Chapter 1: What are the big stories covered this week?
The Clare Byrne Show on Newstalk. With Aviva Insurance. You're very welcome to The Debrief. We're going to look back at some of the big stories of the week. And today I'm joined in the studio by Chief Economist with the Institute of International and European Affairs and columnist with TheCurrency.ie, Dan O'Brien.
Author and journalist Cailin Hogan is here with us and Chief Commissioner of the Irish Human Rights and Equality Commission, Liam Herrick. Thank you for being with us on this beautiful show. Friday.
But we're going to talk about income tax just in case people feel too great about the weather, because it does seem and all of the headlines told us that Fianna Fáil and Jack Chambers are very much in favour now of an income tax cut in the budget.
And I think that surprised a lot of people, given the couple of weeks that we have had and what's happening internationally, that there might be scope for income taxes beyond indexation in the budget. And Cailin, I might start with you on that one. Do you think that it is the right thing to do?
I mean, I think the government's only able to do this because this massive surplus they have. And I know at least one private landlord who's very happy about the idea of income tax. And we've seen in recent weeks Ireland's biggest corporate landlord, you know, thrilled about the rent reforms and the new profits they say they're going to be making.
I think the question for me is always, you know, who is this government serving? And this week we've seen a report that the rate of children in residential care has doubled in two years. I think we are repeating those systemic injustices.
This Sunday, there'll be a protest in Bessborough by survivors of the religious-run institutions against a private developer trying to build on grounds where there are likely hundreds of children buried in an unmarked grave. So again, I think profit is always prioritised by this government. But income tax cuts would surely benefit people who are on all sorts of incomes. It will.
And I'm sure, you know, it could be quite popular. But I think, you know, will it actually address the systemic inequality in this country? I think we have this unprecedented wealth and a government boasting about it, but people not really seeing the benefits. And I think that's creating a real social divide. And people most vulnerable in this country not, you know, getting more support.
They're not really seeing that wealth at all. People really struggling.
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Chapter 2: How is the government planning to address income tax cuts?
But is that not why the government would do this? because of that perceived inequality and because people don't see the benefit of the surplus, which we're now told will be at 9 billion.
Well, there are a lot of reports that say that our tax system actually prevents more income inequality in this country. And, you know, what about a real tax on vacant properties and enforcing that to address the housing crisis? You know, that is one of the reasons that people are really struggling to survive, the cost of rents.
And yet we see this government's reforms, you know, in some ways benefiting corporate landlords, benefiting, you know, people making vast profits off homes. And, you know, we have thousands of homes... remaining empty in this country during a housing crisis.
Liam, I'll come to you on this because there is a perception that this has been mooted to sort of address what happened with the fuel protests, this perception that people aren't feeling the benefit of how well Ireland is doing economically. Do you see that as being a logical way to go?
Tax cuts are always going to be popular at a superficial level. I mean, I was just reading during the week about in the States now there seems to be a race to the bottom, even from the Democrats and trying to almost abolish income tax in some parts.
But there's a contradiction, I think, between this talk about income tax coming from Jack Chamber and on the other hand, the Taoiseach making comments yesterday about structured financial help and targeted interventions for those that are most affected.
I mean, from our perspective, when we do surveys of the public on human rights and equality issues, cost of living is the number one concern for people. But the evidence would seem to be the targeted interventions to those that are most in need. Things like targeted welfare provisions, housing assistance.
If they're well designed and evidence based, they're more effective in terms of addressing the more acute needs. Now, we need a fair tax system and it's always an ongoing debate.
I think the other concern at the moment, though, is that we've moved now from kind of the credible space that we were in, where you've balanced medium term discussions about tax versus spend to kind of really reactive steps. Now, obviously, the response to the fuel protests, even before that, the hospitality VAT measure.
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Chapter 3: What are the implications of income tax cuts on social inequality?
18 years ago, Clare, personal taxes soared because we were in a serious crisis. That's fine. Have they ever been restored? No way. Has public pay been restored? Long ago. The American Tax Foundation finds that Ireland is the second most punitive system of personal taxation in the rich world. Let me just give an example.
Is that not for higher earners?
No, no. Is that across the board? No, no.
Because people on the lowest incomes don't pay income tax.
OK, so it ranks the whole system in terms of how it evaluates, how punitive systems are. But you're absolutely right. We've got a very unusual system here in Ireland that if you're on, say, 25, 30 grand, you pay almost no tax. But here's the kicker. After every euro you earn after 44,000, the government takes more of it than you do.
