Questions that Cowen rarely has to answer
Changing relief on income tax for pensions would deliver €1bn in revenue – so why have cuts been preferred? asks VINCENT BROWNE
THE POLITICAL correspondents are a rough crowd. At the annual Taoiseach’s lunch for them on Monday they really stuck it to Brian Cowen.
One put it to him straight up: how the past year had been for him personally. That was a humdinger. I bet that set him back in his tracks. “For me personally, it was the most difficult year I faced in my political lifetime,” he was forced to concede.
Under further pressure, he conceded: “I think that everybody is finally beginning to come to terms with what was a very difficult time for a lot of people.” He found some consolation, however: “I have been lucky to have had good colleagues who were equally determined to put the country first.”
It was nice of the political correspondents not to mention how many of these good colleagues have been going around the place saying what a disaster he (Brian Cowen) has been, and how imperative it is to get rid of him ASAP.
Later on, someone forced from him the revelation: “I don’t do grandstanding. I try and look at these things logically and rationally and look at all the options.” Thank God we have robust surrogates of the people in our political correspondents, not afraid to put the hard questions to our leaders, holding them accountable at every turn.
I am sure when the full transcript of Monday’s exchanges is revealed in 30 years’ time, we will discover (OK, not “we”, but some of you will discover), that the relentless sleuths put a few other humdingers to Cowen. Pity the rules of engagement don’t allow for the publication of his answers right now.
I can imagine some of them demanded to know why it was he and his good colleagues decided to cut social welfare and the pay of public servants earning less than €30,000, instead of changing the relief on income tax for pensions to the standardised level (this would result in €1 billion in extra revenue for the State, according to the ESRI).
And when the familiar line about the need for hard decisions and the need to address the gaping fiscal deficit was uttered, I’m sure the correspondents thumped the table and retorted en masse: answer the question, why did you choose to cut social welfare and the pay of public servants earning less than €30,000, when you could have achieved the same result by a change in the pension relief? All the more so since this was recommended by the Commission on Taxation and the ESRI, and, incidentally, is part of the programme for government?
I can just imagine how they put him through the wringer on a few other issues as well. For instance, they must have spent a good part of the lunch hounding him on the tax breaks business.
The tax breaks resulted in a loss to the exchequer of €7.4 billion in 2009, nearly twice the required “adjustment”.
The tax breaks explain why all earners earning over €100,000 pay only 27 per cent of their income on tax. The tax breaks account for the fact that the highest earners pay only 20 per cent of their income on tax, according to the Department of Finance. According to the OECD, in 2005 Ireland spent three times as much on tax breaks as the average of 22 EU countries (this is quoted in the TASC pre-budget statement). Given all that, the political correspondents must have put it to the beleaguered Taoiseach, why, instead of closing off at least some of the tax breaks, did you:
You’d have to feel sorry for Cowen facing such a barrage just days before Christmas. Especially after the awful year he has had, what with his pay being cut almost to the level of Gordon Brown and Angela Merkel.