17 Nov 2014

Charging the Irish

The Irish are upset that they are being asked to pay for the water they use (replacing a system of "rates" where property taxes covered the cost of water). This columnist says the charges make sense (I agree), but I see three reasons for opposition:
  1. The system -- after years of underinvestment -- is run down. People are upset at charges for a poor service. It would have been easier to raise charges after improvements arrived, but that could take years
  2. The shift from rates to charges looks like it will harm the poor and help the rich. The allocation of 57 liters, free, per person will not be acceptable for people claiming a right to use as much water as they like
  3. There's a perception that charges are directed at repaying "odious debt" from bailing out banks. I bet that charges are aimed at cost recovery alone, but it's clear that the government was too broke to continue to subsidize users
Bottom Line: Nobody likes to pay more for anything, and politicians love to hold water charges down for popularity, but users who pay for water are far more likely to get the good service they deserve as customers.

H/Ts to DL and GU


Ron Griffin said...

Here's a cite that presents the basic econ argument:
Gardner, B. Delworth and Randy T. Simmons. "The Economic Effects of Using Property Taxes in Lieu of Direct User Fees to Pay for Water." In Aquanomics: Water Markets and the Environment, pp. 225-46, editted by B. Delworth Gardner and Randy T. Simmons. New Brunswick: Transaction Publishers, 2012. Not sure how you feel about the book title:)

David Zetland said...

@Ron -- thanks. Any chance of getting a URL for the chapter?

BTW, I asked about the name. They were "pressed" into it, if I recall.

Anonymous said...

It's worth noting that "rates" are also a very new introduction in Ireland (post-bailout). Until very recently, water services were paid for through general taxation (income tax, etc) - distributed by the central government to the local councils (now superseded by Irish Water). So it's not really a shift from rates to water charges but a perception of paying nothing to now paying water charges ("nothing" being income tax, etc). I should note that my comment applies to residential use, as businesses have been paying water charges for some time now.

Anonymous said...

I agree with your points.
Three other issues about Irish water complaints:

1. It appears that people are paying for water use to Irish Water, but the taxes from which water was previously funded will not be explicitly reduced i.e. water charges will increase the gross amount of money people pay. I think that's part of the evidence for water charges being part of the Troika bail-out conditions i.e. paying foreign bond holders;

2. The education programme to prepare people for water charges has been woeful. If there'd been a long and informative programme about the failings of the existing water system and what it was going to take to claw back a functioning water system from years of under investment, then there may have been a better feeling of people getting something out of the money now being proposed to be charged for;

3. There is a strong activity in many resentment classes in Ireland currently. In part it's because of several years of austerity and additional taxes, and people are fed up. In part I think Irish people like complaining. In part it's because water charges has been a wonderful piece of media hype that just keeps on giving. In part because organisation on social media and internet has burgeoned in Ireland. A good example is the protests being organised North and South about electricity pylons and against wind turbines

David Lloyd Owen said...

The lack of transparency in the water tariffs lie in lack of an explicit quid pro quo - what are you getting in return for this new bill? Either income tax ought to be reduced pro rata or there should be explicit spending commitments using the funds no longer required for subsidising water utility services.

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