I congratulate people who have a strong opinion on Charlie McCreevy's Budget one way or another. Such an opinion suggests not merely that they understand it, but they are also able to make long-term judgments on it. I myself am not. My brain turns into porridge whenever it sees the word finance. For a long time I thought ERM was a rock band, whereas in fact it's the sound I make when trying to understand a budget speech.
This doesn't mean I haven't done my best to help those fearfully clever people in our finance pages, who sit talking Urdu to one another all day. When I sauntered amiably into the finance area, Jane Suiter, who has a brain the size of France and who can mentally calculate the value of pi to the first 200 places, would go pale and exit as if in an ejector seat. Cliff Taylor, who at the drop of a baht could tell you how many Peruvian escudos you would have got for 45,378 Uganadan shillings in February 1969, would unleash his full verbal weaponry on me: Stand Back! You have been warned! VHI relief @ 24 per cent, minus personal allowance at 24 per cent, plus tax on covenants @ 22 per cent, allowing for 22 per cent tax-band of £20,150, with full mortgage ceiling of £5,000, and including tax band for those in receipt of lone-parent allowance. . .
Happy days
It never failed: I would reel back like a vampire being hosepiped with pureed garlic. So now I spare them my monetary theories.
These are happy days for the colossal brains in the finance section. Jane, Cliff and the others no longer have to employ Gurkha sentries against my approach. I bother them no longer.
So. I say all that follows as tentatively as a man who's just had a vasectomy and is now lowering himself into a bath full of piranha. On the one hand, when my wife goes out to work and has half her income confiscated at source, because our twin allowances are absorbed in my income - and I have already exhausted the sum total of my financial knowledge here - it seems perfectly monstrous. The question arises: why would she bother?
On the other hand, is it right and just that the couple for whom the woman - and we are normally talking about a woman here - who stays at home to mind the children are taxed more punitively than the couple who both go out and work? Of course not.
Enough. My head is hurting.
I don't understand tax, and that is why I have a nice accountant called Sophie to handle my affairs. But I think I understand something else. I think I understand levies. There's nothing complex or shifty or devious about levies. They are straightforward theft; and they do definitely discriminate against certain people.
Health levy
Take the wicked 2 per cent "health" levy, which manages to break two of the Ten Commandments in a single breath: One, Thou Shalt Not Mug Perfectly Harmless Strangers and Help Thineself to Their PayPackets; and Two, Thou Shall Not Tell A Whopper.
We know the "health" levy is straightforward larceny, not for health, since it vanishes into the central Exchequer out of which all current expenditures, including those vast civil servant pensions, are paid. And though we never get that money, we nonetheless pay tax on it as though we did. The 2 per cent deduction, therefore, in effect becomes close to a 3 per cent deduction.
And that sounds bad; but stay. There is worse to come. There is also the iniquity of PRSI. This is charged at the rate of 4.5 per cent for people in the private sector and, of course, only 0.9 per cent for those in the public sector, apart from recent recruits. And on this also you pay tax. The 4.5 per cent deduction, with the tax added, actually comes to about 6.5 per cent of the first £25,400 earned.
So all in all, total levies, irreducible and unavoidable, account for nearly 10 per cent of your salary if you are in the wealth-creating private sector and you are earning about £25,000 a year. Now. Let is look at this a little bit more closely, namely at a couple who both work and whose combined income is £50,000. The levy-related deductions at source account for nearly £5,000, even before taxation has begun on the income which they actually receive.
Staying at home
But what about the couple in which the man (say) earns £50,000, and the wife stays at home? In addition to the allowance the housewife gets for being a dependent, there are other clear benefits. For example, there is only one health levy of 3 per cent on the £50,000 income; only one PRSI levy (for PRSI ceases over £25,400).
Therefore, according to my rusting Ford Edsel of a brain, the couple with the child-minding wife are better off, in reduced levies alone, to the tune of well over £3,000.
To be sure, I can understand why people get hot under the collar, either way, about Charlie's proposed tax changes. But what I completely fail to understand is the absence of any uproar at all over the inequities of the health levy and PRSI. "Fees", such as those charged by barristers and solicitors, are immune to these deductions; but not the wages and the salaries of PAYE mugginses. So why silence from SIPTU on this? Or am I just being stupid?
Probably.