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The Death of the Irish Trade Union Movement.?

Bin tax campaigners at Mountjoy Jail and Article from Labour Comment:—November 2003

This is a long-and entertaining piece-if you are into politics, and taxation  (and who is not!), so get a cup of tea,and relax before you begin the read.

AHERN:—
"Abolishing Rates Was Totally Wrong"  (a quote from An Taoiseach!!)

"The tragedy is that he was disappointed and defeated as much by those he helped as those he opposed. His words 'if the Irish have a weakness next to drink, it is moral cowardice' ring as true today as they did at the end of the last century." MICHAEL D. HIGGINS, T.D. in a tribute to Michael Davitt (1846-1906), founder of the Land League.

JOE HIGGINS, T.D. WOULD BE REGARDED BY THE DUBLIN ESTABLISHMENT AS A BIT OF A POLITICAL HEADBANGER BUT IN HIS WILDEST POLITICAL MOMENTS, JOE COULD NEVER SURPASS THE OUTRIGHT RECKLESSNESS AND FINANCIAL IRRESPONSIBILITY OF THE 'UNCANONISED' JACK LYNCH, WHEN HE ABOLISHED DOMESTIC RATES IN 1978.

Two other heroes adulated by the Dublin Four set, the former founder and leader of the Progressive Democrats, Des O'Malley, and the current Minister for Transport, Seamus Brennan, were Lynch's backroom boys in the 1977 General Election which foresaw the removal of Domestic Rates on private dwelling houses from 1st April 1978, and the cast-iron election promise that local authorities would in future be guaranteed 100 per cent of the income they lost in Domestic Rates.

No single political action ever dealt such a damaging blow to the independence and authority of the concept of Local Government in Ireland.

In the debate that has followed the jailing of Joe Higgins, TD and his Socialist Party colleague, Councillor Claire Daly, Lynch's irresponsible and anti-democratic measure in his abolition of Domestic Rates in 1978 has barely received a mention.

Had the 'profligate' Charles Haughey implemented such a decision, he would have carried the cross for life. Not, however, the 'real' Taoiseach!

The present writer, would also contend that Lynch's political bequest is today a major source of the immoral and outrageous cost of housing in the republic. The lack of an equitable, progressive and democratic rates system in no small way has fuelled the staggering cost of present-day housing.

The construction of enormous developments of four and five-bedroom housing would quickly be eliminated if a proper rating system existed. In its place, the intrinsic need to build modest houses would be paramount and vital resources would be freed for such a purpose. Housing would become a social requirement, not predominately a speculative exercise. Six out of ten of all units are purchased by people who will never reside in these new dwellings. That's a national shame!

Writing a hagiography on "the man with a will of steel", Bruce Arnold, OBE, could only defend Lynch on the following basis in his "Jack Lynch: Hero In Crisis" (Merlin, 2001):

"Fianna Fail has often been blamed for 'buying' the 1977 general election; notable among the commitments used in evidence is the abolition of rates, which had been proposed by Fianna Fail before the previous election and dismissed as eve-of-poll insanity at the time. Yet the Coalition proposed the same thing in its 1977 programme: the abolition of the rates" (p199).

Ahern And 1977

The following is an extract from Bertie Ahern: Taoiseach & Peacemaker by Whelan and Masterson (Blackwater Press, 1998). Following a successful legal action against the Sunday Independent and Willie O'Dea, TD, the authors claimed Ahern had approved the entire manuscript. In 1977

"…A swing to Fianna Fail was still needed. And the quickest way known to politicians anywhere to finesse a swing is to bribe the electorate. When Fianna Fail published its 1977 election manifesto they brought good, old-fashioned political bribery of the electorate to new heights. Few in Fianna Fail would deny as much today. Domestic household rates and car taxes were to be abolished and social welfare rates across all sectors were to rise. That was just for starters. It was said of the manifesto that if the electorate wanted the moon, Fianna Fail would have written a promise to buy Cape Canaveral, so desperate was their need to return to Government. The manifesto was the brainchild of Trinity College Economics Professor, Martin O'Donoghue, and seemed solely predicted on the notion that if the Government put money into the economy, the economy, of itself, would grow.

