Photo credit: Gript

SCALLAN: The Irish government can’t tax people out of poverty

Only a politician could look you dead in the eye, and tell you with a completely straight face that the government has to increase tax on heating to make poor people’s homes warmer.

It’s no secret that energy prices are big on most people’s agenda at the moment, as prices continue to surge for businesses and households.

According to the CSO, the number of people in Ireland unable to properly heat their homes has doubled in the last year, as energy costs spiral out of reach of most ordinary people – though you probably didn’t need an official graph to tell you that. Most households can feel the bite for themselves, irrespective even of the ominous data emerging from official channels.

And that’s why this week yours truly attended a government press conference, during which I questioned the newly-appointed Finance Minister, Michael McGrath, about the country’s scheduled annual carbon tax hikes, set to take place on April 1st of this year.

Both Minister McGrath, and his Fine Gael predecessor Paschal Donohoe, signed off on these hikes last year – despite the country being in the depths of a crippling energy crunch.

And so several months on it seemed worthwhile to ask: “Would the government consider suspending carbon tax hikes in the coming year to try and ease energy and petrol cost?”

However, the Minister’s response was an unusual one to put it mildly.

“No,” he replied flatly. “I think it’s important to remember what we’re doing with those carbon tax receipts.”

He went on to explain that the government needed to hike taxes on energy to – get this – make people’s homes warmer.

I’ll let McGrath explain in his own words:

“We are using some of those receipts to fund the anti-poverty measures in social protection. So we are actually funding the expansion of eligibility of the fuel allowance for example…and also by investing in retrofitting, which, for many of the poorest households, is the best long-term investment that we can make, to try and make their homes warmer and more comfortable.”

So, in short, his response was that the government needs to hike taxes on the poorest people among us, to fund “anti-poverty measures” and help them stay warm. And mind you, this is coming at a time when, as mentioned earlier, the amount of people struggling to heat their homes is more than doubling year-on-year.

Clearly, whatever the government thinks its “anti-poverty” measures are doing to make the poor’s homes warmer, it is objectively not working by any measurable criteria.

I don’t think you need to be an economist or financial guru to realise that increasing taxes on briquettes is probably not going to help people afford heating. But for those of us who do like to see the data, it’s worth pointing out that, as previously reported on Gript, fuel like coal and heating oil is far less affordable to Ireland’s poorest workers than it was a decade ago.

To take a specific example, before carbon tax was introduced, it would take a minimum wage worker around 1 hour and 30 minutes to earn enough money to afford a 40kg bag of coal.

Today, a worker on minimum wage would have to work for 3 hours to afford that same bag.

So in other words, since the government introduced carbon tax, coal has become twice as expensive for the poorest among us.

And yet apparently, according to Ireland’s new Finance Minister, the purpose of this policy is to alleviate fuel poverty. Does this make sense to anyone?

It’s also probably worth pointing out that in McGrath’s response, he didn’t once mention the climate or the environment. The purpose of the tax, in his words, is to fund various social programs and schemes.

Whether one agrees with these schemes and thinks they’ll be effective or not, the carbon tax is starting to seem suspiciously like just any other government levy or charge to fund whatever the project of the day is, and less to do with actually saving the planet.

In short, the government’s M.O. is to wring every cent they can out of you for years in the form of tax, and then when you’re struggling to make ends meet, give you back a small, insufficient portion of that money and act like they’re helping you out.

What lovely lads. Honestly, what would we do without them?

It’s worth noting as well that the same government bragging about its record-breaking tax revenue is also telling us that they can’t afford to let you buy cheap briquettes.

And while some might say that “The increased tax revenue is from corporation tax, which is expected to decline in the coming years,” that’s the government’s fault too. They’re the ones who increased the country’s corporation tax, bowing to international pressures from the OECD, and making Ireland’s FDI economy far less competitive in the process. They put the economy in jeopardy, and then tell you they can’t help you because the economy is in jeopardy. You actually couldn’t make it up.

The fact of the matter is, it is impossible to tax people out of poverty, and it is nonsensical to try. People have every right to feel frustrated by a government which not only creates problems, but kicks the public while they’re down as well. And until the state gets its finger out and stops making people’s lives needlessly harder, that frustration is only going to increase going forward.

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