Still no pain, but at least some gain for Sinn Féin
As long as I have been writing about politics, there was one comedy show we all looked forward to every year.
It was the Sinn Fein pre-Budget Outlook.
The party would present its figures and we would hold our bellies as its TDs conveyed such fiction and fantasy with such straight, serious and po-faces.
The absolute pinnacle for this school of comedy came in the weeks before the 2007 General Election when Gerry Adams appeared on PrimeTime for a star turn. It was a magnificent performance. His innumeracy was a massive factor in determining Sinn Fein’s subsequent election results.
The truth was that whatever the mastery of Adams and his party on the national question, they knew damn all about finance. Sinn Fein produced more policy papers than the NAMA legislation had amendments (and boy there was a lot of them). But the problem was that it didn’t cost any of them. Universal health care for everybody. Huge increases in social welfare. Big hikes in taxes. It was all done on the general Robin Hood principle – rob the rich to pay the poor. But when you totted it all up, it didn’t balance, the sums didn’t work, it made no financial sense.
But cometh the recession, cometh the cold chills of reality. Sinn Fein was the first party to present its pre-Budget submission yesterday. Still very much based on the Robin Hood principle, it was nevertheless the first wholy coherent financial document that the party has published, in my opinion. I think that some of its projections are askew and are based on over hopeful assumptions. There is also a trick-of-the-loop or two, including a €2 billion raid on the National Pension Reserve Fund. And the party’s aim to increase €4.5 billion in extra taxes is not a realistic option in the current climate.
Still, it has some things going for it. Firstly, it places the party very firmly indeed on the left. No cuts whatsoever in social welfare. For child benefit. For anything. I just wonder why the party accepted the enormous State commitment to social welfare, which covers way way more than the dole and pensions, with questioning any elements of it whatsover.
Also the party wants the Christmas bonus revived (cost €223 million) and a new ‘cost of living’ package to help people pay bills (ie a measure to help meet the costs of inflation). But in forwarding this position, the party rejects the CPI index which shows that the cost of living has actually decreased in the past year. Fair enough. The party is taking a populist line with its consituency. Objectively, you could argue there is absolutley no need for this.
In summary, the package proposes some €4.5 billion in tax increases; €1 billion in cuts; and a €2 billion raid on the pension fund. Its stimulus package will cost €4 billion, most of it geared towards jobs, the rest at restoring the Christmas bonus and helping people meet cost-of-living expenses. The net savings will be about €3.5 billion, the party says.
What is interesting is that the party goes hammer and tongs at the more wealthy in society, both in its tax measures and in its cost-saving plan. I didn’t get a chance to ask at the press conference yesterday but I suspect that if the very serious cuts the party is proposing for TDs, Ministers, hospital consultants and more senior public servants were implemented, it would make a huge dent into its own predictions for tax-take from the wealthier classes.
The most eye-catching measure from my perspective was the proposed wealth tax of 1 per cent for assets valued over €1 million, an idea that might be explored further. The party based its calculations on a Bank of Ireland assessment of wealth that was done in 2007, and discounting the overall figure by 50 per cent. It reckoned a €1.6 billion take, which seems high to me, given the calamitous fall in GDP, wealth etc in Ireland over the past 18 months.
The other two big tax ideas are the standardisation of all discretionary tax reliefs and exemptions. This will affect pension reliefs. More relevant is that it will also affect private medical insurance – something that people with very humble salaries avail of. I believe there was an internal debate about this. But the party wants universal health provision and to make an exception for medical insurance would have give it some kind of official approval. The one exception the party did not go after was mortgae interest relief.
It also wants to introduce a third tax rate of 48 per cent for those earning over €100,000. It would raise over €355 million, it says. But it would also increase the marginal tax rate for that group at 60 per cent. Positioned where it is, Sinn Fein, of course, would see no real problem with that. Labour I suspect will propose something similar, but may go for a 45 or 46 per cent rate, rather than a 48 per cent rate.
Its proposals for cuts are radical. A billion euro saved from high earning public servants. Salaries are to be capped, under its proposals. A maximum of €150,000 for consultants. A maximum of €75,000 for TDs. A maximum of €100,000 for civil servants. No change for frontline services which means that the party wants to leave nurses, guards and other emergency workers alone. Again, you kind of wonder is it wise not to look at any of the blizzard of allowances or extras or perks that they get.
There are a couple of silly suggestions. One is for excise duty on alcohol to be relaxed in the four-weeks of the Christmas period to discourage people from shopping across the border. Apart from the workability of this, you also have to question the message this sends out about alcohol and lushness in Irish society. As a non-drinker, I find it shocking to think that people go on pilgrimmages just to stock up on booze for personal consumption.
Sinn Fein has been working hard on building up its credibility on financial matters. It’s an unfinished symphony. Its hoped-for tax take doesn’t add up. But it is a serious effort.