The Commission on Taxation

It would probably take an accountant to make sense of the report of the Commission on Taxation. The Commission’s Report has made many recommendations to broaden the tax base. New property taxes, a carbon tax, taxing child benefit etc. On balance it set out not to increase the overall take in taxes but to swap one set of taxes for another, to lower taxes on anything that encourages economic activity and job creation and to increase taxes on anything that hinders economic activity. What will it achieve? Well I suppose that remains to be seen.
But there are some issues that the Commission did not address and in fairness they were outside their terms of reference. They stressed that they wanted to keep Ireland a low tax economy. There are consequences to this. Many are now having second thoughts about the achievements of our economy during the boom years. We are realising that decisions were made which brought short term benefits but in the long run led us into the predicament we are in now. One of those decisions was to go down the road of low taxation. Low tax means less public services. Public services are not just some abstract economic formula. They are schools, hospitals, childcare and so on. It would have been interesting to have seen a debate in the report about the consequences of a low tax regime and the benefits of increasing tax.

The Commission was also given the task of finding ways to broaden the tax base. They understood this to mean finding new taxes, perhaps broadening the tax bands and reviewing the status of tax exiles. However as far as I can gather from the report there was no consideration to widening the tax base to bring in those who now pay little or no tax, certain sections of the farming community and some of the self employed. There is no doubt that at the moment many farmers are having a tough time and probably do not have incomes that would take them into the taxation system. Fair enough. The same goes for many of the self employed. However there are others particularly in businesses that generate cash that are quite simply not paying their fair share. At the same time they are using public services. Look at those whose children go on to third level education. There are a disproportionate number of the farming community and the self employed compared to the contribution they make to the tax take.

The third issue and probably the most important one is the capacity of the tax system to re-distribute the wealth of society. This was also outside the terms of reference of the Commission. One of the consequences of our recent economic success was a growing disparity in our society. One sixth of Irish children live in poverty. There are huge consequences for unequal societies. Everyone is unhealthier, live shorter lives and suffers more from mental illness and alcoholism and there is more crime. (see The Spirit Level: Why More Equal Societies Almost Always Do Better by Richard Wilkinson and Kate Pickett). It would have been interesting for the Commission to open a debate on using the tax system to redress inequalities in society.

Having waited thirty years or so for a Commission on Taxation it is a pity it was so limited in its scope.

Will you remember today

Do you remember where you were on September the 11th 2001 or as we now seem to call it 9/11? Probably most people in the western world and perhaps beyond do. Those iconic images of the planes crashing into the Twin Towers, the smoke billowing from the burning buildings and that awful shot of a man spiralling through the air to his death. It is unforgettable.

But do you remember where you were on the 26th of June 2000? In ten years will you remember where you were or what you were doing today? The interesting thing is that when the history of the 21st century is written the 26th of June 2000 and the 4th of September 2009 will appear much more significant for the future of human kind than 9/11. How many even remember the great massacres of the 20th century (apart from the Holocaust) never mind those of the past few hundred years.

So why are the 26th of June 2000 and yesterday so important. Well on June 26th 2000 the completion of the decoding of the human genome was announced. Admittedly it was a rough version and it was announced then to prevent a private company beating the public consortium to the post and copyrighting it. So much will flow from the decoding of the genome. Even in the last week some Trinity College scientists have announced that they have found some genes that are unique to humans. Over the next decades never mind centuries the ability to manipulate our genetic code will mean that many horrific fatal and debilitating diseases will be cured. But that is the most obvious benefit from the decoding of the human genome. The real achievements are probably beyond our imagination at the moment. Whatever happens there is no doubt it has allowed humans to transcend the laws of Darwinian evolution.

So what happened today? Well scientists in Bristol announced that they had managed to build a computer chip that uses light. It is in effect a ‘quantum computer’, a very primitive one. Quantum computing if or when fully developed will make our current computers look like hot air balloons compared to jet planes. Quantum computing could allow much of what we now believe to be science fiction to become reality. Computers that are millions of time faster and thousands of times cheaper could make many of our technological fantasies come through and transform the world.

When quantum computing and genetic science converge there will be a world that we cannot now imagine and it will be a better one. September 11th 2001 will be a footnote. If you cannot remember the 26th of June 2000 remember today so that you can tell your grandchildren.