Innovative Noonan draws attention to plight of the long-term jobless
The Minister for Finance’s post-budget address to the the Global Tax Policy Conference in Dublin was a tour de force
Minister for Finance Michael Noonan: “A man comfortable in his skin, deeply absorbed in the details of his brief and happy to be playing his part in the gradual improvement of his country’s fortunes.” Photograph: Eric Luke
Were it not for the European Union’s insistence that member states publish their tax and expenditure plans earlier, our budget day this year would again have been in early December rather than mid-October. We had become accustomed over the last 15 years to our budgets being in the lead into Christmas, accompanied, inevitably, by headlines and cartoons depicting the minister for finance as Santa Claus or Scrooge.
While Michael Noonan’s Churchillian physique would have made him easier to caricature as the former, history determined that he finally got to be Minister for Finance during a time of economic crisis when there could be no giveaway budgets.
Notwithstanding this, Noonan has retained his natural jovial demeanour. Last Thursday night he was guest of honour at a dinner in Dublin Castle for international delegates to the Global Tax Policy Conference co-hosted by the Irish Taxation Institute and the Harvard Kennedy School.
Speaking to the conference before dinner, Noonan set aside the supplied script and engaged directly with the assembled tax experts on some of the revenue-side dimensions to this week’s budget. It was a 20-minute tour de force. Noonan is a man comfortable in his skin, deeply absorbed in the details of his brief and happy to be playing his part in the gradual improvement of his country’s fortunes.
He spoke of how it was regrettable that the majority of the budget coverage, this year and every year, tended to focus on the expenditure side. Almost all of the coverage deals, he said, with expenditure cuts or expenditure-type incentives and not enough on what had and could be done on the taxation side.
He quipped about how he wasn’t sure whether it had something to do with the Keynesian bent in academia or otherwise but Irish economists seemed, he said, to prefer governments to spend money to incentivise policy objectives and they had less regard for how taxation policy could be used as an instrument of economic policy.
He cited, as an example of how government could achieve policy objective by tax changes rather than those on the expenditure side, the reduced VAT rate he had introduced for the tourism and hospitality industry. There is no doubt, he said, that the reduced rate had had not only a multiplier effect but also a psychological effect in helping lift tourism and hospitality out of the doldrums into which they had fallen when the crisis began. The reduced VAT rate had worked so well that he had decided to retain it in this week’s budget.
Noonan then spoke at some length about two tax-related initiatives, which he had announced this week in the construction sector. The first of these was the home renovation incentive, which will give up to €4,050 in a rebate to those who spend between €5,000 and €30,000 on renovations or home improvements. The second is a provision that allows those on the live register for more than 18 months to set up a business and earn up to €40,000 free of income tax in the first two years.