Should we pay more tax to have a better society?

[T McGibney]

Communist utopia has failed.
Laisse faire marketplace has failed.
Light touch regulation has failed.

That's the propaganda. The reality is that it hasn't.

Tax compliance is now at the highest level ever in this country despite the Revenue Commissioners sharply reducing the number of Revenue audits they conduct annually, in favour of the far less onerous but infinitely smarter alternative of targeting anomalous cases identified by intelligence gathering.

And the broad mass of businesses no longer have to worry about putting their lives and businesses on hold for weeks or months as they undergo a periodically invasive audit.

That's a prime example of how light touch regulation works in improving outcomes for everyone.

 

[DublinTexas]

As a customer of Revenue I agree with you, since I got my PSC and can do everything online with a few mouse clicks (including uploading of receipts) and it even reminds me to ensure I claim my credits if I forget, the progress they made from paper to electronics is great.

My annual tax return is now easy because I do it as I go and then at the end of the year, I simply do the final declaration and voila easy as pie even with foreign interest, Employee Shares, WFH, medical and everything else.

Plus, on one occasion where I had a problem, I sent an online inquiry and got a call back to discuss the question and it was sorted!

I wish some companies would have such great customer service!

 

[nest egg]

...Things will only change if people elect alternative candidates, and we have a real discussion of where we want to go as a society and how we address the challenges ahead of us.

But as long as each election the same old professional politicians are elected and there is on real discussion about our future, we will continue to have to cough up higher individual taxes either as direct or indirect taxes and higher cost of living (than alternative countries)...

The question is why do things never change? Does anyone really think swapping one set of faces for another will solve the problems we have?

My view is that it's naive to expect politicians to have an outlook greater than the next general election. Let's stop expecting any more from them than short-term decision making, and instead shift our attention to where the responsibility truly lies.

The big issues the country faces are long-term ones, and the people accountable for the long-term are senior members of the civil service. We need present-day T.K. Whitaker's, balanced by 'public representatives' who will hold them to account. That's what the Government should be doing.

Instead we get this charade, with ministers pretending they run their departments, but really only doing P.R. for them in the end. Most have a tenure measured in months, to address problems which take years to solve. Meanwhile the people who will be there after the next election, and the one after that, are invisible.

"Insanity is doing the same thing over and over again and expecting different results." Unless the next set of politicians in Government wants to end up like the current set, the approach has to change.

 

[BlackandBlue]

That's the propaganda. The reality is that it hasn't.

What do we mean by light touch regulation?
For the banking sector we can famously refer back to what happened pre 2008 to get some frame of reference.
Do you accept that the regulatory regime has changed since then?

Regarding the tax office my interactions are very mundane.
I do remember posting off 4 years of medical receipts years ago.
I got a call back from them saying I would get a refund and did I want them back.
I said that it was alright and would they hang on to them.

I do use the online system these days.

Would you accept that advances in technology has permitted the revenue to have better data?
This means that revenue can get better results with current resources?

For example
I live in a housing estate of 48 almost identical houses.
The requirement to pay the LPT hasn't gone away.

Using technology any unpaid or outside the "normal" range" should be easily flagged?
Rather that sending a fishing letter to all 48 they only query the outliers.
The regulation hasn't gone away just better results from available resources?
Same staff, more money coming in.

The increased use of electronic payments has reduced certain sectors freedom to maneuver.
This helps too.

Technology is an enabler. That's all.
By itself technology for technologies self is not always a good idea.

I think we are moving slightly off the topic where the OP was suggesting we all pay more taxes.

Unless the next set of politicians in Government wants to end up like the current set, the approach has to change.

Our political structures via PR are specifically designed to prevent any single group having an absolute say.
However this by its nature must result in a compromise outcome.
That is not to say compromise is bad but by its nature its a compromise.

The big issues the country faces are long-term ones

Agreed, but again they are the long term issues as identified by the best available information today.
Also solutions to the problem will be paraphrased within the confines of current information.

A good example is our aging population and the lack of domestic replacements.
So what to we do?
Options.

• Encourage an increase in domestic production?
  • Good luck with that.
• Encourage immigration?
  • Lots of fun.
• Slowly go down the swanee in 50 years?
  • Probably.

Viable cloning may be a technology in 10 years so it becomes a moot point.

 

[T McGibney]

What do we mean by light touch regulation?
For the banking sector we can famously refer back to what happened pre 2008 to get some frame of reference.
Do you accept that the regulatory regime has changed since then?

Regarding the tax office my interactions are very mundane.
I do remember posting off 4 years of medical receipts years ago.
I got a call back from them saying I would get a refund and did I want them back.
I said that it was alright and would they hang on to them.

I do use the online system these days.

Would you accept that advances in technology has permitted the revenue to have better data?
This means that revenue can get better results with current resources?
....

