Austerity for less wealthy is not the only remedy

Our so-called national debate is merely a process of softening us up for cuts while real options are ignored, writes Vincent Browne.

This Government has lost the support of 80 per cent of the people, the vast majority of these want Fianna Fáil and the Greens out of office ASAP.

Yet this Government is about to make decisions on budgets for four years hence that will have drastic consequences for millions of our citizens. We, the people, have no role in this. Sometime in the next 20 months we will have the option of voting in a general election to determine which party or parties should form the next government.

But even then we will have no role in the decisions that will vitally affect our future, unless you think that replacing Fianna Fáil and the Greens with Fine Gael and Labour makes any appreciable difference.

The basis on which the Government and the would-be government will make these crucial decisions will be on the consensus that we must all share the pain; that we are all in this together; that there is no option but to cut the big spending allocations in health, welfare and education; that tax increases are a greater evil than expenditure cuts. In the process of softening us up for the austerity that is to befall us, we will be told again and again that the country is broke, even though the country is one of the top 15 richest countries in the world, richer than France.

In the run-up to the austerity budget, we can expect the public (dis)service broadcaster, RTÉ, to broadcast pre-budget specials, telling us that our social welfare payments are more generous than anywhere else in Europe, that social welfare fraud is out of control and that we are already taxed "to the hilt", whatever that is. Hardly anywhere in our national debate will there be an acknowledgement that we are a very rich country and that there are indeed options; that we are not all in this together because we are not together in how our resources are shared or how our power is exercised.

Hardly anywhere in our national debate will there be an acknowledgement that austerity for the less wealthy is not the only remedy; that even modest adjustments on the distribution of wealth and income here are or should be part of the mix; that we have options to improve social welfare, not cut it; options to fund health and education better, not cut them.

Take the massive subsidy the State gives every year to private pensions. If a person with a private pension pays, for instance, €20,000 a year into a fund, it costs them €12,000 and the State pays the other €8,000. Or if the annual payment is €100,000, it costs them €60,000 and the State pays €40,000. I can think of no justification for this at all.

So, we should remove at once all tax breaks for private pensions, not just apply the tax break at the standard rate. Removing all the tax breaks would save the State €3.5 billion each year (that's €3.5 billion as compared with the cost of the non-contributory old age pension of less than €1 billion). These tax breaks are a huge subsidy of the wealthy at the expense of society generally. And, I can see no reason why public servants should be afforded huge pensions by the State. Incidentally, that and the abolition of the subsidies for private pensions would generate huge pressure to improve old-age pensions.

Ditto the tax breaks for private health insurance. They should go and this would save the State over €300 million a year. Yes this would mean health costs would increase, thereby reducing the saving but then there would be a one-tier health system!

A property tax is unavoidable and it is fair. It's a way of bringing tax exiles and others who escape tax into the net.

The objective here should be to generate revenues to the State of €1 billion, charged against the owners of homes valued at, say, €750,000 or more, where the household income was more than €80,000.

A new tax rate of 50 per cent for those earning over €100,000 for a single person or €150,000 for a couple, plus an increase by a few percentage points for those earning above €80,000 (€120,000 for a couple) should be an option.

Reducing all public service pay over €150,000 to €150,000 would save quite a bit too. This would include the pay of hospital consultants, GPs, cabinet ministers, the staff of Nama and the NTMA, bankers in banks now owned or controlled by the State, everyone in the public service, including all State agencies.

The point is there are options for dealing with this massive deficit, options that do not afflict the less wealthy people in society and that are fair. You would expect the Labour Party to be canvassing ideas such as these, but they are now focused on attracting middle-class votes away from Fine Gael – so not a cheep out of them about this kind of agenda or anything else, on anything that matters.

Maybe a left-wing party will come along and we all might be the better for it.