So anybody who gets a bonus who's on 44 plus, government takes more of it than the person who actually earns the money. If somebody – if you're a business person and you're taking another contract or you're taking on more work, you know that the government is going to take more of it than you do.
Now, 18 years of that, the only thing that surprises me is we haven't had protests demanding tax restoration many, many years ago because the money has been there to do it. The government spending is out of control. They don't get good value for money. People are paying all this tax. And what are they getting in return for it? They're finding government spends, spends, spends.
We get messages about the USC all the time because people were told that the USC was a temporary measure. Now, it was two things wrapped into one at the time. And then there was another bit thrown on top of it.
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Chapter 4: How does corporate landlord influence affect housing in Ireland?
And we are still living with it. It brings in five billion. What you're talking about, though, is the higher rate of income tax, isn't it?
Basically, whether it's PRSI, whether it's USC, whether it's income tax, they're just different names. They're all exactly the same thing. They are personal taxation. So people sort of fixating on USC, they really don't matter. The point is that once you get to 44,000... every single euro you earn over that if you're a single person, the government is taking more of it than you get to keep.
Now, in my view, that is absolutely an abomination. It was something that was brought in 18 years ago as an emergency measure.
Mm-hmm.
We are – the amount of increased expenditure the government has put in place over those years is staggering, highest in Europe. And we are still being taxed in a way that, you know, for people on just 44,000, very average income, very few countries in the world have a system where they take more than half of your money. In Ireland, we're having it at average incomes. It's insane.
Liam, do you want to come in there?
Well, I'm just wondering, you know, we were told that the reason we ended up in the crisis 20 years ago was because we had too narrow a tax base. And, you know, talking about focusing only on income tax to reduce it, I don't see the government coming forward with alternatives. You know, there's no real measures in terms of wealth tax.
We know that the corporate tax income is unstable and we need to pivot away from it. So if we want to have the discussion that Dan wants to have about reducing income tax, how are we going to have a broader tax base? And I defer to Dan's expertise on this, but we're looking at it from the perspective that we are one of the wealthiest countries in the world in terms of overall wealth.
But we have chronic problems of lack of investment in infrastructure and we have extreme poverty in certain parts of our society, very targeted parts. We have problems with child poverty. We have chronic problems for people with disability, for example. And we have, you know, real difficulties in parts of our cities and providing people being continuing education and so on.
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Chapter 5: What are the effects of income tax on the average citizen?
Are you saying that if there is a tax cut at that level, as Dan describes, you have to replace it with something?
Well, we have to broaden the tax base. I mean, I thought that was, we all agreed on that, but there's no real enthusiasm.
Liam, broadening the tax base is the number of taxes you have, the number of people who pay. I'm not talking about that. I'm talking about the amount people pay for every additional euro they earn that the government is taking more of it than they do. And that is profoundly unfair in my view.
But if we were to reduce income tax at a higher rate or into the bands, that money has to be replaced from somewhere.
Yeah. Listen to the fiscal watchdog. Every year, the government is spending more than it promises. It keeps ramping up spending, not just more than it should, but then there are budget overruns then during the year. If the government got its spending under control, it could give more, allow people to keep more of their own money.
I think we have one of the biggest divides in Europe between lowest earners and highest earners in this country. And there has to be a way to address that.
That's not true.
I think it is. I was looking at research yesterday. And, you know, I think it's an abomination that we have thousands of children homeless in this country when we have a huge surplus and unprecedented wealth. And, you know, I make under 30 grand. I pay some amount of tax for sure. But, you know... How do we address that inequality?
You have people making huge numbers of money in this country and people who are struggling to keep a roof over their heads. So there has to be a way to address that and to equalise that some way in our society.
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Chapter 6: How does the government’s spending impact public services?
I think there are two problems with public spending. For most of people in the public sector and most public sector bodies, the system now around estimates and budgets is incredibly detailed. It's very thorough. It's very careful about every penny that you spend. And then on the other hand, there seems to be decisions that are made outside of the rules.
So, for example, the response to the fuel protests, but also large infrastructure projects.
So you know all the boxes you have to take in your daily life and then you see a half a billion package signed off on a Sunday night.
And if spending doesn't come in exactly on budget, there are penalties and there are real repercussions. But there are other parts then where that's not followed through. And I think that's the difficulty. It's not that public sector spending generally is problematic. There are some areas where it's very tightly marshaled and there are other areas where it isn't.
And I think that's a real question for the governance and the rules within the system. What's happened over the last couple of weeks, I think, has undermined credibility and public trust.
If, you know, for example, Eoin Reedy from the Congress is saying that, you know, we've been told to go through negotiations, go through a public pay process where there's going to be discussions about small percentage increases. And then we see 750 million pulled out of nowhere. because people shut the country down for a couple of weeks.