"The electorate were slow to bite on the Fianna Fail giveaway with the polls showing no immediate shift of allegiance. The policies themselves were being rubbished by independent economic commentators as 'spending our way out of a boom'—indeed, political commentary in the media was generally hostile to the party. Gradually, however, the middle classes, who were set to benefit most, began looking at their personal bank balances and started moving their votes to Fianna Fail."

AHERN:—
"Abolishing Rates Was Totally Wrong"

"In retrospect, Ahern believes that the 1977 Manifesto was economic make-believe. Other economic commentators are not as kind in their analysis, claiming the manifesto led to a huge national debt that dominated economic and political life for the following decade and took a further decade to get under control.

"The car tax thing was a nonsense and abolishing rates was totally wrong. All we needed was a waiver scheme. I remember at the time there were a lot of old people—Garda widows and retired teachers—who had huge houses but no money and they were being screwed for rates. All we needed to do was bring in a good waiver scheme for the people who hadn't got the bread. Instead, we abolished rates and here we are, 20 years on, and Dublin Corporation have to do everything on a shoe-string because they can't have a local charge."

AHERN:—
"It Has To Be Indirect Taxation Now"

"'I agreed with local charges but you'll not get rates back again. The game is over on that one. It has to be indirect taxation now,' he says." (p24).

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"The Valuation (Ireland) Act, 1852 is still the basic legislation for valuation. Comprehensive revaluations have been undertaken by only two local authorities: Dublin (1908-1915) and Waterford (1924-1926) cities. Private dwellings are no longer liable for rates since January 1st, 1978 when the source of finance became a charge on central funds." (A Dictionary of Irish History 1860-1980, Hickey & Doherty 1987, Gill & Macmillan). New Edition due this month, November, 2003).

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Local Government Speaks Out

A History Of Galway County Council by Gabriel O'Connor, published in 1999, gives a first-class account of the impact Lynch's disastrous policy has had on local government.

"In 1971, when administration of health services was transferred from County Councils to the Regional Health Boards, it diminished substantially the aggregate of local expenditure. A report on 'Local Finance and Taxation', the first of its kind, was published by the Stationary Office in 1972. Its principal proposals were that the valuation system be modernised as a matter of urgency, that valuations be brought to full current values and that rates remissions and exemptions should be drastically curtailed. In 1975 a further report by the E.S.R.I. entitled 'Economic Aspects of Local Authority Expenditure and Finance', confirmed the international use and general acceptability of rates as a form of local taxation. It was accepted that land valuations were outdated and needed a total review. However, in view of the 1972 report and the E.S.R.I. 1975 report, it was somewhat surprising that the Coalition Government in 1976 decided to phase out domestic rates and, in 1977, the incoming Fianna Fail Government abolished domestic rates altogether.

"Following the abolition of domestic rates the government contributed a grant to each County Council to compensate for the loss of rates. The Local Government (Financial Provisions) Act 1978 guaranteed 100 per cent of lost rate income. Galway County Council retained the power to set the rate level, but the Minister controlled the situation by determining the maximum percentage increase over the previous year. The effect was to drastically curtail the financial independence of the County Council. Central government economic management held the rate level below inflation. The position further deteriorated in 1983; following a High Court decision of July 1982 (upheld by the Supreme court in January 1984) that the collection of rates on land valuations as it operated was repugnant to the constitution. Rates on agricultural land were abolished from January 1st of that year.

"Due to the financial crisis of the 1980s, the Government sought to shift a great proportion of its burden onto local government by departing from the 100 per cent recoupment guarantee. This forced local authorities to introduce service charges for local services. This development incurred the odium of the public but did not improve the income of the County Council. The County Council had had a statutory authority to collect domestic water charges in the rural areas. This legislation was expanded in 1983 to enable the then domestic water charges to be levied in urban districts. Domestic refuse was also included as a service charge. The main opposition to these charges came from within the urban districts and these campaigns were supported by opposition parties.

"Following the first and second county development plans, many additional services had been introduced, and others had expanded. These had now to be maintained. The structure of government grant support, took no account of the cost of maintenance of this increased range of services, including the demands under the environmental acts. Galway County Council had no option but to begin cutting back on expenditure where the County Council had discretion. In formulating an annual budget there are inescapable annual commitments such as remuneration, power supply, loan charges, etc. One had to meet these expenses.

