Saturday 22 July 2017

Game on for FG and Labour with a tainted prize at stake

LABOUR leader Eamon Gilmore is fond of breaking down billions into millions to try to get the huge size of the figures across.

So, to use his own language, there's a fifteen-hundred-million-euro gap between Fine Gael and Labour in their budget plans.

Fine Gael agrees (like the Government) that there should be €6bn of spending cuts and taxation increases in this year's Budget, whereas Labour says only €4.5bn is necessary.

These are the two parties touted as the most likely to form the next government, but that's not the only difference of opinion. As part of its "tax-the-rich" strategy, Labour wants a 48pc rate of tax on individual incomes over €100,000.

Fine Gael's finance spokesman Michael Noonan dismissed this yesterday as "nonsense" that would stop job creation, force key people to emigrate and make it unlikely that multinational executives would want to live here with families.

Strong words indeed, but Labour finance spokeswoman Joan Burton said he was "wrong" and that the highest earners had to contribute.

There will be more trouble between the parties when it comes to the public sector. Both are agreed on the need to reduce the wage bill using voluntary redundancies and "natural wastage" -- not replacing those who retire.

But Fine Gael wants to cut 30,000 jobs from the public sector.

There is no such definite target in Labour's document and it is advocating a 'Nothing is Agreed Until Everything is Agreed' strategy, which makes the prospect of reform very doubtful.

It may be unfair to zero in on a single example, but if public servants in the immigration service cannot agree to use a €20m fingerprinting machine without getting a pay rise, then what are the chances of Labour's "softly, softly" reform approach succeeding across the entire public service?

Then there is the area of the €20bn social welfare budget, where Labour's cuts of €216m are less than one-third of Fine Gael's target of €736m.

And Fine Gael is proposing a €6 cut to social welfare payments such as jobseekers' benefit. Signing up to that would be an appalling vista for the Labour Party, which now has a rejuvenated Sinn Fein to worry about on its left flank.

But if there is a lot that divides Fine Gael and Labour, there is also much that unites them.

They have both promised not to cut the minimum wage of €8.65 per hour for 52,000 people, they have similar internship schemes designed to help the one-in-four young people unemployed and their plans to shut down tax reliefs are similar.

And in their budget documents, they promise that the reckless banking and political decisions that have brought the country to the brink of disaster will not be repeated.

And if the Government thought it would be able to get Fine Gael and Labour to introduce a property tax by delaying the measure until 2012, it was wrong.

Fine Gael has a three-pronged proposal which involves increasing the tax on second homes (a move Labour also favours), increasing the "death taxes" on those who inherit property and applying a 7pc tax on any profits made on selling a house.

But as ESRI economist Thomas Conefrey noted yesterday, this would only produce "fluctuating" tax revenues like the much-criticised stamp duty system -- high in a boom and low in a recession.

"That's why something like a property tax is attractive. It doesn't fluctuate. Many countries have a well-thought-out system of property tax, which is fair," he said.

And lest anyone think that Mr Conefrey is backing the Government, he also believes that its plan for a "site value tax" also fails to address the problem.

Fine Gael and Labour might have been interested to hear the words of executed 1916 leader Thomas McDonagh on TG4's excellent documentary series recently. He said that the Irishman who felt he was better off under either English or German rule was a slave.

Both Fine Gael and Labour are furious that they will find it difficult to attain "freedom" if they get into Government, because we are now (to some extent) under the rule of the Germans, the English and other EU nations that contributed to the €85bn bail-out deal.

If Enda Kenny gets the most seats at the next General Election, then he will have the numbers and the negotiating strength to insist that more of Fine Gael's plans are put into action. If there is a "Gilmore Gale", then it will be Labour who is dictating more of the terms to Fine Gael.

And then it will be their turn to start sending in the weekly spending reports to what the 1916 signatories called "our gallant allies in Europe" (the EU) and the IMF in Washington.

Irish Independent

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