TAX HIKES?
The good news is you can allegedly forget tax increases. The bad news is the Irish solution to an Irish problem – the LEVY – looks set to become even more ubiquitous. Sunday’s broadsheets are sprinkled with stories detailing the proposed introduction of levies in just about every facet of the economy.
Just why levies appear to be more palatable to the body politic must remain a source of mystery but they are certainly becoming the generating method of choice.
In The Sunday Times, columnist Jill Kerby paraphrases the Austrian economist Frank Chodorov, who said a levy was nothing more than a “permission-to-live tax”. If that’s the case, prepare to bow and scrape for the foreseeable future just for the privilege of breathing.
Kerby comments on the suggested levy of between 1% and 2% on insurance policies to pay for the €620m bailout of Quinn Insurance. Although a ten-year lifespan for such a levy has been mooted, she notes a similar thing happened following the collapse of the then AIB-owned PMPA and ICI insurance firms in the 1980s. The levy ended on most insurance products a decade later but a 3% levy on non-life insurance contracts still exists.
“A 1% levy applies to all life assurance investments or protection policies, while the 2% health levy and 1% income levy are now subsumed in the new 7% Universal Social Charge,” she points out.
“If the additional 2% Quinn levy is applied to all general insurance contracts (and not just car and house cover) and the jobs pension levy [0.5%] is also introduced, somebody earning €50,000 and with a €200,000 pension fund, could end up paying more than €3,000 a year on the various levies.”
Presumably, Kerby penned her column prior to SIPTU President Jack O’Connor’s call on Saturday for a tiered levy on all incomes over €100,000, as reported in both The Sunday Independent and Sunday Business Post.
O’Connor is proposing a levy of between 1% and 3%, the proceeds of which would be funnelled into a Strategic Investment Bank for job creation purposes. The levy would last for a pre-determined time but what make this one more palatable is that “investors” would be paid dividends and could recoup their payments if the economy developed as a result of the capital injection.
“Those opposed to taxing the wealthy always cite the negative implications for retaining such people in Ireland. This risk would be reduced if they could be assured it would only last for a limited period, say three to five years max,” he said.
He then painted the gloomier alternative of certain default, with all of the negative implications for everyone – including the wealthy – this would entail.
“People on high incomes would doubtlessly complain but they would get the money back. In any event, they will lose a great deal more in a disorderly default,” he said.