"The abolition of domestic rates had a very negative impact on County Galway. In 1981, the County Engineer, Mr. Pat Flood reported that 'while the level of funding for the national roads was adequate… it must be recorded that the funds for the main and county roads fall far short of what is considered necessary for even a minimum standard of maintenance or improvement of these roads'. A major crisis developed in the condition of county roads. If they were not resurfaced every seven years or so, they disintegrated. As a result, the subject of pot-holes and idle road workers became the topic of radio jokes in the early 1980s, and County Galway was no exception. The poor condition of the roads resulted in numerous deputations, and the occasional 'march' to the county buildings, usually on the day of a Council meeting.

"Until the 1980s, Galway County Council traditionally employed a large number of road workers. The Council was very disturbed at the cutback of outdoor staff but there was simply no funding and extremely difficult decisions had to be taken. Many road workers were made redundant.

"These were dark days for the elected representatives and Council staff. A further consequence of the cutback in funds arose when certain legislation was passed by the Government and the Council simply did not have the funds to properly implement the proposals. A good example of this was the statutory duty on the County Manager to implement the Water Pollution Act. The shortage of funds continued for years until it became politically necessary for the Government to do something about it." (p179).

A small example of the disastrous impact of the Recoupment Grant, which was central government's substitute for Domestic Rates: in 1978 Cork Corporation received 100%; 1983: 37%; and in 2002, the grant was 17%, hence the massive increases in Waste Charges and the rates on commercial property.

The Bin Charges are a 'blind': what the Government is doing is a sleight of hand—the Bin Charges will eventually increase to such an extent that they will be rates by another name. However, they will totally lack any equity, and fairness —advantageous to the rich and the new burgeoning middle-class, represented by the Progressive Democrat boot boy, Michael McDowell, Minister for Justice—who cannot even guarantee the holding of his own Courts in Limerick, the birthplace of the Progressive Democrats and home of his Fianna Fail Junior Minister, Willie O'Dea.

The tenant will pay the same as the landlord; the landlord and the nouveau riche will abrogate their property responsibilities.

"As I was reminded recently by a friend in East Anglia, the U.K.'s equivalent of the bin tax charges started at about 188 Euro and now run at around a staggering 4,334 Euro a year" (Gerry Ryan, 2FM, The Star On Sunday, 19.10.2003).

The Irish Farmers' Association

One of the most pertinent observations made during the current dispute is that by the Cork City Alderman and Community Activist, Con O'Connell:

"…there is no disputing that Higgins and Daly were deemed to have broken the law and that the High Court was empowered to jail them but it is interesting to compare their situation with a similar situation in the not too distant past."

"In January, 2000, the then Government decided to increase meat inspection fees to recover the cost of meat inspection. The meat plants attempted to pass the cost on to the farmers and, at once, caused uproar. The Irish Farmers' Association (IFA) picketed meat plants all over the country and forced the lay-off of over 3,000 workers; as a result Mr. Justice O'Donovan made an order in the High Court that the picketing should stop.

"The IFA said they would defy the High Court order and did so. The leader of the IFA said there would be total resistance if any farmer was jailed for contempt of the court order.

"Hundreds of farmers continued to picket meat plants and their leader said not a scrap of meat would be allowed to enter or leave the factories until the dispute was settled. Yet, no one was arrested. Mr. Justice O'Donovan said the IFA and its leader had 'taken up arms against the court'. Who then was that erstwhile IFA leader? None other than the present junior minister Tom Parlon—a member of the Progressive Democrats, who claim to be the party of law and order and will brook no defiance of authority" (Evening Echo, Cork, 8.10.2003).

On January 10, 2000, the IFA imposed a blockade on the meat plants throughout the country. Farmers were seeking an increase of £50 per standard grade animal and the abolition of a veterinary inspection levy.

But the Irish Meat Association (IMA) hit back and went to the High Court where Justice Diarmuid O'Donovan handed down an order preventing the blockade.

The IFA persisted and Justice O'Donovan imposed a £100,000 a day fine. Three days later, he hiked the daily fine to £500,000 and stated:

"...he had no intention of imprisoning and making a martyr out of some member of the farming community. He would continue imposing fines until it hurts and until the High Court order was obeyed" (Examiner, 18.1.2000).

But the IFA said it would not pay any fines imposed on individuals who persisted in blockading meat factories in breach of High Court orders.

