Business Comment & Reaction

Thursday 21 August 2014

Miriam Donohoe: Yes, it was tough and unfair, but hang on in there

Published 06/12/2012 | 17:00

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EVERY family is a micro economy, and there was little cheer in the kitchens of Ireland last night as the details of the latest in this series of harsh budgets were digested around the dinner table.

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We were forewarned of the tough measures in store and bombarded with reminders of the sacrifices the country has to make to get back on track and please our troika masters. The grim news has now been unveiled, and it will take a few days to figure out what it means for everyone.

No one expected the Budget to throw up any pleasant surprises, and how right we were as Michael Noonan and Brendan Howlin announced the bad news. In fact, we were still searching the small print last night for the "loads of good things" that Michael Noonan promised the Budget would contain.

Very little of the necessities of family life went untouched yesterday. In particular, the Budget hit the pockets of the so-called coping classes, hard-working couples on modest incomes who invested in their homes during the boom and are now battling with a big mortgage and a reduced income.

The big news yesterday was the property tax. For an average-priced house of €250,000 the tax will be €450. People in Dublin and other cities will be worst hit, with a house worth €400,000 yielding a tax of €720.

Then there is the €10 a month cut in child benefit. For families with more than one child it adds up. The cut in child benefit across the board was another example of the Government bottling the tough decision. It should have taxed it if it was serious about being "tough but fair". Michael O'Leary will still get the same amount as the couple with four children who rely on a voluntary contribution from the St Vincent de Paul to get by.

Alongside the child benefit cuts was the news that new mothers will have their maternity benefit taxed from next July. It seems the Government is forgetting that it is when couples have young children that they need financial help most.

We are facing yet another increase in car tax. And predictably, the old reliables of drink and cigarettes were hit, including an extra euro for the privilege of a Saturday night bottle of wine at home.

Before yesterday, there were thousands of families in Ireland who were dreading Christmas because they had so little money. Many will rely on the intervention of charitable organisations to make ends meet. Yesterday will have made matters worse.

One of the dictionary definitions of the word "austere" is "having no comfort or luxuries". For many families, the Budget will guarantee that luxuries in the foreseeable future will be few and far between.

We heard a lot from ministers yesterday about how this was a "tough but fair" budget. The spin doctors were out in force feeding their bosses this line to feed to the media.

Was it tough? Yes. Was it fair? No. Surely people earning handsome salaries have the means to pay more and could have been hit harder. Did the Government not tax them because of Enda's "no tax hikes" promise? Bad promises deserve to be broken.

So the bad news has been laid bare, and our pockets will be a lot lighter. And the complaints will be loud and long. But we have no choice now but to cut our cloth to suit our measure. It's tough and crippling and disheartening, especially for those who are stretched already. But if it means getting that cheaper toy for Christmas, doing without that weekend away or that new outfit, we need to accept this is the medicine we have to take until things turn around.

Let's hope Michael Noonan is right when he says we're well on the way to recovery. On a positive note, we are now 85pc of the way there in terms of the adjustments we have to make to get us out of the crisis.

Many families are at breaking point. But hang in there.

Irish Independent

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