Jason OMahony - Irish political blogger, Irish politics, EU politics
 

Would the Irish vote for an income tax cap in the constitution?

Posted by Jason O on Apr 10, 2014 in Irish Politics |

Everybody (save for a few ideologues) is in favour of lower taxes and value-for-money spending. Until, of course, it comes to a bit of public spending they actually approve of or benefit from. It’s this argument which has prevented most modern governments from seriously reducing the share of national wealth that is spent on public spending.

The problem is that there are still large sections of society who do not recognise the connection between taxation and spending. This is hardly surprising, as we lived through a whole political generation of politicians from all parties telling us that we can have both low taxes and high spending.

Maybe it’s time to confront the voters with a choice. Supposing we proposed a constitutional amendment that barred the government from taking more than 40% of anyone’s gross income in tax. Would the Irish vote for that? There’d certainly be a huge debate, about what constitutes “Tax” (does it include VAT, waste and water charges? I’d say Yes, No and No) and there certainly would be opposition from the People’s Front of Judea. They’d almost certainly want to put a threshold into the constitution, which would not be practical.

But the core question would remain: would the Irish vote for it? On the one hand, they’d twig pretty quickly that they were voting to cut taxes on the rich. But on the other hand, many people would see that they were also voting to cut their own taxes, and I think that would win out.

But the real effect would be the reality that it would immediately limit the amount of money the state could raise in revenue, forcing either cuts in spending, or (less likely in Ireland, I know) the state trying to get better value out of what it had.

After a few years, as the revenue cap would feed through into services, a debate would almost certainly start again about changing or scrapping the Tax Bar. This in itself would be a very healthy thing, because it would force our slippery pols to take sides, either for or against. It would be one of the first honest debates we’d every have in the country, based on real choices.

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