It had earlier instructed members to lift their eight-day-old blockades after deciding to obey the court orders and apologise to Justice O'Donovan at a sitting in Dublin.

Justice O'Donovan welcomed the IFA's change of attitude and lifted the £500,000-a-day fine, but warned that he would deal severely with any individuals continuing with the blockades.

As the IFA paid £500,000 in accumulated fines from five earlier days of High Court order breaches, individual farmers were still protesting at various meat plants.

IFA President, Tom Parlon, Deputy President, John Dillon, and almost all of its National Council resigned the previous night.

Tom Parlon, a Junior Minister in the present government, stood down after saying "he would not support the decision to comply with the court order" (Examiner, 18.1.2000).

There was widespread speculation that the resignations in Portlaoise the previous night were a ploy to avoid the massive fines confronting the IFA if it persisted with the blockades.

But an IFA spokesman dismissed those suggestions saying: "It was not a stunt. It was a black night for the IFA."

All Equal Before The Law?

At the height of the blockade, we got a lecture from the legal eagles in Cork's South Mall:

"It is important to understand, however, that whatever one may feel about the rights and wrongs of a dispute, it behoves every citizen to respect a court order. If any other position were to be tolerated, the rule of law would be compromised with the resultant slippage towards an orderless society.

"The fine is a stark reminder of the power and standing of the court, and of the rule of law, in a civilised constitutional democracy which espouses the independent separation of powers between the legislature, the executive and the judiciary" (Richard Martin, LLM, Solicitor, Examiner, 19.1.2000).

But you guessed it—the IFA had the last laugh—they got their £50 per head of beast and succeeded in the abolition of the veterinary inspection charges—all for £500,000 and a bit of anarchy!

"The whole matter has been compounded by some early tactical errors by the IFA leadership. Trade Union leaders who have been around equally tough dispute and court corners have privately commented that it was folly to flout the judges' ruling, and allow the impression to go abroad that they had pockets deep enough to support a £100,000 daily penalty" (Examiner, 19.1.2000).

"Early tactical errors", indeed, but there was no strategic errors, that was for sure! Let the Dublin journalists 'rampage' on!

The 'deep pockets' centred around a rumour that the IFA had set aside a £5 million Fighting Fund. In 2000, the assets of the IFA were believed to be worth £20 million.

These are assets not dissimilar to Trade Unions like SIPTU with huge property portfolios but lacking the iron resolve and single-mindedness of the 'Lords of the Land' when it comes to acting on behalf or in defence of their members' interest—High Courts or any other courts, not withstanding.

The Trade Unions

"The General Secretary of the I.C.T.U., David Begg, has accused the campaigners of 'leading ordinary working people into a cul-de-sac of imprisonment in pursuit of a political objective'" (Irish Times, 18.10.2003).

Commenting on the jailing of Dublin West T.D., Joe Higgins, and Socialist Party Councillor, Clare Daly, Union General President, Jack O'Connor, said:

"It is ironic and deplorable that democratically elected public representatives are going to jail for falling foul of a law that imposes an inequitable tax to fund environmental services. At the same time people are suffering at the hands of land speculators who are hoarding development land to keep house prices artificially high.

"These speculators should be subject to a windfall capital gains tax which would—if properly administered—serve the dual purpose of funding vital environmental services and reducing house prices at the same time.

"Not for the first time in this country, the law has got it wrong and the wrong people are going to jail," declared the SIPTU leader" (Liberty, September, 2003).

"SIPTU's opposition to domestic service charges (for waste collection, sewerage and water) was re-affirmed at the Union's recent National Delegate Conference in Galway.

"The Conference continues to view these charges as a form of double taxation—which are being imposed because of cuts in funding to local authorities by central government.

"The issue of domestic service charges was also linked to the issue of privatisation of local authority services—as delegates recognised that Government policies were increasingly forcing local Councils into making an unreal choice between service charges or privatisation.

"SIPTU believes that both options are unacceptable.

"By adopting a policy of withdrawing refuse collection services from those who do not pay the charge, the authorities are creating a major health risk by leaving waste to rot.

"Meanwhile, the other side of the same coin—privatisation—has led to illegal dumping by the very private operators who were contracted to dispose of the waste" (Liberty, September 2003).

