Out for pints with a friend who treats Exchequer monthly returns like the Racing Post – forever checking the forms of the various revenue streams and then predicting the next monthly race. He tells me that on current trends we will have the lowest tax revenue as a percentage of GDP, which makes me nearly gag on my drink.
‘Not in Europe, surely. I mean, there’s Romania,’ I reply.
But he is adamant and when I get home I look up the numbers. He’s right – our tax revenue as a percentage of GDP is by far the lowest in the EU-27, lower than Romania, lower than the Slovak Republic, lower than even the US. Current and capital income is projected by the ESRI to come in at 25.6 per cent of the GDP (30.2 per cent for the post-repatriation GNP figures). The EU-15 average stands at over 45 per cent. We’d have to spend an extra €28 billion just to reach the EU average. We are so low that only Mexico among the OECD countries beats us to the absolute bottom.
Good grief. Does anyone really think we can have even a second-rate health system, or education system, or public transport system, never mind social protection, etc. on that level of tax revenue? Maybe so – David Quinn is on RTE’s Questions & Answers, calling for more tax cuts. The outriders of the neo-liberal command economy will not let social facts and economic necessity readjust their ideological myopia.
In all the commentary no one has raised this aspect: a modern, socially efficient and socially equitable economy needs a high level of public investment and services. But this can only be sustained by a reasonable level of taxation and expenditure. All we are treated to is a surfeit of commentary insisting on public expenditure cuts – whether of the trim and prune variety or the slash n’ burn school of lay-society-to-waste. After 10 years of boom we are mired in a low-wage, low-service, shoddy-infrastructure economy. And the only answer some of our esteemed commentators have is to make it worse.
And yet, and yet – general tax increases at this juncture would be tantamount to public expenditure cuts or pay freezes: they would reduce disposable income which in turn would reduce consumer spending and if that falls anymore then there’ll be more job losses, wage reductions, and downsizing in the consumer markets. And the vicious cycle spirals downwards. What a mess.
It’s getting late. I’m exhausted with all these desultory numbers. And it’s raining.
Notes on the Front 
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