually causes recession. Result, the pauperisation of the people you were attempting to help in the first place. (There is a word for this wicked idiocy. It is France.)
How Charlie McCreevy must love being lectured by the heads of religious on the virtues of high taxation. I just wish he were sitting at the back of every church, ready to dip into the collection plate at the rate he dips into my collection plate. An example: for much television and radio work over several months, my fee from RTE recently was £5,115. I actually received £2,318.14.
Charlie got the rest. What would the nice people in CORI say if that sort of deduction was made from their collection plates?
So of course I enjoy enormously being told by religious orders that I should pay more tax, when often enough they are sitting on the largest and most valuable land-banks in the country. And if these fine people donate the proceeds of their astonishingly profitable land sales to the poor, they do so in such secrecy that nobody gets to hear about it. If sales of such land, bought by the pennies of our great-grandparents, were subject to the sort of taxes CORI urges Charlie to levy on the rest of us, we might just hear a little less pious vapouring from those whose experience of tax is largely confined to carpets.
Encouraging growth
Another defence of high taxation is that our economic boom proves that growth can accompany it. Wrong. The very reverse is the case. In order to encourage growth, finance ministers for the past decade have had to create special low-taxation reservations in which wealth-makers operate.
These low-tax reservations come in many guises, the most obvious being the low corporation tax for manufacturing industry. Such industry wouldn't move here if the executives who are going to run it were subject to the hilariously high taxation levels ordinary PAYE workers endure, so they are given special deals which entail substantial payments into their indigenous tax bases. Such payments are almost certainly illegal, but since without these executives our economy would probably resemble Albania's, there's a general agreement that it would do more harm than good to enforce the law.
And it is not merely a matter of turning a blind eye; there is also a consensus of silence on this matter, even though it involves the transfer of large amounts of money to distant bank-balances in other lands, and contracts which enjoin complete secrecy. Very sensible too.
But this is not the only area of low taxation. Successive ministers for finance have recognised the simple economic reality that investment simply will not occur if (a) high taxation prevents the would-be investor from generating enough capital to invest in the first place and (b) taxation on the income from that investment is so high that the investor gains no real benefit. In such an economic climate, money seeps either into more remunerative economies or into the publican's pocket.
Recognising the necessity for investors - rather than the Revenue Commissioners - being the beneficiaries of investment, governments introduced an entire range of tax-holidays on earnings from investment and on the original investment too. This alternative, no-to-low taxation economy has grown to such an extent that many well-paid and prudent PAYErs are able, by creative investment, to escape the tax-net completely.
Imaginative tax-breaks
Where are the most spectacular areas of growth? In computers, software, and in the designated zones of central Dublin, all of which are prospering in low-to-no taxation regimes. The capital city has been revitalised by imaginative use of tax-breaks (which were introduced by Charles Haughey, and were used most effectively by Zoe Developments: together they have been largely responsible for saving Dublin).
Simply, high taxation hinders economies, which are not, as we like to pretend, moral things, but engines. Tell an internal combustion engine it is greedy to want expensive petrol and it should get by on diesel, and your car stays in the garage. So listen to me, Charlie: ignore the begrudgers. But you dodged the big one.
Differential PRSI, in which most of the public service, which benefits most from State resources, gets off the lightest, is simply a scandal. Be brave next time. Tackle it. Otherwise, you done well, son.