Forty years ago, the PAYE revolts rocked Ireland. Paul O’Neill tells the story of this oft-forgotten period when Irish workers fought for a more progressive taxation system, while the establishment struggled to reign in the movement.
From 1979 to 1983 Ireland witnessed a number of militant strikes, including an enormous general strike of 700,000 workers, with associated large demonstrations throughout the twenty-six counties.[efn_note]Kieran Allen, Fianna Fáil and Irish Labour (Pluto, London, 1997) p. 159.[/efn_note]
These were some of the largest marches by organised workers in Irish history, such that the BBC described the enormous demonstration on 20 January 1980 as the ‘largest peaceful protest in post-war Europe’.
The strikes and marches took place to demand a more equitable taxation system for workers. Workers paid, as they continue to do today, income tax through the Pay As You Earn (PAYE) scheme. Under the PAYE system employers deduct income tax and other deductions directly from your wages.
The movement for a more equitable taxation system took place partly in reaction to the failure of the Fianna Fáil government to introduce increased taxation for prosperous farmers and wealthier members of society. Unlike other anti-tax movements, the strikes and marches were not influenced by the political right; the workers were fighting to replace an unjust tax system and to ensure that the wealthy paid their ‘fair share’ of tax.
In 1975, PAYE workers paid 71.4 per cent of all income tax – by 1978 they were paying 86.5 per cent. It is calculated that in the period 1974-78, PAYE workers paid £1800 million in income tax, the self-employed and farmers paid £320 million and £20 million, respectively.[efn_note]Diarmaid Ferriter, Ambiguous Republic: Ireland in the 1970s (Profile, London, 2013), p. 508.[/efn_note]
There were stark differences between the taxation of PAYE workers and that of the self-employed and companies. For example, the Revenue Commissioners did not have sufficient resources to investigate the accounts of the self-employed and of companies. Paul Sweeney notes how there existed a perception that the twenty-six counties had one of the ‘most efficient PAYE tax system in the world’ and a scandalous taxation system for the self-employed and companies.[efn_note]Paul Sweeney. ‘Symposium on taxation – The PAYE sector’s perspective of taxation and trade union demand for reform’, in Dublin: Journal of the Statistical and Social Inquiry Society of Ireland, Vol. XXV No.1, 1983/1984, pp27-35 – http://www.tara.tcd.ie/handle/2262/7828 [/efn_note]
Everyone has to pay indirect taxes as a consumer of goods (for example VAT and excise duties) and the burden of these indirect taxes falls heaviest on those with the lowest incomes, who pay the same amount of tax as higher income earners. The twenty-six counties had the second highest rate of indirect taxes in the European Economic Community (pre-cursor to the EU) and during the 1970s the average percentage of indirect taxes as a percentage of overall taxation was approximately 47%.[efn_note]Ibid.[/efn_note] One study stated that “…the poorest 10 percent pay at least twice as much indirect tax, relative to their income, as the richest.”
Economic crisis of the 1970s
The south relied heavily on importing oil as a fuel for electricity, transportation and industry. There were two major oil shocks during the 1970s, firstly in 1973 following the Arab-Israeli war. The second oil shock took place in 1979 following the revolution in Iran and this crisis was exacerbated by the Iraqi invasion of Iran in 1980. The increase in inflation (rising prices) caused by the increase in oil prices, led to a fiscal drag (a fiscal drag occurs when the wages and spending of workers start to rise and the tax allowances\thresholds remain unchanged, leading to workers paying more income tax). The relentless rise in prices and the decreasing net pay, caused by the fiscal drag, led to deep unrest among PAYE workers.
There was also an increasing unemployment problem during the 1970s. In 1976, the official figures for unemployment was ten per cent (112,000 registered as unemployed out of a working population of 1,125,000). Some union officials believed that any argument for a fairer taxation system needed to avoid the accusation that it would automatically lead to lower public spending. The focus on reducing public spending by the right was an attempt to undermine the argument for a fairer taxation system to which all sectors of the economy had to contribute.
PAYE Workers & Industrial Action
Trade union membership had increased continuously from the 1930s to the 1980s. In 1976 there were over one hundred unions. In 1977 there were approximately 270,000 workers in the public and semi-state sectors and the unions for these workers had a strong influence over Irish Congress of Trade Unions (ICTU).
From the 1960s the union leaders began to cooperate with employers and the government by contributing to commissions and by negotiating tripartite agreements. By participating in the agreements and commissions, the union leaders were co-opted into supporting the aims of Irish Capitalism. There were a number of National Wage Agreements between the Employer’s federation (FUE) and ICTU during the 1970s. According to Allen, these agreements were about more than pay, also including a restructuring of industrial relations.[efn_note]Allen, Fianna Fáil and Irish Labour, p. 145[/efn_note]
However, groups of well organised and militant workers such as the maintenance fitters in Aer Lingus, clerical workers in the ESB or others in the civil service set the rate of wage increases by organising strikes. Other workers used these wage increases as a benchmark for their pay bargaining.
