Is It Time to Reinvent Fairness? This December’s budget must be one of the most regressive budgets in the history of the Irish State. (See definition below). As a result of the proposed changes people on 85,000 to 250,000 Euro per annum will pay an additional 1-2% in tax. However, folks on 17,000 Euro per annum will pay an additional 12%. This policy is grossly unbalanced and unfair particularly when you realize that those in charge of the many 850 quangos that exist in the State are hopelessly overpaid.
For example: 1. Head of ESB: €752,568 2.
Head of Dublin Airport Authority: €568,100 3.
Head of An Post: €500,000 4.
Head of Coillte, the forestry commission €417,000 5.
Head of Voluntary Health Insurance: €412,003 6.
Head of Bord Gais: €394,000 7.
Head of Bord na Mona (turf energy agency): €392,000 8.
Head of RTE: (TV): €326,000 9.
Head of CIE (transport): €252,416 10.
Head of Health Services Executive: €335,913
If these executive rates were modified and the 850 quangos abolished the savings would more that allow a faired distribution of the tax burden? Why was this not done? The current policy being adopted by Fianna Fail and the Greens seems to be pushing Irish politics further to the left as people are becoming increasingly shocked and disillusioned by the gross inequity of it all. If this trend continues, Labour, National Sinn Fein, The People before Profit Alliance, Independent Socialists and Non-Aligned Independents will form the next Irish government. This will render any real reform of the bloated State sector practically impossible and could herald more pain on an already beleaguered Irish middle class. Alternatives that could bring about a fairer taxation and a semi-state /public sector overhaul, plus banking restructure involving a new Irish commercial bank, enterprise development and focused retraining for the unemployed may not get the chance it so badly deserves.
Regressive Taxation Policy Definition:
A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases. In terms of individual income and wealth, a regressive tax imposes a greater burden (relative to resources) on the poor than on the rich — there is an inverse relationship between the tax rate and the taxpayer’s ability to pay as measured by assets, consumption, or income. It can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime. Regressive taxes tend to reduce the tax incidence of people with higher ability-to-pay, as they shift the incidence disproportionately to those with lower ability-to-pay.
The opposite of a regressive tax is a progressive tax, where the marginal tax rate increases as the amount subject to taxation increases. In between is a flat or proportional tax, where the tax rate is fixed as the amount subject to taxation increases. The term is frequently applied in reference to fixed taxes, where every person has to pay the same amount of money. The regressivity of a particular tax often depends on the propensity of the tax payers to engage in the taxed activity relative to their income.
In other words, if the activity being taxed is more likely to be carried out by the poor and less likely to be carried out by the rich, then the tax may be considered regressive. To determine whether a tax is regressive, the income-elasticity of the good being taxed as well as the income-substitution effect must be considered.