Sir, – There are many technocratic bodies at home and abroad such as the only recently formed Fiscal Advisory Council, as well as the OECD, the IMF and the EU, which have a duty to warn us what we ought to be doing, such bodies have not always been right or far-seeing, and may in some instances be overcompensating for past omissions before the crash.
Democratic leadership has to balance what they have to say with the need to maintain the consent of the people for what requires to be done.
In the context of rising pre-election pressures, caution is needed, and the electorate would be wise in the light of experience to be sceptical of sweeping and unfulfillable promises and of those that make them.
One of the most important lessons of the crisis, and one of the least disputed in general terms, is the danger of allowing the tax base to become too narrow.
Where the reduction or abolition of a tax quickly becomes eaten bread soon forgotten, it is much more difficult to persuade the public of the need to supply an alternative source of revenue as part of a more rational re-configuration of the tax system, if a new tax, charge or rise is involved.
Leaving aside the necessity of eliminating the budget deficit and the desirability of reducing our dangerously high debt exposure, there are many crying social needs which need some of the increased resources that growth can provide. The resort to devices such as off-balance sheet financing, which usually involves deferred but higher spending, should not be overused.
Given that the Government has adopted the policy in recent years that downward budget adjustments should consist of two-thirds expenditure reductions and one-third tax increases, should not the reverse apply in the recovery, with extra resources divided into two-thirds expenditure reinstatement to one-third unwinding the more explicitly temporary and emergency tax increases?
It would be a pity if the tax-base broadening reforms of the last few years, that were long advocated, were to be lost in the clamour to abolish water charges, property tax, and the universal social charge, whatever mitigation may be required in the interests of fairness or where there is a genuine inability to pay. – Yours, etc, MARTIN MANSERGH Friarsfield House, Co Tipperary.