‘Unreasoned rant’ against ICTU

AS the largest civil society organisation on the island - representing some 750,000 working people - the Irish Congress of Trade Unions expects to draw its fair share of criticism and comment.

And we welcome fair and reasonable comment from all quarters. Mature, rational debate is, after all, the stuff of democracy.

But we draw the line at inaccurate, ill-founded criticism and remarks that border on the slanderous - as contained in your columnist Paul Mills’ article on November 11 (‘Increasing corporation taxation not an option’).

What appears to have launched Mr Mills on his unreasoned rant was the fact that congress recently published proposals to try and ensure that the wealthy and large corporations paid their fair share of tax (see www.ictu.ie, under publications).

In our pre-budget submission, congress proposed that we should restore the rate of corporation tax to 20%, from the current rate of 12.5% (not 13.5%, as your columnist claimed).

For congress, the fact that multi-billion euro corporations pay a maximum tax of just 12.5%, while people on €29,000 pay at 42% is both grotesque and deeply unjust.

Indeed, recent revelations detailing how millionaires use tax shelters legally to pay no tax merely strengthens our case. Congress has also called for the abolition of these shelters.

However, in these straightforward and eminently sensible proposals, your columnist detects a devious plot, a hidden agenda.

Thus, he wonders if the true aim of congress and the broad union movement is not simply to impoverish the country because a “declining economy with growing unemployment is a breeding round for union membership.”

That remark is as ignorant of our recent past as it is contemptible. It is also deeply insulting to the 550,000 plus union members in the Republic whom congress represents, people who have made such an enormous contribution to the country’s economic success.

They have every right to feel deeply angered at such remarks.

Your columnist’s representation of the congress position on our tax system was also somewhat at variance with reality.

Thus, he takes issue with our statement that low business taxes played no role in the creation of the Celtic Tiger, a position we advanced in a recent congress briefing paper.

In the late 1980s, Ireland had a tax regime in which revenue raised amounted to 49% of GDP and public spending equated to 56% of GDP.

This was clearly unsustainable and the unwinding of this system over the years to 2000 facilitated economic growth and employment.

What congress argues is that we abandoned this gradualist approach in 2001 with massive business tax reductions at a time when the economy was growing at 9% and unemployment was down to 3.9%. The reductions went too far.

It is factually incorrect to assert that low business taxes created the Celtic Tiger - they were a consequence, not a cause. But that myth is peddled by those who would prefer that business and the wealthy continue to benefit from the low tax/no tax regime they currently enjoy.

A fairer tax system does not equate to high unemployment, as your columnist asserts. Indeed, congress had argued that Ireland’s low business tax regime is unsustainable in the long run (a point your columnist expressed some mystification at).

Thus, Estonia has introduced a zero rating for corporation tax - how can Ireland possibly compete?

Nobel economics laureate Joseph Stiglitz has argued that our low business tax regime might soon prove an impediment to development.

Speaking in Ireland in July, Mr Stiglitz observed: “All the evidence is that the low (business) tax, low service strategy for attracting investment is shortsighted. Far more important in terms of attracting good business is the quality of education, infrastructure and services.”

But where might we raise the money to pay for them?

Macdara Doyle

Communications Officer

Irish Congress of Trade Unions

31-32 Parnell Square

Dublin 1

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