In the 1979 budget the Fianna Fáil government introduced a two per cent levy on farm produce as an attempt to widen the tax base. The Irish Farmer’s Association organised protests against the levy and forced a government climb down.
Following the reversal of the levy on farm produce, PAYE workers began to take spontaneous industrial action and called for other workers to join the strike action. At CA Parsons engineering in Howth approximately 250 workers stopped work. The thirty-two unions representing workers at Dublin airport began to plan a demonstration. The ITGWU organised a march on the 11 March 1979. Over 50,000 workers marched through Dublin calling for a general strike. But, the leaders of ICTU refused to back strike action.
On the 20 March 1979 the Dublin Council of Trade Unions organised a work stoppage and demonstration. Over 150,000 workers marched through Dublin and there were simultaneous demonstrations in thirty towns and cities throughout the twenty-six counties. In Cork, approximately 40,000 workers joined the action. Workers in various sectors walked off the job, there were stoppages to trains and buses, and flights were cancelled at Dublin airport.
On a bitterly cold January 20 1980, over 350,000 workers marched through Dublin in the largest of the tax protests. Approximately 700,000 workers took part in a general strike in the twenty-six counties. There were protests of 60,000 in Cork, 50,000-60,000 in Limerick and 30,000 in Galway. The strike brought work to a halt in shops, factories, offices, schools, pubs and restaurants.
Foreign exchange dealing at the main banks and the Central Banks ceased operations as workers walked off the job to join the strike and protest. Unions not affiliated to ICTU took part in the strike and protest, including for the first time the Irish Bank Officials’ Association (IBOA).[efn_note]Eugene McEldowney ‘700,000 demand tax reform in countrywide protest marches’, The Irish Times (23 January 1980), p. 1.[/efn_note]
Commission on Taxation
Following the PAYE protests, the Fianna Fáil government set up a commission on taxation. Typically, governments use commissions to diffuse the anger of workers and political movements, however given the size of the taxation protests and the anger of the workers it was expected, by some at least, that a thorough review of the taxation system would take place.
Two representatives of the trade union movement, both senior officials in ICTU, attended the commission. These representatives lacked a coherent strategy to fight for tax reform on behalf of the workers, while at the same time there was a strong influence from representatives of the banks and big employers. The failure of union bureaucrats to represent workers effectively in demanding reforms meant any radical changes would only come from the activity of rank and file workers.
Following an increase in PRSI that led to unofficial strikes by workers, a demonstration of 16,000 workers took place on 24 May 1982, which was organised by the Dublin Council of Trade Unions. The workers marched on government buildings to protest against the continued burden of taxation on PAYE workers. The ICTU leadership did not attend this protest. Dublin Bus workers from the National Busmen’s Union (NBU) walked off the job to join striking office and factory workers, all part of the continuing campaign to put pressure on the government.[efn_note]Fergus Black, ‘Thousands join in march over PRSI payments’, Irish Press (25 May 1982), p. 5.[/efn_note]
Waterford Crystal workers leading the fight
There is one particularly inspiring example of an attempt by organised and politicised workers to take on the government, the Revenue Commissioners and the bosses. The workers at Waterford Crystal were the largest industrial workforce outside of the six counties, and amongst the best organised workers in the south. There were forty shop Amalgamated Transport and General Workers’ Union (ATGWU) stewards and two full-time union convenors with a union office at Waterford Crystal.
In March 1983, Matt Merrigan of the ATGWU wrote a letter calling on workers to boycott the PAYE system by calling for support from the clerical staff, who administered the payroll at firms. On the 7 April 1983, with the support of clerical workers, the payroll system at Waterford Crystal was not updated with the new tax codes and effectively income tax and PRSI was not extracted from workers’ wages. The company agreed a ‘loan package’ for workers to ensure they were paid.
They received widespread support, and a few workplaces were even able to copy their withholding tactic. Many more lacked the organisation of the Waterford Crystal workers and could not stop the deduction of taxes in the same way.
