The service charge con

Cover story for WSM paper. The service charges that are being brought in north and south of the border are part of a process of further increasing the proportion of tax paid by workers. The trend in global capitalism is to replace 'progressive' taxes (like income tax) with flat-rate taxes (like VAT, service charges, etc) to further shift the taxation burden from rich to poor.

 

The service charge con

Taking from workers to give to the rich

 


The service charges that are being brought in north and south of the border are part of a process of further increasing the proportion of tax paid by workers. The trend in global capitalism is to replace 'progressive' taxes (like income tax) with flat-rate taxes (like VAT, service charges, etc) to further shift the taxation burden from rich to poor. This is the policy advocated by the world bank, IMF, WTO and virtually all of the institutions of global capitalism.

In the south all through the Celtic Tiger workers' pay rises were never much more then the inflation rate. But at the same time the bosses were making super profits. This could be sold to workers because of cuts in the rates of PAYE tax which meant that at the end of the day we ended up with more money in our pockets.

The imposition of service charges (e.g. the Bin Tax) will take this money back. PAYE workers are giving the self employed and corporations tax breaks. And even within the PAYE sector low paid workers end up paying a greater proportion relative to more highly paid workers. Simply put, the service charges are all about shifting the tax burden even more onto the shoulders of ordinary workers.

Minister Martin Cullen has indicated that he hopes to get the bin charge up to 700 Euro a year. And we know that they hope to get other charges up by a couple of hundred as well. The key thing about these charges is that a millonare like Tony O'Reilly pays the same as a cleaner or a bus driver.

Take two households. One has an income of 20,000 the other 150,000. For the household earning 20,000 paying out 900 euros in service charges is equivalent to an over 5% hike in income tax! For the one earning 150,000 a service charge bill of 900 euros is equivalent to a 0.6% hike in income tax.

So for many workers the introduction of service charges has wiped out years of take home pay gains due to cuts in PAYE tax. The rich have kept the benefits of these percentage cuts, ending up thousands or tens of thousands of euros better off. It's time to tell them where to get off.

First published in Workers Solidarty 77, Sept 2003

WORDS: Andrew Flood (Follow Andrew on Twitter )

  


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