Privatisation has occurred in 41 of the 77 County, City and Town Councils. More than half of County Councils and Town Councils have privatised their refuse collection claiming that the main reason was the non-payment of bin charges.

Dublin charges 156 euro; Athlone is 416 Euro; and Letterkenny is privatised, this is where an illegal dump containing 10,000 tonnes of waste was 'discovered' recently.

Rotten Waste

The outrageous policy of leaving uncollected the refuse bins of those who don't comply beggars belief. Coming from an administration who herald their non-smoking legislation as an example to the rest of Europe. Ahead of everyone else in matters relating to public health.

"Public health authorities said yesterday they were concerned about the speed at which waste piles could increase. Environmental health officers attached to the health boards warned house-holders with uncollected bins to 'double-bag' rubbish and keep it in dry places, away from potential damage by birds, dogs and rodents, or to bring it to a local authority landfill site" (Irish Times,16.10.2003).

It is the middle of August, you're living in a terrace of 30 houses—20 are paying the charges, the others are not. Your bin is collected, the other 10 are not, on the strict orders of the above authorities. But the reality is that the health risks arising in the middle of summer equally affects all the residents, not just the non-payers. Absurd!

This was challenged in the Supreme Court in 2001 by Alderman Con O'Connell of Cork City Council, when he succeeded in having the policy overturned and the local authority was forced to seek recompense through the courts. However, amending legislation has been implemented by the Minister for the Environment this year.

On Tuesday, 28th October 2003, Alderman O'Connell failed in a Supreme Court bid to overturn the amending legislation.

The Labour Party Funks It Again!

"Labour leader, Pat Rabbitte has dropped Tommy Broughan from the party's management committee because the Dublin North-East TD defied party policy on the bin charges controversy.

"Rabbitte told a meeting of the Labour Party parliamentary party in Leinster House during the week that he had removed Broughan from the management committee because he had not followed the agreed party line on the bin protests.

"A week earlier, Broughan expressed his support for the protests and said he had not paid his own charges. He subsequently joined a delegation from the Dail that visited socialist TD and anti-bin charge campaigner Joe Higgins in Mountjoy Prison.

"The Labour Party has criticised the discrepancy in bin charges between one local authority area and another, but Rabbitte has insisted that people should obey the law and pay up.

"Broughan and Joe Costello, T.D., his Labour colleague from Dublin Central, opposed—and voted against —the imposition of charges when they were debated by Dublin Corporation. It was on the point of being dissolved last year for rejecting estimates proposed by city manager, John Fitzgerald, and was only saved when Labour lord mayor Dermot Lacey voted for the estimates, which included provision for the bin charges.

"Local charges were first introduced in 1983 by Dick Spring, then Labour leader and Minister for the Environment." (Sunday Tribune, 5.10.2003)

The Waste Problem

In Belfast, householders pay rates, which cover the cost of rubbish collections and other services. The owner of an ordinary three-bedroom semi-detached house in West Belfast can expect to pay about 550 Euro in rates per year. In Holland, Germany and other EU states, refuse collections are paid for by municipal taxes, which are separate from national income tax.

For decades, successive governments neglected waste management. Even now, the amount of domestic rubbish is growing. According to the Department of the Environment's figures, almost 2.3 million tonnes of household and commercial waste were generated in Ireland in 2001—representing an increase of almost one-third in three years.

According to the Government's own figures, recycling levels remain disappointingly low. Eighty-seven per cent of municipal rubbish is still simply buried in landfills, some of which will run out in the space of three years.

In Ireland, every man, woman and child produces an average 700kg of waste each year—over three times the Dutch rate.

Because of high levels of recycling, composting and incineration, only seven per cent of rubbish in Holland is sent to landfill dumps. The Dutch householder is likely to have up to five separate bags in his kitchen for rubbish.

"Moral Cowardice"

Michael Davitt's contention in relation to moral cowardice is particularly apt in relation to the Dublin ruling-class. No issue highlights this more than the question of tax on property. There is not a civilised country on earth, which in some shape or form property tax is an integral part of their financial administration.

There is no basic moral or political integrity within the mainstream political parties in Leinster House.
The Dublin media mock and scorn the de Valera years—but stop for a minute and imagine how Lynch, O'Malley or McDowell would have faced up to the conflagration of 1939-1945 and the pressure of the Imperial powers. The magnitude of the decision to remain neutral was surely awesome.