On the 13 April 1983, another rally and protest took place in Dublin and across the country against inequality in taxation. Over 100,000 workers took part in the stoppage and march in Dublin, 7,000 in Galway, in Cork 5,500 and in Limerick 5,000. A campaign of strikes and civil disobedience were demanded by the workers.[efn_note]Gene McKenna, ‘Next a Strike Wave? Marchers demand reforms by Dukes’, Irish Press (14 April 1983), p. 1.[/efn_note]
Social Partnership
In 1979 a new form of tripartite agreement called the National Understanding for economic and social development was proposed as a replacement for the National Wage Agreements.[efn_note]Ferriter, Ambiguous Republic, p. 511.[/efn_note] Jack Lynch, the Fianna Fáil leader and Taoiseach, claimed that this deal would distribute the tax burden equally.[efn_note]Ibid. p. 521.[/efn_note]
The agreement was designed to attract union leaders into longer-term arrangements. As Kieran Allen argues in Fianna Fáil and Irish Labour, the union leaders would accept a form of ‘political exchange’; they could have some influence over government policy in return for wage moderation and an end to industrial militancy.[efn_note]The following paragraphs are derived from Kieran Allen, Fianna Fáil and Irish Labour (Pluto, London, 1997) p. 151-172[/efn_note] They discussed a number of issues including education, health, workers’ participation (becoming involved in the decision-making process of the employer), taxation and employment.
The PAYE revolt affected the popularity of the Fianna Fáil government. Compounded by internal wrangling on the question of the Troubles, the party’s vote in the European elections plummeted to 35% and they lost two by-elections in Cork. This led to the resignation of Jack Lynch as Taoiseach and the election of Charles J. Haughey as leader of Fianna Fáil.
Haughey had earlier developed an alliance with the ITGWU and had spoken as an honoured guest at National Executive Committee in Liberty Hall following the Arms Trial in October 1970. Haughey used his influence with union leaders to help continue the National Understanding initiative. The continuing militancy of the tax revolt meant it was prudent to pay attention to the concerns of the unions and to make political promises on jobs, taxation, health and housing.
Yet, the longer-term aim was to promise partnership for union leaders to discourage militancy and to provide space and time for the ruling class to prepare to take on the workers. Haughey impressed some of the union leaders by making an unscheduled visit to the headquarters of the Federated Union of Employers (FUE) to cajole them into supporting the National Understanding. Haughey was simply buying time until union militancy had been defeated.
The recession of the 1980s and a return of a Fine Gael-Labour coalition less amenable to making short-term concessions to the unions led to a decrease in workers’ confidence. While in opposition, Haughey continued to cultivate links with the union leadership. There was a split in Fianna Fáil as Haughey’s opponents, who were supporters of monetarism, lost patience with his vacillation with the unions and his lack of explicit support for tax cuts and privatisation to stabilise Irish capitalism. This faction left to form the Progressive Democrats.
When Haughey returned as Taoiseach in 1987, he was able to convince some union leaders that Fianna Fáil were a ‘progressive’ alternative compared to the monetarism of Fine Gael and the Progressive Democrats. Haughey helped to broker a social partnership arrangement titled the ‘Programme for National Recovery’. Like earlier agreements this was about more than simply wages and conditions; it was about the transformation of the unions.
During the 1980s the union leaders began to adapt to a form of ‘new realism’. This meant seeing their role as developing partnerships with employers to help them compete in the market. The union leaders pointed to defeats such as the miners’ strike in Britain as a reason for seeking a consensus with the government and employers.
There was a reduction in the number of unions as they merged to form larger, more centralised and more disciplined organisations, with union rule books being re-written. For example, SIPTU was formed following the merger of the ITGWU and the Workers’ Union of Ireland (WUI) in 1990. Finally, there were changes to trade union legislation. The 1990 Industrial Relations Bill, introduced by Bertie Ahern, led to the outlawing of secondary picketing, political strikes, pickets supporting individual workers who had been victimised. The bill also introduced the requirement for a secret ballot for industrial action.
It is worth noting how this bill was similar to legislation introduced by Margaret Thatcher in the 1980s. That legislation still applies to trade unions in the north and People Before Profit are attempting to repeal some of those laws through their Trade Union Freedom Bill, soon to come before Stormont.
Rank and File Struggle
The tax marches and strikes of the period 1979 to 1983 remind us that workers can unite to fight against an inequitable taxation system. This was a progressive movement of the trade unions and the left unlike other later protest movements against taxation. The example of Waterford Crystal workers challenging the taxation system from below shows the power of workers, when they organised and acting independently of the union officials.
There is a pressing need today for a similar independent and combative trade union rank and file organisations. The role of rank and file workers is key to challenging the dominant ideas of social partnership that has led to reduced wages, weaker union organisation and a taxation system designed to allow bankers, landlords and corporations to avoid paying a fair share of tax (and in some cases very little tax at all).
The burden of direct and indirect taxation still falls heavily on PAYE workers and their dependents. In 1987, the share of the national economy going to profits, interest and dividends was 31%; the share to wages, pension and social security was 69% (the share for the working class). After ten years of social partnership, the share going to profits, interest and dividends had risen to 41% and the share going to workers had dropped to 59%.
The Social partnership deals from 1987 onwards weakened shop-floor organisation and the confidence of workers. This is why socialists and trade unionists must oppose social partnership today.
