Colm O'Doherty: It would be naive to think that a Commission on Taxation composed of political insiders and handcuffed to the taxation equivalent of the status quo – keeping the overall tax burden low - would reverse the regressive taxation policies which have played such a big part in destabilizing our economy. My limited perusal of Part 1 of the Commission on Taxation Report – Executive Summary and List of Recommendations - gives me no reason to doubt my own instincts on the direction taken by the commission. The taxation policies recommended here are based on the presumption that “lower tax rates on a broad base are better than higher rates on a narrow base" because "having a broad tax base allows tax revenue to be raised from a wider range of sources and enables rates of tax to be kept low”(Commission On Taxation, 2009;2).
Broadening out the tax base means taxing those on social welfare, taxing child benefit, a water tax, a property tax and a fossil fuel (carbon) tax. Broadly speaking, these recommendations strongly reinforce existing levels of income inequality. These are essentially “social taxes” – taxes on individuals' participation in society - and they bear as heavily on those with average or below average incomes as they do on the wealthy. Their re-distributive impact will be in line with existing arrangements, i.e transferring income from the least well off to the better off. Complying with its “light touch, hands of the wealthy" imperative, the Report prioritises economic rather than social integration. Social integration is a function of the labour market. As a social policy instrument the Report favours the free movement of capital (low corporation tax) and promotes the interests of the economic elite (no wealth taxes). It is at its core a market–making, not a market-correcting social policy.
In short, it is further evidence of a government in deep denial of the reality it has unleashed on the majority of its citizens. So where does the retreat of the state from the function – promoting the wellbeing of its citizens- on which it claims its legitimacy leave us? This Report further erodes the social foundations of social solidarity and adds to our ongoing political crisis.