McCreevy's words on tax and poverty sound just a little bit rich

When John Maynard Keynes was accused of inconsistency he turned on his critic and said: "Yes

When John Maynard Keynes was accused of inconsistency he turned on his critic and said: "Yes. I do change my mind when I'm wrong. What do you do?"

When Charlie McCreevy changes his mind, he denies it.

He changed his mind on the tax system and was given full marks for his trouble. Not just by friends and colleagues in Fianna Fail and the Progressive Democrats, but by some of his sharpest critics.

Michael Noonan, Derek McDowell, Pat Rabbitte and John Gormley praised him for the change.

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Proinsias De Rossa said it was the most significant to have been made since the introduction of PAYE.

Sean Healy, of the Conference of Religious in Ireland, believed the Government had come to accept the need for fundamental reform of the tax system and recognised the traditional tools of taxation were inadequate.

As Mr De Rossa put it: "An extra £6 or £10 won't make anyone rich. But if they are built on in the years to come, these changes will provide the basis for a much fairer and more equitable system of taxation."

Fine Gael, Labour and Democratic Left would have been both foolish and hypocritical to have complained about Mr McCreevy's change: the minister had adopted the policy on which they'd fought the last general election.

Tax was the central issue. Fine Gael, Labour and Democratic Left proposed systematic reform - including credits - because, they said, it would be fairer all round. Fianna Fail and the Progressive Democrats favoured tax cuts.

The Irish Independent - in a notorious editorial announcing "It's Payback Time" - came down in favour of the FF-PD line, on the grounds that it would help the betteroff. It did.

So did Mr McCreevy's first Budget. The cuts he made - and the halving of capital gains tax - favoured the rich to a degree which even some of the rich found embarrassing.

He was unabashed, accused his critics of speaking for the left or (worse) "the poverty industry" and said that he'd done exactly what the coalition had been elected to do.

That was until Wednesday when he ignored the mandate and turned last year's strategy on its head.

He widened tax bands, moved from allowances towards a fairer system of credits and set 80,000 people who earn £100 a week or less outside the tax net.

He didn't say why he'd changed his mind, though none of the supposed reasons suggest a change of heart; or, from this stubbornly ideological minister, a change of philosophy.

The Government has its sights on a successor to Partnership 2000. Local and European elections are only seven months away.

And by-elections in Cork, Limerick and Dublin have shown how foolish it is to ignore reports of public anger or disillusion.

Indeed, he hasn't changed as radically as some of his more gullible friends in the media seem to believe.

The shift in last year's Budget in favour of the rich and super-rich has not been reversed. The corporate sector, Sean Healy notes, is set to gain more than £700 million from continuing reductions in corporation tax.

The number of people living in poverty won't be greatly reduced; housing and hospital waiting lists will remain as they are, and rural exclusion will continue as before.

Overseas development aid is almost as shameful as it was when Liz O'Donnell threatened to resign. The excuse that child care is too complicated for decision is a cop-out by Ministers who are afraid to decide.

Old age pensioners are promised increases of £6 a week, but the general increase of £3 a week is, as the Minister's critics agree, "an insult to the 30 per cent of the population whose only source of income is social welfare".

Yet when the Taoiseach spoke in the Dail on Thursday it was to reassure the betteroff:

"[They] have nothing to complain about and can look forward to future Budgets under this Government which will ease a burden heavier than in most other countries."

So the Taoiseach pretends our tax burden is heavier than in other countries. Nonsense. Tax and social contributions here are well below the EU average.

It's the disproportionate share borne by the PAYE sector that causes the problem.

Mr McCreevy suffers under another delusion. He doesn't believe that this is a divided society. On Prime Time on Wednesday night he said: "We're very lucky to have that type of society that there is not that great divergence.

"There are people who are very rich and there are people who are very poor. But we don't have - as they have in other countries - that great divergence. And it's important that we don't have that."

I doubted my ears. I checked and double-checked. And, yes, that was what Mr McCreevy had said.

Keynes, the economist, a wise and witty man, went through life with his eyes open. He had a way with words. Mr McCreevy, the accountant, does not - and now it seems that he averts his gaze from the reality around him.

On the day after he'd budgeted for a surplus of £2.4 billion, he was questioned (on radio) by a woman whose daughter struggled to get by on little more than £70 a week. His answer was to remind her that the State's welfare bill amounts to £5 billion a year.

LIKE tens of thousands of others on welfare, she may be a victim of a strategy plainly evident in this Budget. It's summed up in a word that seems to have been invented for the occasion.

The word is incentivised. As explained by supporters of the Minister, people are incentivised by keeping their welfare payments low. It leaves them with an incentive to find work.

And if, in the course of putting this policy into action, some of the deserving poor - the families of the unemployed - suffer because they fall into the same welfare category as the undeserving poor, what matter? It makes for tidier accounting.

Democratic Left's press officer, Tony Heffernan, explained that, of course, there are different ways of incentivising different people. In the case of the poor, it's done by giving them less money; in the case of the rich, by giving them more.

Indeed, I was wondering why we heard nothing about overseas bank accounts or the use of this country as an offshore tax haven on Wednesday.

It would have been intriguing to hear Mr McCreevy on the subject, even more intriguing to hear him on an issue thoughtfully raised by Peter Cassells on Dunlop and Finlay on Thursday night.

He argued that we are at a point where we can make choices about how we develop: whether we are to be like the United States - a deeply divided society or, in the European mould, less dependent on the market?

Budgets, he suggested, provided for a forum for such discussions. They should, but not when they are churned out like a balance sheet by a Minister whose most characteristic measure was to incentivise bookmakers.