FERGUS FINLAY: We need information to know that government spends money wisely

The then minister for finance, Charlie McCreevy

I’m pretty certain though that all the stuff about tight fiscal space will be upended on budget day, writes Fergus Finlay

HERE’S my appeal to publicpolicy.ie. Update your tax slider, please. It’s a fascinating and valuable resource, that you should be marketing heavily. But it hasn’t been updated for quite a while.

Publicpolicy.ie was established to provide, in its own words, independent thinking on public policy choices. It has a heavyweight team and board, and it has been funded independently by Atlantic Philanthropies. I’m guessing that may be an issue, because the largest of the philanthropies working in Ireland is winding down rapidly, and the public policy team may, as a consequence, be running out of a source of funding.

That would be a huge pity, because over the years they have produced a lot of quality work. You don’t have to agree with their conclusions, but they’re always rigorous and based on an honest assessment of fact.

I thought of them at the weekend, during one of those discussions on Marian Finucane that made me want to shout at the radio. It was about what we might expect from the budget, and as far as I can recall it was prompted by a newspaper headline that suggested that Leo intends to spend big. That in itself was surprising, since Leo is on record as saying that he wants this budget to include tax cuts.

And as we know, all the experts are unanimous in saying that there isn’t enough money to cut taxes and increase spending. Some of them go further, and suggest that it would be dangerous to “overheat” the economy by spending anything more. To listen to them all, you’d almost think that (A) the cupboard is bare; (B) even if it wasn’t we’d be mad to spend anything; and (C) we’re standing at the edge of some economic ravine. Make one mistake now, and we’re doomed again.

I must be thick, because I just don’t get it. Relatively speaking, we’re one of the richest countries in the world. Our stock markets are doing well, Irish companies and multinational companies working in Ireland are doing well, the major industrial sectors are all doing well. I heard a guy on the radio this morning saying construction in Ireland has just completed 48 consecutive months of growth.

But the experts are still convinced we’re one policy decision away from disaster. These are the same experts, of course, who consistently failed to predict the last collapse. They’re the people who cheered in budget after budget as Charlie McCreevy and Bertie Ahern brought in tax break after tax break to drive the construction sector into ever more furious growth, because tomorrow would never come.

Now, it seems, they’ve convinced themselves that even the tiniest hint of optimism will drive the public policy makers daft again.

But heaven knows we need something. I don’t know what kind of tax break the country can afford to give right now. I’m pretty certain though that all the stuff about tight fiscal space will be upended on budget day. During the discussion on Marian Finucane, Colm McCarthy said at one point that whenever he’s asked what’s likely to be in the budget, he always answers by asking “do you remember what was in the last one?”.

It was a fair point. But I do remember one thing about last year. Universally, the commentary beforehand was about how little money was available. And the commentary afterwards was about how much money the government had been able to find “down the back of the sofa”. They found more than a billion for €1bn, and €500m each for education and health.

It was all badly needed — in fact more is needed in many of those areas, but it wasn’t going to be possible. Until suddenly it became possible.

And I think you can be reasonably certain that something similar will happen again this year. Doom and gloom right up to budget day, and a few pleasant surprises on the day itself. Followed by commentary about sleight of hand, election budget, and the usual stuff you could start to write right now.

But the other thing said on the programme — that started me shouting at the radio — was the comment someone made, that the real problem is that none of us know how our taxes are spent.

Because of course we should know that, as a matter of public service. Publicpolicy.ie’s tax slider sets out to ensure that we know exactly how the government spends our money. If they can’t afford to keep it up, and market it, then perhaps Robert Watt, the secretary general of the Department of Public Expenditure and Reform, who was recently shouting at people to bring forward their facts, should fund them to do it.

But the existing one, even though it’s not up to date, tells us a lot. And a lot that’s surprising (you can do this for your own circumstances on the website.) But as an example, if you’re a single person earning €40,00 a year, you’re going to be paying just under €10,000 of that to support the community around you (and yourself.) That’s your tax bill.

Out of that 10 grand, €213 goes to provide a police service, and €1.39 (yes) goes to provide a fire service. Nearly €1,300 of your 10 grand goes to pay the country’s debts (about a quarter of that is due to bank debts).

About €7.15 goes into providing clean water, and you also pay 40c for the library service. As you might expect, a big whack of the tax you pay goes into healthcare — not far short of €2,000 out of your 10 grand contribution goes to hospital services, community care, and long-term residential care. And a lot of it goes on education too — you’re contributing just over €1,400 every year.

There’s bits of it begrudged, if you believe what you read. The millions and millions we spend on overseas aid, for instance — how is that justified when we’re broke? Well, if you’re a €50,000 employee, your share of what it costs to prevent hunger, famine and other forms of oppression is €78 a year. That’s €1.50 a week, by the way. I’m guessing you spend a lot more than that in Starbucks.

I know these figures are a couple of years out of date, although I suspect the balances involved are still pretty accurate (the government does publish up-to-date figures on the breakdown of public spending, but doesn’t relate them to your tax contribution.) But they do make you wonder, don’t they, why we begrudge so much. We all accept, don’t we (or do we?) that spending on education, health and social protection is a good and necessary thing. It just seems sometime that we wish it wasn’t us that had to spend it.

But we do. I think it’s reasonable for us all to know how our taxes are spent in detail, not because we are determined to spend less, but because we should be determined to ensure that wise choices are made. The more information we have, the better we can judge that and insist that our money be wisely spent. In that way maybe, just maybe, the more we know the less we’ll begrudge.

www.publicpolicy.ie/where-does-your-tax-go/


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