Technology is an enabler. That's all.
By itself technology for technologies self is not always a good idea.

None of that rebuts my observation that light touch regulation is working very well as regards the tax system.
There is no reason why this can't and shouldn't be extended across government.
There is likewise no reason why government has always to continue expanding and becoming an ever more onerous burden on society.

The future lies in playing smarter and getting better results from fewer resources. Of course this is the polar opposite of the pork barrel politics that has driven the development of our public sector ever since independence, so it will be virulently opposed and frustrated by vested interests.

I think we are moving slightly off the topic where the OP was suggesting we all pay more taxes.

I disagree. This discussion is still directly addressing the questions the OP originally raised.

 

[joe sod]

Well let's not be too pedantic! Surely some of the activities that brought down the Irish banks - local instantiations of the global banking crisis, but with interesting local flavours. I believe 'fraud' covers some of these practices, and they certainly fall within the category of white collar crime (think of our friend Mr. Lynn for example. And lots of others.)

What brought the Irish banks was the ineffectiveness of the Irish financial regulatory system. Remember john hurley the former governor of the central bank appointed not by financial qualifications but by seniority in the civil service, it was basically a plum job given to a senior civil service. It was self regulation regime, so the regulator has to take the banks at their word because they hadn't a clue themselves and hadn't the financial capability to oversee the banks. That's why the department of finance had to go outside the country to recruit Mathew elderfield to run the central bank. Brian lenihan famously said during the crisis that nobody in the department of finance had a clue, that's why he had to get outside advice in how to deal with the banking crash

 

[Allpartied]

Why should universal healthcare be provided by the state?

There are pros and cons to it.

I think I would agree with this in theory or philosophically. But in practice, it doesn't work in Ireland. We are not good at managing such large scale projects.

There are risks in private health care as well but, personally, I am much happier relying on the private healthcare system than the public healthcare system.

When I need social care, I would like to pay for it myself.

I know a lot of wealth elderly people and their children complain "The HSE will only provide one hour a day of visits". I look at them in astonishment knowing that they and their parents are very well off and could easily afford to pay a carer to visit a few times a day, but they prefer to leave their parents without the care they need. Madness.

Your private healhcare is heavily subsidised by the state.
How many nurses does the private sector train?
How many doctors?
Physios, radiographers, Occupational Therapists, plus a long list of highly skilled professional healthcare workers?

And when it comes to acute care, or cancer care, or major surgery, you are mad to rely on the private sector. Believe me, if you are in a crisis, after an operation, you are better off in a public hospital.
If you really want to pay for social care, yourself, be my guest. You might be lucky and only need a couple of hours a week, of care, or maybe none.
But you might need years, or even decades of personal care, requiring a whole range of professionals, and careworkers. Are there any private insurance companies offering to cover costs for social care in old age?

 

[extopia]

What makes you think I or anyone else bothered to trawl through it, when you couldn't be bothered providing a precise reference?

Well, it's only 16 pages of large type, and most of what I summarised is contained in the Executive Summary on pages 2 and 3, but OK.

My summary from my post above:

An Oireachtas Library's 'Spotlight' from 2011 estimated that social welfare 'fraud and error' in Ireland were broadly in line with international levels of 2.4 - 4.4%. However error was a bigger issue than fraud, so less than half of that total lost by the system to fraud and error is actual fraud.

In relation to the latter point, what the report actually says (p2) is:

Research (from an international review) shows that a larger proportion of social welfare funding tends to be lost to administrative and customer error than fraud.

and then I extrapolated:

2023 Dept of Social Protection budget was about 23 billion. So, broadly, 'fraud and error' is probably somewhere between 500m to 1 billion. Fraud is less than half of that, so maybe 250-500 million?

Obviously these figures could be more accurately estimated with better data, and I'd love to see more up to date figures/research. But the only reason I mentioned it in the first place was to to suggest that wastage in welfare spending, obviously a huge portion of government spending, might be (a) less extensive than many assume, and (b) more fixable than many assume (assuming errors at both customer and administrative ends can be eliminated).

 

[Forumuser]

Public services in Germany are nothing better than Ireland on average.

We had some German guests here last year. They did not know what a "hospital waiting list" was. They were shocked when I told them. "But I thought you are in the EU now?"
Tells you all there is to know about the benefit of higher taxes!

 

[Forumuser]

My key point is that it would be better to link benefits to the contributions made.

There is no way that the €1,200 paid in PRSI by someone earning €30,000 a year is enough to fund their Contributory Old Age Pension.

It should be raised to fund the level of pension or else, put into a pot, and make it a defined contribution pension.

Brendan

You have a point there.
But just explain to me how someone who is on the minimum wage for most of his/her life would be able to pay more for a pension?

