Taxing matters

At the Fianna Fail Ard-Fheis and on RTE radio, the Taoiseach Brian Cowen stated several times this past weekend that taxes in Ireland will rise. We don’t know when, by how much, for how long and how often, and we don’t know whether he is talking about income tax, capital taxes, corporate tax or indirect taxation (such as VAT) – but we know it will be at least some of these, and by noticeable amounts. I would stick with my view that whatever is to be done should be done in one go, to maximise the benefit for the exchequer and to minimise the effect on sentiment that is bound to flow from a continuing process of tax increases over time. The trick will also be to do this without completely losing the ability to present Ireland as a low-tax economy. If we lose that, we are likely to lose a lot of prospective foreign direct investment.

But my other concern is this. The prospect of tax increases may suggest that a good way of dealing with higher education funding might not be through tuition fees, but through some form of taxation targeted at those who have benefited from university degrees. Indeed, this was the gist of a proposal from Fine Gael education spokesperson Brian Hayes made in November 2008, and which I believe is currently Fine Gael policy. The thrust of this is that third level graduates would, on entering employment, be liable to pay a special tax that might be collected through the PRSI (social insurance) system.

On the face of it this looks a reasonable way of addressing higher education funding issues, but in fact it is not. There are a number of problems with such a proposal, but the two key ones are these: that those emigrating – who perhaps should above all be paying for their education as the benefit of it will be going to another country – will be exempt; and that while money may be collected this way, there is absolutely no guarantee that all of it (or even any of it) will actually go to the universities and colleges. No Minister for Finance will ever accept the idea of ringfencing revenue receipts for any particular purpose, regardless of how it was collected.

Although I know that it is not an easy step to take, in the end there simply is no viable alternative to university tuition fees. Sooner or later – and I hope and expect sooner, we shall need to take this step. And when we do, we will also at last be able to allocate appropriate and much more generous resources to the needs of those who come from disadvantaged backgrounds.

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5 Comments on “Taxing matters”

  1. Perry Share Says:

    I agree, our tradition of emigration would be the biggest barrier to any attempt to introduce an Australian HECS-type scheme.

    I’d be interested in your views as to how fees would impact on the IoT sector, as there has been a complete silence from all stakeholders on this issue.

    It’s unfortunate that we have never had a 3rd level education policy in this country – those chickens are now coming home to roost!

  2. KB Says:

    Agreed, the Fine Gael proposal does not address our issue of emigration. A progressive sliding scale third level fee system would be the best option to produce a fair and balanced approach.

  3. David O'C Says:

    It’s a difficult subject to deal with and there will always be a large amount of scepticism among the general public that the government will never deal with this in a way that will be fair and equitable. As it is at the moment, if some one wishes to send their child to college, it is very difficult even now to afford it even on an average wage. The thresholds for qualifying for a grant make it unattainable and there is no reason to believe if fees were reintroduced that this would be improved.
    Without adding fees to the equation, it would cost from eight thousand euro minimum to send someone to university if they have to live away from home. This is about twenty per cent of the take home pay of an average wage, a lot to lose if there is one earner and other children in the home. Particularly worrying if there is a second teenager with an interest in also attending third level. I personally would have no confidence in the government making grants more attainable if fees were reintroduced or introducing fee payment at salary thresholds which can afford it. These thresholds will be unrealistically low. This is particularly more poignant in the current climate with various salary cuts, introductions of levies and the pending shake up of the income and tax revenues on the horizon.
    It’s hard to argue against the introduction of fees when you listen to all the arguments but it’s worrying when you know that the government will not be fair in its handling of the situation. I am genuinely worried.

    • I appreciate the concerns you express, David, and I agree that whatever system is introduced needs to ensure that people and families are not crippled in order to avail of third level. But this can be achieved.

  4. Vincent Says:

    But is there not another way. You could bypass the Dept’s of Ed and Finance and make the loans directly to the student. This is the very reason that Harvard, Yale &co are remembered with hard cash from the people who have benefited.
    It is those gifts big and mostly small that the funding bodies in Europe has to deal, not so much the US state.
    You have the ideal opportunity to do just that, if there is a long game play idea within the Faculty. And by long play, I mean 60/70 years.
    Dignity is remembered. As is my rememberence of being stuck for rent of £60, dealing with a nasty little dean, since with a good Galway parish, sitting before me with open legs.
    Anyhoos, the point I’m making, quit pegging yourself to the civil service as it draws your independence, believe in those you admit and treat with dignaty. Then you will find that any call will be answered without the begging bowl as a cosh.
    In case you missed it, by far the vast majority of moneys entering Harvard derives from investment made in the ’40, and they will have their endowment back very soon.

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