Working Class Action
The Plot Sickens…
December 2002
Today sees the publication of Chapter Six of Finance Minister Charlie McCreevy’s grisly tale of economic mismanagement and fiscal blundering. For the majority of working class people in this country the Celtic Tiger was clearly a work of fiction - a rising tide may lift all boats, but when all you’re given is a leaking raft, staying afloat is made all the more difficult. The party might be over, but most of us were never invited.
Increased revenue for the Exchequer was squandered throughout the period with precious little invested in the social infrastructure of the country. This was further exacerbated by the fact that our natural resources were sold off to the highest bidder. Yet it is the PAYE workers who are expected to tighten our belts. Those currently resident in Dublin Castle who are directly responsible for the present state of the economy have gone into Leinster House and not into Mountjoy.
SSIAs
A perfect example of the economic mismanagement of the economy is the Special Savings Incentive Account scheme (SSIA). In an attempt to bribe the electorate, the Government devised a scheme whereby they will give people an extra 25% of their savings FREE, on top of the interest received from the banks!!!!! Obviously, the wealthy will benefit most, because they will have more money available to invest in this scheme. It is estimated that this scam will cost the country at least 500 million euro per year. Conveniently the five year accounts will mature just before the next election is due and Fianna Fail are hoping those who benefited from the ‘free money’ will vote for them. This economically indefensible scheme should be stopped immediately.
Corporation Tax
An indication of the rate at which the government has been abolishing tax for major businesses is shown by the drop in the rate of Corporation tax in the past four years.
| Year | Rate |
| 1999 | 28% |
| 2000 | 24% |
| 2001 | 20% |
| 2002 | 16% |
| from 2003 | 12.5% |
The death of the Celtic Tiger and the cutbacks inflicted on ordinary people have not impacted at all on McCreevey’s determination to extend tax cuts for his business buddies. Continuing at this rate Corporation Tax should be gone altogether in three more years. After the Celtic Tiger years of huge profits, it is time for big business to return some of it’s gains to the public purse. At a minimum, corporation tax should be increased to it's pre-1999 levels of 28%.
Housing
There are now 54,000 households on the housing waiting list in the country, with a further 8,200 joining each year. However, there are currently only 12,000 new units provided annually by the government. At this rate, even if the numbers of those on the waiting list remain static, it would take at least 14 years to provide the necessary accommodation.
The government is committed to providing social housing at a rate of 20% of total housing stock annually. But in fact most local authorities only manage around 5 to 10%. According to the Budget Estimates, the social housing budget is to be cut by 5%. In a further attack on the principle of Social Housing, the Department of the Environment is reviewing the whole scheme at the behest of the big builders.
In Dublin alone there is a supply of zoned serviced land ready for building which extends to 2,173 hectares, enough for over 90,000 housing units. This land should be the subject of Compulsory Purchase Orders if the owners refuse to build on it.
Who buys the houses?
The recent outcry against the abolition of the 'first time buyers' grant is a case of the media focussing on a red herring. While this is a serious issue a much greater political and social scandal surrounds State policy on who actually buys houses. One in four buyers of new houses are investors who are buying property to rent it.
In the 2001 budget the government re-introduced Mortgage Interest Relief for persons buying to rent. This decision went totally against the Bacon Report, which aimed to stabilise house prices to keep them within the range of ordinary people buying a home. Before the tax exemption was re-introduced house prices had stabilised, in some cases they had dropped slightly. The re-introduction of a tax shelter for investors fuelled immediate housing inflation as investors flocked back into the market in direct competition with young couples buying their first home. About 10,000 investors with enough disposable income to hide, tax free, benefited directly from this change to the direct disadvantage of 30,000 PAYE taxpayers.
The average cost of a house in Dublin is now one quarter of a million euro and the property investment dodge has joined it's cousin the Business Expansion Scheme as the new tax avoidance scam for middle class people.
Partnership?
The next few months will see intensive efforts on the part of the government to sell a new partnership deal to the unions. The sham pretence of ICTU and SIPTU at having concerns about negotiating a new deal in the current economic climate are betrayed by the fact that they have stood behind government mismanagement, failing consistently to cut a decent deal for their membership.
David Beggs’ appeals for increased social inclusion measures to be taken as one of the main planks upon which he would take his members into a new partnership deal now ring hollow - especially given that the cutbacks in this budget already hit the most disadvantaged. Even the employers are hesitant about signing up to a new agreement, believing that they may not need a new partnership deal to keep their workers in line.
Political debate before the budget has focussed on McCreevey’s cuts in public spending and the need for borrowing. Little attention has been paid the obvious solution of taxing those who gained most from the ‘Celtic Tiger’, or holding the
government responsible for wasting billions to buy victory in the last election. It is up to ordinary people to raise these issues with the parties responsible and taking political action themselves to address these attacks on the working class.
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