Old problem

  • 11 March 2005
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It's a little bit unfortunate that the OECD's comparative report on taxation and wages should come out as the political system goes into convulsions over how to shift the blame for the nursing home fees debacle. For the government, the OECD report is a vindication of their policy, with Irish workers paying the third lowest tax and social insurance contributions in the industrialised world.

But the illegal taking of money from pensioners highlights the fact that low taxes go hand-in-hand with low services. For the key point that emerges in the Travers' Report, published this week, is that it became apparent over the years from 1976 onwards, that there was a problem with the legality of charges. It raised the appalling vista of the superior understanding of civil servants being called into question, and the even more appalling vista of the fundamentals of social and taxation policy being questioned.

Much better to let sleeping dogs lie, and hope that no one would notice. After all, they were rather old people, many of them not in the prime of their mental competence. Of course, the OECD report ignores what the opposition have called the stealth taxes – waste and water charges, hospital charges of various kinds, levies and special costs. And it ignores the shifting of the tax burden from direct to indirect taxation, from tax on income and wealth to tax on spending and consumption.

As a simple premise it can be straightforwardly argued that indirect taxation generally imposes a higher comparative burden on those with lower incomes. The poor spend more on food proportionately and if food is taxed (as it is) then the poor pay more food tax proportionately than do the rich.

It's direct taxation that offers the best means of effecting a redistribution of wealth and resources by making everyone contribute according to their ability, while providing the services, supports and incentives needed equally. Of course, this smacks of socialism, and even our own Red Bertie will have no truck with that.

But what the OECD report has also failed to mention is that Ireland was never high-up in the taxation stakes. The huge hype raised by the PDs in particular, who made the issue their niche point of appeal, was essentially based on a delusion: the real issue in Ireland wasn't the levels of taxation, but the equality of it, and equality means different things to different parties.

The traditional left would argue that equality is achieved, by making the famous seven per cent who owned 87 per cent of private wealth pay 87 per cent of the tax burden; the Thatcherite right, thought it was equality if everyone paid the same – a sort of national poll tax.

And this was the background in which, over three decades, the nursing home scandal festered.

At any time the Government could have put that right by simple legislation, but it would have drawn attention to the illegality of what was being done up till then and so nothing was done. And when the Government had no alternative but to do something about it, they tried to make legal retrospectively what was clearly illegal, and almost certainly theft in the criminal sense of that word.

Under pressure for the constitutional failure of her legislation, Tánaiste Mary Harney discovered the systemic maladministration of her department and commissioned a report which would find out what happened and how – and which, of course would apportion blame.

I have to admire the delicacy of touch with which the report places the explicit blame on a public servant, the department's secretary general Michael Kelly, who was made to fall on his sword. And the even surer touch by Mícheál Martin by which he was so delicately dumped on. I'm sure it's nothing personal, but one consequence of the Travers' Report into the illegal charging of fees on residents of public nursing homes, is that political attention has been almost entirely diverted away from Harney's own responsibility for the ill-fated legislation which tried to give retrospective legality to this state-sponsored theft.

It's a masterpiece, too, that paymaster Brian Cowen (who has to bail Mary Harney out of this mess) merits no mention, any more than Labour's Brendan Howlin or Fine Gael's Michael Noonan.

Mícheál Martin might argue that the issue goes back 30 years and covers a period in which such luminaries as the above three as well as Brendan Corish, John O'Connell, Barry Desmond and even Charlie Haughey held the Health portfolio, but Martin's is the only name that is truly in the public domain.

Very adroit, too, that the PDs Tim O'Malley (who, unlike Martin, was present during the December 2003 discussion of the issue) took no further action because the area involved was not his area of responsibility.

This week's preliminary flurry in Dáil debate is just a prelude to a full-scale opposition assault in the run-up to Easter, with Mícheál Martin picked as the weak link in the chain.

It will be a real test of his mettle. But it looks increasingly as if he will face it on his own with his government colleagues looking on as interested but uninvolved parties.

Eoin Ó Murchú is the Eagraí Polaitíochta of RTÉ Raidió na Gaeltachta. He is writing here in a personal capacity.