How do you have a reasoned adult conversation about public sector pay on one hand for people who really need it and the cost of living is going up when you see a massive gesture towards one sector because they shut down the country?
Well, just the final thing to say, you know, we've been with this for 18 years. The sort of arguments that are being made here is that until we reach utopia, then we can have no tax cuts. So which is we'll never have tax cuts. That's effectively the argument my fellow panellists are making. And I just don't agree with that.
We are extremely highly taxed in this country at very low levels of income relative to other countries. That was supposed to be an emergency measure 18 years ago. It needs to be restored to where taxes were in 07.
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Chapter 7: Are ticket prices for events becoming unaffordable for the public?
And keeping, you know, the health sector, every year public spending on health not only is increased but runs over budget. It's almost just an annual occurrence now. The government needs to get serious. Listen to what the fiscal watchdog that was set up after the last election crisis back in 18 years ago and it constantly is telling the government you're not sticking by your own spending rules.
The state of our hospitals, the state of our public services and you want to see less spending on public services for people who are struggling to get good health care, to get education, childcare for their children and you want less investment in public services and more relief for people making, to be fair, very high amounts of money. Average income is not high. How can average income be high?
A lot of people are struggling in this country just to live. And to be fair with the protests, there was, you know, a majority of people in this country supported the protests because they felt that struggle to survive. Even when there's talk of great wealth in this country, people struggling to heat their homes, put food on the table and keep a roof over themselves.
I think there's a huge divide in this country and it's completely eroding trust in our political institutions. And it's opened up space for far-right rhetoric as well. And to come in and for extreme fringe parties to really gain a footing in this country because of that complete lack of understanding of what most people in this country are going through, just struggling.
I think a lot of people, though, Cailin, when they look at what we spend on our public services and they look at what we're getting back, would want to see that money, that huge investment being managed properly and spent in the right way. We would share that ambition, I think, most of us.
And I think we have to question that exactly. I don't think this government and Fianna Fáil and Fine Gael have been putting that money in the right place. I mean, look at the money wasted on a printer that didn't even fit in the room in government buildings. So there's no question that money has been wasted.
But then that's a question of political policy and what our political priorities should be and who this government is really investing money in.
Look, it's also about leadership and politicians willing to say the hard things at times as well that people don't want to hear. I mean, you know, there were certain sectors that were really badly affected by the sharp increase in diesel. And, you know... The response to that was to give tax cuts.
But if this is a prolonged crisis, we're going to have hard conversations about how we reduce demand on fuels. Because obviously the government can't do this on an ongoing basis. And that means about investment in alternatives. And it might mean small sectoral supports from time to time for industries that are affected. But I mean, we aren't having those hard conversations.
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Chapter 8: What solutions are suggested to manage rising costs in the arts sector?
We're having the lowest common denominator, which is either throwing money at things in a random, it seems quite random way, or perhaps and also looking for scapegoats. And I mean, you know, there is a divisive discourse coming about and certain comments this week, urban versus rural and all the rest of it. That's not very helpful either.
There's just a bit of a sense at the moment that the government isn't really showing leadership on this and is moving from that medium-term planning.
Do you want to have one last word on this? Just one last point. You know, if the government is taking more of your money than you get to keep, then people clearly are not less interested in a bonus, less interested in working overtime. People who are working themselves will take on fewer things and have more leisure time. So you cut the tax. People have more incentive to work.
Some of it, at least, will pay for itself.
I can't wait to make more money than they get to keep or less money than they get to keep. That'd be great, you know.
Let's move on because another impact we were talking about today of the crisis in the Middle East is rising costs and in particular in the arts sector. But before the crisis, we had people saying, look, these tickets for the big gigs are just gone to a place where they are out of reach. Do you agree, Cailin, that we're pricing people out of the arts?
Hugely, yeah. I mean, there was just a court case or the US jury just found that Ticketmaster was responsible for illegal monopolies that were, you know, taking advantage of fans and artists. And it's interesting that this story is coming when
And artists around the country are applying for the basic income for the art scheme, which is only going to help a fraction of artists, only 2000 out of probably more than 8000 artists who will apply for it in this country. And but the research I was on the pilot and it showed that artists are fighting facing extreme financial precarity in this country. It's affecting their well-being.
It's affecting their mental health. And the basic income did show that for every euro spent supporting artists, society made back one euro 39. But for some reason, despite all that and the great international press that the government's getting for this, they decided not to expand it beyond 2000 artists. So a tiny fraction of people.
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