That's what moral leadership was all about.

What a contrast with Lynch, who couldn't make a statement on the North without first informing the British Embassy.

We had another example of the the type of political spinelessness during the period of the Residential Property Tax which was eventually abolished. Everybody knows some form of tax on property is inevitable but the ruling clique in Leinster House want to abrogate the 'duties of property' and by means of Ahern's 'indirect taxation now', foist it on those who can least bear it.

Residential Property Tax (RPT)

Residential Property Tax was first introduced in 1983 when the tax was payable in respect of houses valued over £65,000 where combined household incomes exceeded £20,000.

In 1994, the thresholds were significantly reduced by Fianna Fail Finance Minister, Bertie Ahern. The move proved unpopular with many middle-class income households falling into the tax net, particularly in Dublin.

The Fine Gael/Labour/Democratic Left Government pledged to reverse the 1994 threshold changes in its programme document, A Government of Renewal, and this was done in the 1995 Finance Act, making 18,000 householders ineligible for RPT.

In 1996, a Fianna Fail Private Members Bill to remove RPT was voted down.

At the time, only two per cent of income tax payers were liable for RPT which raised about £12 million for the exchequer annually.

This was the fiscally responsible Michael McDowell's attitude to the RPT in 1996, when he and the PDs argued for the abolition of the property tax but were vehemently opposed to the removal of Service Charges:

"There is absolutely no link at all. Property tax is levied by central government and the proceeds go directly to the exchequer. Service Charges are imposed by local authorities. The two are completely unconnected," according to Mr. McDowell.

"Hang on a second: isn't there an argument about taxing the rich to support the poor, or something?

"Many houses pay both charges, so abolishing one means they will still have to pay the other. The argument about being fair across the board just doesn't hold water. It's just being used as an excuse to backtrack into abolition" (Cork Examiner, 9.10.1996)

The Failed PDer

"Finance spokesman, Charlie McCreevy describes the thinking behind RPT as some bolshie clap-trap dreamt up by begrudging lefties and says the sooner it's gone the better.

"He regards Local Government reform as quite a good idea but insists that there is no connection between the two.

"To say the RPT and Service Charges are linked is to make a very tenuous connection. The simple truth is that this is neither a tax on income or property. It was only dreamed up as a piece of typical socialist begrudgery." (Cork Examiner, 9.10.1996).

Brendan Howlin TD was Environment Minister in 1997, and oversaw the RPT. The coalition had political difficulties about abolishing the RPT while Service Charges remained at that time. Fine Gael, Labour's partner, wanted RPT abolished but were happy to retain the Service Charges—this put Labour and the Democratic Left in a pickle with the working-class electorate around the urban centres.

The Service Charges brought in about £60 million a year, which was a significant amount of revenue to local authorities at the time, in contrast to the RPT which yielded only about £11 million to the Exchequer.

At that time in 1996, the threshold of RPT was a house valuation of £94,000 and a family income of £29,000.

RPT was abolished in 1997.

Of course, all the middle-class wafflers on the RTE talk shows support the Bin Charges. Explaining that property has responsibilities would be like trying to convince that lot that Bobby Sands is an Irish Patriot.

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"The absence of any form of property tax and the reluctance of the tax authorities to confront this issue is the most glaring anomaly in the Irish tax system, a leading economist has said.

"Writing in the newly published edition of 'The Economy of Ireland', UCD lecturer David Madden says the absence of a property tax has resulted in a high number of tax payers paying the top rate of tax by international standards." (Sunday Tribune, 8.10.2000).

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Tax On New Homes

Home buyers face an even bigger hurdle as Dublin Councils are currently considering putting a 10,000 Euro tax on new homes.

The capital's four councils want the tax—which would increase house prices by four per cent.

The hike would be higher than solicitors' fees, stamp duty and VAT which are all charged on the total price of a house

It also comes on top of the Government's take on the price of a house which is estimated to be one third of the cost of a new home. This includes VAT, stamp duty, tax on materials and income tax on labour costs.

Any attempt to hike up the cost of new homes is likely to promote outrage from buyers and builders at a time when the cost of an average Irish house has soared to 250,000 Euro.