 

[Forumuser]

What about the people that receive a pension without contributions. In 2020 a fifth of pension recipients were non contributory, should that also be fully funded by those who pay state pension contributions?

Indeed.
There is a contributory pension reform in full swing which reduces the amount of people on that scheme more and more. And guess where they all end....on the non contributory pension scheme. Can anyone tell me where the saving is for the taxpayer?

 

[Protocol]

You have a point there.
But just explain to me how someone who is on the minimum wage for most of his/her life would be able to pay more for a pension?

7% of the workforce are on the NMW, mostly young people.

Nobody should be on the NMW all their life.

 

[T McGibney]

You have a point there.
But just explain to me how someone who is on the minimum wage for most of his/her life would be able to pay more for a pension?

Nearly nobody is on the minimum wage for most of even much of their life.

 

[Forumuser]

7% of the workforce are on the NMW, mostly young people.

Nobody should be on the NMW all their life.

7% is an estimated value- it is more 10%. But let's give them all a 3 euro more per hour- we are still lightyears away from being able to finance a better pension. And taking the ever rising rents into account, those folks will be less and less able to pay for a better pension!

 

[Forumuser]

Nearly nobody is on the minimum wage for most of even much of their life.

You are surely not living in one of those small towns and villages in the West.

 

[T McGibney]

You are surely not living in one of those small towns and villages in the West.

I know those places well, and by and large their catchments have plenty of employment options. Thomas Sowell has written eloquently on the fallacy that minimum wage legislation rescues people from lifetime poverty.

 

[Forumuser]

Just looking at his theories. Interesting indeed!

 

[extopia]

Hopefully we are not looking to the likes of Mr Sowell for inspiration about how to build a better society over here.

 

[presidenttttt]

My take is political reform would be required to shift mindsets towards cost efficiency and longterm decision making, even Michael OLeary wouldn't be able to drive much efficiency into the civil service as it is today.

I too would happily pay more if I didn't think it was being squandered. The children's hospital being the easiest example.

There is a huge income band for which work is disincentivised, and switching modes to gaming the system is incentivised.

Work 35 hours a week and earn slightly too much and you are condemned to rent or a hard mortgage payment for 35 years, but earn a bit less and you get a house handed to you and have enough money left to go on your sun holiday or to Turkey for teeth or a boob job. Next door, the same house, is costing a high earner the bulk of their income such that their disposable is next to nothing. I am not talking about welfare cheats here - simply people utilising the current system which does not incentivise them to aim higher. Who wants to be the idiot working more for an extra 10k, but losing out on the equivalent money in supports. I have no interest in funding such a system or those behaviours.

I suspect tax structure is the main lever government have to address this problem, to change behaviours, and to ensure the middle class can continue to grow and be rewarded for education and work. Housing shortages make the weaknesses of the current system more stark but there are many elements and allowances which combined are driving the wrong behaviours

 

[Sophrosyne]

Regarding the tax office my interactions are very mundane.
I do remember posting off 4 years of medical receipts years ago.
I got a call back from them saying I would get a refund and did I want them back.
I said that it was alright and would they hang on to them.

I do use the online system these days.

Would you accept that advances in technology has permitted the revenue to have better data?
This means that revenue can get better results with current resources?

For example
I live in a housing estate of 48 almost identical houses.
The requirement to pay the LPT hasn't gone away.

Using technology any unpaid or outside the "normal" range" should be easily flagged?
Rather that sending a fishing letter to all 48 they only query the outliers.
The regulation hasn't gone away just better results from available resources?
Same staff, more money coming in.

The increased use of electronic payments has reduced certain sectors freedom to maneuver.
This helps too.

Technology is an enabler. That's all.
By itself technology for technologies self is not always a good idea.

Although not the same type of operation, there seems to be a technological chasm between the Revenue Service (civil service) and the HSE (public service).

Obviously, I mean mostly HSE administration, rather than face-to face patient care, though even that could be improved by IT.

I have been following the progress (or lack of it) of electronic health records.

The HSE did present a case and a budget for EHR but DPER rejected it because it was too expensive.

By contrast, the Revenue Service seems to be constantly upgrading its IT capacity with no interference from DPER. It also seems to implement change and enhancements quickly – incorporation of LPT collection from the Local Authorities, for instance.

Anyone who follows the PACs will know that trying to get specific information from the HSE is like pulling teeth. Either it doesn’t have the required information or it has to pull it together from numerous paper systems or piecemeal disparate locally developed databases.

Is Revenue able to present its case for IT advancements better than the HSE?

Is it comparative lack of urgency, persistence, expertise or something else?

Does civil as opposed to public service matter?

You quite rightly say that IT is not an end in itself, but if it allows better accounting, better service, better research and better patient outcomes and cost targeting, then surely it ought to be indispensable to the HSE.