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Analysis/Comment Last Updated: Jan 24, 2011 - 3:16 AM


Irish General Election 2011: Independent/ Dependent TDs and the €206,000 tax-free bonanza
By Michael Hennigan, Founder and Editor of Finfacts
Jan 21, 2011 - 4:01 AM

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Today is the 92nd anniversary of the first meeting of Dáil Éireann in the Round Room of the Mansion House, Dublin, January 21, 1919.

Last November it was reported that a letter, written 18 days before his death at Béal na mBláth, records Michael Collins, one of the leaders of the fledgling state in the midst of a Civil War, offering to pay half of the bill for a car hired for campaigning during the June 1922 election because some of the journeys were personal trips. The letter was written to Skibbereen solicitor Tom Healy who had acted as election agent for Collins and seven other candidates. He hired cars for canvassing from local firm Johnson & Perrott, a company that still exists.

The letter signed 'Miceál Ó Coileáin' would be strange in modern Ireland with the contrast between the way most people handle their private finances and the wanton/shameful Irish lack of a duty of care when it comes to public funds. Photo: Houses of Oireachtas Commission

Irish General Election 2011: With the date of March 11th set for the general election, it is expected that there will be a large number of candidates aspiring to be so-called 'independent' TDs and apart from reinforcing the pernicious disease of clientism, there is the issue of the €206,000 tax-free bonanza over a Dáil  term - -  a relic of the free spending Ahern/McCreevy days.

Parliamentary pay and expenses may seem of little consequence but it reflects much else in the way an economy is run.

On Thursday in Stockholm, OECD Secretary-General Angel Gurría presented an economic survey of Sweden and said: "The economy is now growing at an annual rate exceeding 5% and we expect it to grow by about 4% in 2011 and 3½ per cent in 2012.

The fiscal position remains strong. The public sector deficit is expected to have been below 3% of GDP in 2010 and to return to a surplus by 2012. Public debt remains relatively low. And contrary to many other countries, you reformed your pension system years ago, so you are not facing huge future liabilities, as a result of the ageing of your population.

The labour market, where the scars of the recession generally take longer to heal, is already recovering. Employment and participation rates remained high throughout the crisis.

Last but not least, Sweden is spearheading efforts to green the economy. Sweden managed to decouple its GHG emissions from growth. It now boasts one of the lowest GHG emissions per capita amongst OECD countries.

This is such a positive picture that you could be excused to rest on your laurels. You shouldn’t. You are never totally free from external shocks. And it is in good times that you should prepare for future storms. This is the time to strengthen fundamentals even further."

Members of Sweden's Riksdag receive a basic, monthly pay of SEK 56,000 (€6,200), a sum that is subject to income tax - - and is at a higher level than Ireland’s.

Members living more than 50 kilometres from the Riksdag are entitled to reimbursement of up to SEK 7000 (€780)/month spent on overnight accommodation in Stockholm. However, the Riksdag has about 250 overnight apartments which are provided free of charge for members.

Fifty TDs only get the basic Dáil salary of €92,672 and their overall earnings in 2010 were at an average of €112,000

In Ireland, an 'independent' TD can trouser over €41,000 tax-free annually, with no need to justify where it has been spent and this is in addition to a raft of other allowances and public funding for 2 staff.

In 1997, the non-party TDs negotiated with Bertie Ahern for an allowance equivalent to the Party Leader's Allowance and in March 1998, Minister for Finance Charlie McCreevy announced big rises in expenses for politicians including the new allowance of about €13,000 tax-free annually for non-party TDs; McCreevy cut the radius from Leinster House in respect of claiming  overnight allowances, from 20 to 15 miles; the flat-rate daily travel/pocket money/turning up allowance for TDs and senators was increased from £26.45 to £45 and applied to all members who lived within 15 miles of Leinster House.  

In 2001, following revelations at the Moriarty tribunal that Taoiseach Charles Haughey had bought hand-made Charvet shirts in Paris costing over £15,000 in 1991, with money drawn from the Fianna Fáil tax-funded party leaders' allowance, new measures were introduced to have such disbursements audited.

However, while non-party TDs were to have their special allowance also audited, that proposal was later dropped, presumably following pressure, and in the same year, McCreevy extended the allowance to non-party senators.

The Standards Commission reported last year that political parties received a total of €13,603,264 in state funding for 2009. The money was paid to the parties under the Electoral Acts and under the Party Leaders Allowance legislation.

Five parties (Fianna Fáil, Fine Gael, Labour, Sinn Féin and the Green Party) received funding of €5,438,385 under the Electoral Acts and those five parties along with the Progressive Democrats received €8,164,879 under the Party Leaders Allowance legislation.

The funding is not subject to income tax and may not be used for electoral or referendum purposes. The level of funding is linked to pay increases in the civil service; however, the legislation which governs the funding is silent on pay decreases. Qualified political parties must furnish to the Standards Commission Statements of Expenditure of the funding received.

The commission said non-party members of Dáil and Seanad Éireann also receive funding under the Party Leaders Allowance legislation. The amount payable to each non-party member of Dáil Éireann during 2009 was €41,152 and the amount payable to each non-party member of Seanad Éireann during the same period was €23,383. The total paid to non-party members was €306,000. Non-party members are not required, however, to provide a Statement of Expenditure of the allowance to the Standards Commission, or to any other authority.

With the drop in house prices, a TD could buy a taxpayer-funded apartment in Dublin without a loan, in 6-7 years.

Senator Shane Ross has announced plans to contest the Dublin South constituency as an independent.

Since 2007, as a university senator, he will have received over €80,000 tax-free from this special allowance alone by March.

If Ross is elected to the Dáil, his expenses over a full term following 'reforms' which took effect from March 2010, will be as follows:

Non-party allowance: €206,000; €75,000- €173,000 (the minimum is paid without presenting receipts), for general expenses (it is called the 'public representation allowance'); €60,000-€189,250 for travel and accommodation, and €8,000 for setting up a constituency office, which can be in his house, without producing any receipts.

If he lives within 25km-60km of Dublin he will receive €28,106 per annum, tax-free, to meet travel expenses to work, and for constituency travel.

He will also have public funding for 2 full-time staff.

Ireland is bankrupt and despite the broken political system, many voters will look no further than their parish pump; if non-party candidates are not willing to surrender a tax-free gift that is greater than Ireland's annual per capita earnings before tax, don't be fooled by messages of radicalism.

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