Why the PDs Did So Badly ? Some Facts to Remember

In another characteristically great piece of analysis which he has titled "Fun, Fun, Fun ‘Til Her Daddy Takes Her Calculator Away", Michael Taft shows again how the groups who chiefly benefit from the State schemes most vulnerable to PD propaganda are the same ones who tended to vote PD. (The PD spin is mine, not Michael's).

Here are some extracts from a long piece:

We can all have fun in Household Budget Survey land....

Where else can you find that in the bottom 40% income groups, no one buys limes ? Or that the poorest 10% spend a higher proportion of their income on church contributions than anyone else? Or that the richest 10% spent nothing on funeral expenses (the rich must ‘die harder’)?

...I’d like to try my hand at a small set of figures: the extent to which higher income groups’ spending patterns attract higher state subsidies. For instance, if the state subsidises house-purchasing more than it does rent, we can get an idea of where that public expenditure is going by analysing the spending patterns of the different decline groups. Similarly with VHI relief or a whole group of other categories. ...

Public subsidies are heavily skewered to house purchase as opposed to tenants. ...[and]Nearly ¾ of mortgage interest relief goes to the upper-half of the adult population (the top four deciles of households equals 50% of all adults).

Relief for health insurance is only slightly less regressive though this may be an under-estimate as a number of low and even middle income households may not get the full tax relief if they are not fully in the tax net (these figures only relate to expenditure and not to the actual distribution of tax relief).

Taken together, these two reliefs cost the Exchequer (that is, the taxpayer – which is everyone; from the richest to the poorest) over €500 per year (that’s before the Government increased mortgage interest relief in the last budget – therefore, it’s [now]higher). It is questionable whether the vast majority of people are getting ‘value for money’ here.

It has long been established that pension contributions are highly regressive. The CSO gives us an update...While the top 25% of income earners account for nearly 70% of private pension expenditure – the distribution of tax relief would probably be even more regressive as those on the top rate get 41% relief while those on standard rate only get 20%. And this means a lot of money – employees and self-employed pension relief costs in the order of €1 billion a year (and that’s not counting the pension funds’ full tax exemption).

So the distribution of over €1.5 billion in public expenditure is skewered to the highest income groups. By contrast let’s take a look at one particular tax – refuse charges.

Charges for this absolute necessity of domestic life are skewered in favour of high income groups. This extremely regressive tax (or levy or charge) has such an impact that many low income households pay less in income tax or PRSI than they do refuse charges. In any event, the lowest income group pays five times more than the highest income groups as a % of gross income, even though they have nearly 18 times less income.

Please bear that last point in mind the next time you are tempted to get "sniffy" with those who object to being charged under the "polluter pays" principle, as I confess that I often am (despite the baby brother's repeated correctives).

I recommend going to Michael's website/RSS feed to read the full thing, if only to see the graphics which tell the stories even more clearly.