Low tax rates cause public finance shortfall

DICK KEANE (Letters, February 22) is right to be worried about the size of our budget deficit, but to link this to public service pay is misleading.

The real cause of the public finances shortfall has been the exceptionally low personal tax rates for many years, combined with an over-reliance on transactional taxes.

Populist tax cuts over the past decade or so have led to the situation where the majority of taxpayers last year paid income tax at rates substantially below those charged in almost every other European country. The tax burden also shifted from the rich to lower and middle income earners. Witness the billions lost to the economy as a result of tax breaks available for the ultra-rich.

Our public servants have contributed massively to cutting the national debt. Savings that have been made so far include public service levy (€1.1bn), suspension of Towards 2016 pay agreement (€1bn), unfilled positions (€0.3bn), recent pay cut (€1bn).

So far the burden of closing the gap in the public finances has been shouldered mainly by public servants and those on social welfare. Next time, perhaps, Mr Keane could put his hand in his own pocket.

Kevin P McCarthy

Ardteegalvin

Killarney

Co Kerry