Dublin City Council has commissioned a report from Deloitte & Touche to research methods of raising funds for infrastructure and it is understood the consultants have suggested a 10,000 Euro levy.

"Rates On Dwellings Can Help Reduce Over-Consumption"

"International commentators, such as the OECD and IMF constantly recommend the re-introduction of rates on dwellings in order to broaden the tax base.

"All the major political parties and most householders within Ireland would be strongly opposed to this. However, even if domestic rates are unacceptable, any alternative system of property taxes/allowances should be judged against the four strong advantages of rates on all buildings.

"Firstly, rates on all buildings would raise 'a tidy wee sum', as John Hume described his Nobel Prize money before donating it to charity. If rates on 1.3m domestic dwellings were levied at 0.25 per cent of market value, the yield would be in excess of 600 million Euro per annum. This compares with the 68 million Euro which Revenue estimated was the tax foregone on all building-related tax allowances in 2000.

"Secondly, rates on dwellings can help to reduce what economists rather indigestibly describe as over-consumption of housing. In the past the annual cost of rates probably forced widows and empty-nesters to trade down to smaller accommodation more quickly than at present. This would result in more people being accommodated within the existing housing stock. While the politician as economist might applaud the entry of a young family into the widow's large house, the politician as social worker would decry the widow's untimely banishment from her circle of neighbours by a punitive tax. The recent hike in Stamp Duty rates further reduces movement within the housing chain and in commercial property and has resulted in Irish investors taking flight to the UK.

"Thirdly, rates on dwellings helped to restrain house prices by reducing the disparity between houses in preferred and in non-preferred areas. Looking to the medium-term, it will be much more difficult to achieve the concentration and dispersion objectives of the National Spatial Strategy, without a coherent set of location-specific subsidies and/or taxes. More immediately in Dublin and the other four cities, the very slow roll-out of public transport infrastructure (particularly in grade-separated junctions and new dedicated busways) has resulted in a continuing reduction in overall traffic speeds. This has meant that city areas without fast, reliable public transport are becoming locationally obsolete i.e. are becoming non-preferred areas, at a rate which would have horrified previous generations.

"Fourthly, the absence of a local revenue base over which they have some control has probably diminished both the ambition and the efficiency of local government in Ireland. Interestingly, the two major infrastructural problems impeding Ireland's economic upturn are in the areas of health and transport. There has been a failure to date to successfully deliver these services at local level, in spite of nationally-provided funding and norms for the delivery of such services. Ring-fencing funding from car taxation for local authority spending on secondary roads was an imaginative move, but similar additional initiatives are required.

"All systems of taxation are imperfect, but some are less imperfect than others. The capture of building-related allowances by wealthy taxpayers could not continue. And paradoxically, the building industry will accelerate its activity on these tax-based schemes before they expire at the end of next year. But looking to 2005 and beyond, Irish settlement patterns cannot be determined solely by market forces and planning guide-lines: a coherent set of location-specific subsidies and/or taxes will also be required" (Irish Independent, 17.10.2003, Jerome Casey is a consultant specialising in the built infrastructure).

We salute the spirit of the men and women in Fingal—they have hearts of lions, it is they who carry on the spirit of Connolly and Larkin, and of their own forefathers in the Citizens' Army.

However, whilst they have the right notions, they have the wrong way of expressing them. They need leadership!

It is doubtful if it will be forthcoming from political Labour as we understand it in Ireland today!

Perhaps it is SIPTU and the Trade Union movement who hold out the best hope—"These speculators should be subject to a windfall tax..." (Jack O'Connor, President). We agree wholeheartedly but it is not far enough.

Jerome Casey's advocacy of Rates on Dwellings is a harbinger of what's to come. Colm Rapple too, has put forward similar proposals: "We can all bear a fair tax on our property, Charlie" (Ireland on Sunday, 19.10.2003).

It could easily be the basis for a resurgence of Irish labour if we got it right on this crucial issue of making the rich pay. For rest assured, property tax in some shape or form will arrive.

Irish labour can choose to ignore the issue and wail and whinge about bin charges or we can make the difficult decision and formulate our own proposals on the 'duties of property', an alternative which is both equal and fair.

We know what Davitt would have done—don't we! And so does Michael O'Leary in his Westmeath mansion!