The perils of non-compliance

Ireland and America are suffering the same problem with their contentious taxes.

A flat tax, levied on milllions of people matching a basic selection criteria, is being fought vehemently. Although non-payment is ostensibly illegal, in practice it is unlikely to result in any real punishment. This in turn could result in a major headache for the government. Am I talking about Dublin or Washington? Both, obviously.

The Irish property tax is the subject of a massive campaign of non-payment. At the first deadline for registration, last Saturday, only half of Ireland's 1.6 million households had registered to pay. There will be many more waves of deadlines, threats and posturing before it comes but the theoretical end-point is jail.

Clearly, that isn't going to happen to 800,000 homeowners. But what other possibilities do the government have? They can't afford – politically or finanically – to back down. The expected year-one revenue of €160m is too much to turn down and in a country seems to have taken all the austerity it can bear, a moment of weakness could well mark the end of the project.

The government may simply hope that attrition (and increasingly scary letters) will reduce the number of holdouts. It is possible to jail a few thousand people in a way that it isn't with a few hundred thousand.

But they then have a further problem, in that they are "only" fighting over around €80m. If they still want to come out on top financially, they can't go for expensive measures of coercion. For instance, it costs over €75,000 to keep a prisoner in jail for a year; if each holdout manages to take up just five hours of a civil servants time, then at the average wage, they would cost the government more than they owed.

As a result, any enforcement the government does will have to be enacted on the cheap, which won't be easy given the scale of the problem.

On the other side of the Atlantic is a tax that nobody wants to admit is a tax. The Affordable Care Act – Obamacare to its detractors – imposes a $695 charge on anyone who fails to purchase insurance. This individual mandate is the subject of a supreme court hearing which is baffling many economists – because it really is all in the name.

The constitution, after nearly 250 years of interpretation, allows for the imposition of taxes by Congress for pretty much any reason it sees fit. There are still limits to the legislature's power, but it is universally agreed that if the individual mandate were a tax, it would be legal. In fact, the Republican alternative to the act is essentially just that, except instead of imposing a tax on those who don't buy insurace, it gives a tax credit to those who do. In fact, the credit, which is over $2,000, imposes a far bigger penalty on non-purchasers than Obama's plan.

The administration knows how unpopular new taxes are, however, so it is refusing to call it one. And the opposition is playing along, because they know that their best chance to get the bill overturned involves pretending that the new tax is a fine along with the government. And so the court case continues.

That's not the only strange political compromise in the bill, though. In the one measure that supports the claim that the mandate is not a tax, there are no legal penalties for non-compliance. The IRS, which administers the charge, is able to send threatening letters, but ultimately non-payment means nothing.

Even more worrying for the admistration is the fact that the charge is actually far too low to do what it is meant to do. Its implementation is due to the fact that Obamacare requires insurers to take anyone who asks, and cover all pre-existing conditions; but this led insurers to fear that people would remain insurance-free until they got ill, then buy healthcare until they got better. If this were the case, health costs would shoot up, and everyone would be worse off.

Hence, people are penalised for not buying insurance even if they are healthy. All well and good, no?

Not quite. Health insurance is really expensive. That's what got the US into this mess in the first place, after all. $695 a year is actually less than almost every insurance package currently on the market, so the fear for many is that healthy young people will take a decade of paying the charge (or not paying it, if they have the courage), then join up when they get ill. If that happens too much, then insurance premiums will rise further – making that course of action even more appealing.

As President Obama and his Irish counterpart Enda Kenny are learning, making people do what you want them to is hard.

Barack O'Bama: The president with the Irish Taoiseach, Enda Kenny. Credit: Getty

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Voters are turning against Brexit but the Lib Dems aren't benefiting

Labour's pro-Brexit stance is not preventing it from winning the support of Remainers. Will that change?

More than a year after the UK voted for Brexit, there has been little sign of buyer's remorse. The public, including around a third of Remainers, are largely of the view that the government should "get on with it".

But as real wages are squeezed (owing to the Brexit-linked inflationary spike) there are tentative signs that the mood is changing. In the event of a second referendum, an Opinium/Observer poll found, 47 per cent would vote Remain, compared to 44 per cent for Leave. Support for a repeat vote is also increasing. Forty one per cent of the public now favour a second referendum (with 48 per cent opposed), compared to 33 per cent last December. 

The Liberal Democrats have made halting Brexit their raison d'être. But as public opinion turns, there is no sign they are benefiting. Since the election, Vince Cable's party has yet to exceed single figures in the polls, scoring a lowly 6 per cent in the Opinium survey (down from 7.4 per cent at the election). 

What accounts for this disparity? After their near-extinction in 2015, the Lib Dems remain either toxic or irrelevant to many voters. Labour, by contrast, despite its pro-Brexit stance, has hoovered up Remainers (55 per cent back Jeremy Corbyn's party). 

In some cases, this reflects voters' other priorities. Remainers are prepared to support Labour on account of the party's stances on austerity, housing and education. Corbyn, meanwhile, is a eurosceptic whose internationalism and pro-migration reputation endear him to EU supporters. Other Remainers rewarded Labour MPs who voted against Article 50, rebelling against the leadership's stance. 

But the trend also partly reflects ignorance. By saying little on the subject of Brexit, Corbyn and Labour allowed Remainers to assume the best. Though there is little evidence that voters will abandon Corbyn over his EU stance, the potential exists.

For this reason, the proposal of a new party will continue to recur. By challenging Labour over Brexit, without the toxicity of Lib Dems, it would sharpen the choice before voters. Though it would not win an election, a new party could force Corbyn to soften his stance on Brexit or to offer a second referendum (mirroring Ukip's effect on the Conservatives).

The greatest problem for the project is that it lacks support where it counts: among MPs. For reasons of tribalism and strategy, there is no emergent "Gang of Four" ready to helm a new party. In the absence of a new convulsion, the UK may turn against Brexit without the anti-Brexiteers benefiting. 

George Eaton is political editor of the New Statesman.