Bin Taxes in Dublin – Stephen Collins sums up the Kant

The Irish Times – Saturday, February 18, 2012
Householders should not have to subsidise cheats

INSIDE POLITICS: The waste service was privatised in the first place
because politicians made it impossible for public authorities to
enforce payment

THE HULLABALOO in the Dáil over the householders in Dublin who won’t
have their bins collected because they refuse to pay for the service
is a typical example of the way the Irish political system panders to
the cheats while taking law-abiding citizens for granted.

The big majority of households in Dublin have signed up to pay the
charges, but the reason for uproar in the Dáil on Thursday was the
prospect that those who refuse to pay won’t be subsidised indefinitely
by their honest neighbours.

It was all of a piece with the controversies over the €100 household
charge and the septic tank charge with Opposition politicians, and
even some on the Government side, lining up to express solidarity with
those who want to shirk their civic responsibilities.

Many of the 18,000 households in Dublin that failed to meet the
deadline for the bin payment probably just didn’t get around to it in
time, and the final number of defaulters is likely to be much smaller.
At the end, though, there will be a hard core of non-compliant
householders and the service providers have to be able to deal with
them, as the ESB, Bord Gáis or UPC would do.

The attack by a variety of politicians on the private refuse company
Greyhound for its refusal to collect the bins of defaulters is a bit
rich. The reason the service has been privatised in the first place is
because politicians made it impossible for the public authorities to
enforce payment. Some openly encouraged householders not to pay, while
others opposed the enforcement of the law by councils for fear of the
bad publicity that might ensue.

Tánaiste Eamon Gilmore summed it up in a broadside against Joe Higgins
during the Dáil exchanges on Thursday. “The deputy spent years
encouraging people not to pay their bin charges to Dublin City Council
and other local authorities, and as a consequence undermined the
viability of the service being provided by the local authorities.”

Higgins responded by pointing out that Gilmore had himself opposed
local charges in the past and had deplored the non-collection of
defaulters’ bins. The Labour leader is finding that the responsibility
for running the State has changed his perspective a bit. Whichever way
the blame is apportioned, the net effect of the anti-charges campaigns
over the past three decades is that bin collections have been
privatised by almost all councils.

It also seems that people are much more willing to pay up when the
bill comes from private operators rather than public bodies. The level
of compliance is related to the sanctions applied for non-payment as
well as the prevailing attitude in society to defaulters. The
inability of councils to ensure widespread compliance is what has led
to the privatisation of their services.

One of the reasons for the scale of our last recession back in the
1980s was the inability of the State to collect the income tax it was
legitimately owed. The indulgent attitude to tax evasion was one of
the problems. Charles Haughey and other wealthy individuals were able
to dodge tax through offshore accounts partly because there was a
level of tolerance for such behaviour. Attitudes to income tax evasion
have changed considerably since then. Much tougher penalties and far
stricter enforcement have been crucial in changing public attitudes.
While nobody likes paying income tax there is now a sense that the
system is broadly fair and people exposed as tax cheats are not
treated with the same level of indulgence as of old.

The argument that people pay enough income tax and so shouldn’t have
to pay other levies or charges simply doesn’t stand up. The statistics
show that Ireland is not an overtaxed country by comparison with its
EU neighbours, and in almost all of them a range of local taxes or
service charges are accepted as normal.

The fairest and most efficient way of supplying services to people is
if they are charged in proportion to usage. People will use water more
efficiently and engage in recycling if the charging system encourages
them to do so. If water and refuse services are paid for out of
general taxation there is no incentive to use them prudently.

The thrust of the campaign against the charges by Sinn Féin and the
hard left is mainly directed against the Labour Party but all
Government TDs had better be prepared for a long fight. The reduction
in the septic tank registration fee from €50 to €5 was a big mistake
as it sent a signal that threats of non-compliance can work.

Fairness is an essential component of the tax system. If citizens
conclude that the cheats are getting away with and not paying charges,
then non-compliance is likely to spread.

Greece provides a stark example of the kind of problems that arise
when a taxation system doesn’t work. A key reason that Ireland has
managed to decouple itself from Greece as one of the “sick men of the
EU” is that we have an income tax system that works and is fair. The
top 5 per cent of income earners here pay 40 per cent of the tax, and
that is as it should be.

In Greece the professional classes and the wealthy engage in tax
evasion on a grand scale. The result is that the state has been
bankrupted, a worrying level of political violence has developed and
the very survival of democracy could be in question.

Our problems are of a different order, but politicians might make
their task of getting to grips with them a bit easier if they focused
on the problems facing the majority of decent citizens who try to pay
their way rather than indulging those who can but won’t pay.