No representation without taxation: August 25, 1997 issue of New Thinking

August 25, 1997 New Thinking:
No representation without taxation

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August 25, 1997

No representation without taxation

This week's New Thinking is brought to you by
Kevin Sweeney

Benjamin Franklin once said the only two certainties in life are death and taxation. In the 1980s, during the heyday of Thatcherism and Reganomics, taxation was perceived as a fundamental infringement by the state on the right of the individual to earn and spend money as they chose.

Many people believe that in a future, wired world, freedom from taxation will be possible. If you live in Ireland, work in New York and bank in Australia, you will be beyond the reach of the taxman (or woman), the argument goes.

The proposition has two fundamental flaws. The first is easily addressed: if the government where you live can't tax your income, they can tax your property, or your shopping, or your mortgage, or your car. The list is almost endless.

The second flaw is that taxation is not an unjust burden we pay as individuals, it is the price of living in a complex modern society. If everyone who can evade paying taxes does so, we will all pay the price as services wind down.

Right now, Ireland is in the middle of the biggest economic boom it has ever experienced. Much of this boom has been created by multinational companies (including software giants) who came here because we have the skills they need. The origin of this boom can be traced back to 1968, when the Government introduced free second level education.

The Irish taxpayer has invested a huge sum of money in education in the last 29 years. If the pundits are right when they say that knowledge is the key to the economic future, then the Irish taxpayer can expect to go on paying a lot of money to support the education system. If anything, the cost is likely to rise dramatically in the near future as the government moves to integrate computers into the educational system.

Education is only one aspect of a sophisticated modern society. Our taxes keep the sewers working and the police force paid. The US taxpayer funded the creation and development of the Internet. It was taxpayers' dollars that developed the first database. Private enterprise would not and could not have funded it.

Governments are very inefficient, and a lot of our taxes are wasted. But the argument that privatizing services will make them more efficient is not necessarily true. Ask anyone using the privatized bus services in the UK. Big organizations are inefficient. Have you ever rung technical support in a large computer manufacturer and compared the experience with ringing a small computer dealer?

In 1977, an incoming Irish government abolished local government taxation to fulfill an election promise. The plan was to fund local government services from central funds.

This worked well in most counties in Ireland except in County Cavan where I live. Cavan has a lot of roads per head of population and the terrain and soils create special difficulties for road maintenance. By 1987, the county's roads were wrecked. We didn't have to pay local taxation but we had to buy extra tires, shock absorbers, steering rods and accept that our cars would depreciate more quickly than cars in the rest of Ireland.

The Internet will change many things but Ben Franklin's dictum about death and taxation will still hold good in a wired world.

Kevin Sweeney

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The Internet will change many things but Ben Franklin's dictum about death and taxation will still hold good in a wired world.