With cuts affecting children and the elderly, acceptance of higher taxes may be growing, writes Breda O'Brien
GIVING THE medical card in the first place to all over-70s was a cheap political stunt. However, it had unexpected benefits, including the fact that many elderly people were being diagnosed earlier and therefore had a better hope of an improved quality of life. More importantly, the medical card automatically linked the person with a network of services, everything from physiotherapy to chiropody.
Nonetheless, it was disturbing to watch elderly people booing and refusing to listen to elected representatives. No doubt many were genuinely frightened and resolved to let the Government know they could not be pushed around, but the country is in deep trouble. Unless we can continue to act with civility even when passionately angry, we will be in even deeper trouble. Of course, the Government must take responsibility for the damage done to voters' trust in them.
For example, education cuts must be the most regressive way to save money. Every cent spent on education is an investment in the future. Paul Gogarty, the Green TD, suggested ways in the Dáil where alternative sources of funding could be found, everything from increasing the charges on ATM cards to increasing the levy on incomes over €200,000. Despite the anger of the teacher unions, parents and the 21,000 volunteers who run our primary schools, reversing the education cuts will be strongly resisted by the Government. It has already had to row back on medical cards and change the terms of the income levy. If it starts unpicking cuts in education, the Budget will have been a failure, and its very survival will be in question.
Perhaps it is time to rethink the entire way we fund public services. Perhaps it is time to think of higher levels of taxation. Most politicians would run screaming from the idea, with vivid memories of the tax marches of the 1980s playing in widescreen in their minds.
It is true that we Irish hate tax. We talk about the "tax burden" as if by definition it represents an imposition. In Ireland we take for granted access to housing, healthcare, education and social welfare for granted. Yet we have also wanted champagne services on a beer taxation system. It has not been helped by a decade of propaganda from right-wing commentators.
Perhaps it is time to grow up. The arguments against higher taxation usually suggest that it is a disincentive to work. Punitive tax rates certainly are. However, we have had a decade or more of unusually low tax rates, and it would take quite significant rises before we would begin to encounter disincentives to work. A more valid objection might be that many in the middle class are already put to the pin of their collar to pay mortgages, childcare and the rising costs of fuel and everyday staples.
Yet acceptance of the need for higher taxation may be growing. It was heartening to hear a recurring refrain from ordinary people that they did not want the elderly and children to be the target of cutbacks. People have already begun to say that they would prefer to pay higher taxes than see children in overcrowded classrooms, without adequate books or other facilities, and sometimes without even a teacher if the substitution arrangements are not reversed.
Had Fianna Fáil had the vision to prepare the way carefully, this Budget would have been an ideal time to launch a carbon levy. In other words, slap tax on fossil fuels so as to discourage their use. As Comhar, the sustainable development council, pointed out recently, EU directives tie us to reducing emissions dramatically or paying an enormous price if we don't. Comhar says that research shows targeted use of carbon tax revenues could spur growth in GNP, increase employment and increase investment in energy-efficient technologies.
In a previous column, I suggested that revenue from a carbon levy could be first used to cushion the blow for the poor who already cannot afford fuel, and then to decrease payroll taxes. The financial situation has deteriorated rapidly since then.
The first aim remains valid, but now any increase in revenue should be earmarked for public services such as health, education and public transport.
At the moment, Fianna Fáil, and indeed virtually all the Opposition parties, seem to see environmental threats as issues you attend to when the economy gets back on its feet. The grim reality is that the economy will never get back on its feet if we do not address this now. The credit crunch will appear like a teddy-bears' picnic in comparison to the devastation caused by failing to address climate change.
The Commission on Taxation will report in 2009. We may need a mini-budget to raise income tax for those of us in higher wage brackets just to stay afloat. The next year should also be used to prepare the way for paying a relatively high carbon tax.
It will only be accepted by people if they believe at a gut level that it will not only help to ensure our future, but make us more economically competitive while also funding essential services. Leadership, vision and trust were never more required, although, sadly, they never seemed in shorter supply.