Let’s make tax clearer

Today I said that the Government needs to ensure it is clearly explaining where our taxes are going, as we struggle to get on top of our deficit. I was speaking about this after the British Government announced that it would be issuing personal statements detailing how exactly taxes are being spent.

We need to ensure we are communicating clearly with the public at all times. The Irish people have shouldered a lot of the burden of the economic crisis in recent years, and I believe it is important that we make sure we explain how their hard earned taxes are spent.

There is a common misconception that if it wasn’t for the banking crisis, we wouldn’t have a deficit. This simply isn’t the case; aside from the cost of bailout out the banks, we are spending more than we are earning. Some clear information about the tax take, and where it is being spent could help to counteract this impression. For example, are most people aware that about a third of all Government spending went on social welfare payments in 2010?

An Edelman study of trust earlier this year showed that 77% of people wanted the Government to communicate honestly and frequently, but that only 11% think this is happening. The British Government has decided to publish personal tax statements to make the tax system more transparent and easier to understand. Perhaps we should consider something similar here.

I think that a better understanding of the challenges that we face as a Government might help to rationalise some of the difficult decisions we are taking as we face our responsibilities head on. The Irish startup company Getbulb.com have come up with an effective way of illustrating our tax intakes and outgoings, as outlined below. This is one of many ways we could use to communicate these details in a visual, appealing way.

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