Sir, - In 1960 one could buy a three bedroom semi-detached house with garage in Dublin for £2,000. The average industrial wage at that time was about £600 to £700 a year. In other words, a good house cost three times the average industrial wage. The average industrial wage now is around £15,000. The cost of an average house in Dublin is about £150,000. It now takes 10 times the average industrial wage to buy a house. The real purchasing power of wages has been eroded dramatically.
In addition, our income tax system has taken a bias against earned income. In 1960 there was a morally justifiable distinction between earned income and unearned income. A quarter of one's earned income was exempt from income tax.
That important distinction was abolished along the way and in addition the burden of domestic rates was shifted to income tax, thereby placing a greater burden on earned income.
The social and economic circumstances of our time warrant the reintroduction of Earned Income Relief. Might I suggest the following framework:
Twenty-five per cent of a person's earned income (to a maximum of £5,000) be exempted from income tax and PRSI, the Earned Income Relief being given by way of a tax credit at the lower rate of tax.
That is to say a person earning £20,000 a year would be liable for income tax on £15,000, less allowances.
Our politicians need to apply themselves to making our income tax system more just and equitable and to developing a system which can be modified easily to eliminate injustice to those with lower earned incomes. The reintroduction of earned income relief would be a good place to start. - Yours, etc., Leo M. Duffy,
Navan, Co Meath.