Rooting for loose change on the dashboard at a toll plaza is an immediate reminder of the infrastructure cost of the roads and bridges we drive on.
Ireland is not plagued too much by motorway tolls in comparison with many other countries.
But in a taxi on the highway between the airport and downtown Johannesburg a few weeks ago, the driver apologised for the almost constant beeping from the electronic toll tag system stuck on this windscreen.
“Just as well,” the driver said, “that most taxi drivers don’t bother paying them”.
The South African logic goes that if you already paid tax to the government for it to build a motorway, you shouldn’t have to pay more for being allowed to drive on it.
It’s a sentiment that is not unknown in this country. It was given further apparent legitimacy last week in the report of the Expert Commission on Domestic Public Water Services.
This concluded that for most situations, water should be funded from general taxation.
The notion that general taxation should cover all government-sponsored utilities and services is gaining greater ground at a time when you might expect it shouldn’t.
Big government is becoming less acceptable. Brexit, the election of Donald Trump, defeat for the Italian government in its recent referendum, and the erosion of the leftist agenda in France and Britain can be analysed in many different ways, but all point to some degree to a desire for smaller government.
Ireland has already merged a right-wing, small government, taxation philosophy, where the overall proportion of tax to GDP is low by international standards, with a left-wing taxation payment model where the vast bulk of tax is paid by the wealthier elements in society.
At the start of this month, new data from the OECD confirmed that Ireland takes one of the smallest slices of tax compared to the nation’s income. It is safe to say that relatively speaking, the Irish tax burden is low compared to other countries.
Our tax collection profile is quite different. A few individuals and businesses account for the bulk of all tax collection. This has several implications, but one of the most important ones is that with every proposal to increase government expenditure, few enough of our citizens end up footing the bill.
A quarter of income tax payers pay 80% of the income tax bill. These income taxpayers will end up paying most of the cost of water provision, if water charges are ultimately abolished because someone has to pay. These income taxpayers will also bear most of the burden of public sector pay restoration, or of increased university funding, or of whatever expenditure proposal is on the Government order paper of the day.
Selective taxes and levies are not working in this country because Government seems to back down every time. Proposals for a broadcasting levy were scrapped. Water charges are on the way out.
Increases to university fees would be toxic.
Charges for waste disposal, whether in the form of domestic bin charges based on pay by weight or industrial levies for disposal of tyres are being challenged and opposed.
We may not have big government, but for the proportion of taxpayers who pay the most, that is certainly how it feels.
Brian Keegan is director of taxation with Chartered Accountants Ireland.
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