Friday 30 September 2016

The nation's great expectations carry the real risk that this 'Giveaway Budget' cannot live up to the early hype

Published 06/10/2015 | 02:30

Former Finance Minister Charlie McCreevy
Former Finance Minister Charlie McCreevy

Given the resources at his disposal, Finance Minister Charlie McCreevy looked like he could not lose.

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But the then-Fine Gael finance spokesman, Michael Noonan, just could not believe his luck as he spotted the banana skin and tore into the author of this "socially divisive" Budget.

Taoiseach Bertie Ahern, sitting between Mr McCreevy and Tánaiste and Progressive Democrat leader Mary Harney, seemed genuinely taken aback. From the Labour side of the opposition benches, one Brendan Howlin was soon gleefully dubbing Mr Ahern as "the only Taoiseach to be surrounded by PDs" in a reference to the shared economic ideology of McCreevy and the then-junior coalition partners.

It was December 1999 and Charlie McCreevy was delivering his second Budget, which was a medley of tax cuts and welfare and other giveaways totalling IR£942m - or something in excess of €1.2bn. How could this biggest ever giveaway in the State's history deliver a crushing blow to Ahern's precariously balanced coalition, which depended on four Independent TDs to keep power?

A ripple ran through all the opposition Dáil front benches as McCreevy announced his "individualisation of tax bands". From the government side, Brian Cowen growled: "Ye don't even know what he's talking about". Cowen was right. But the nation soon knew what tax individualisation was about.

It gave more favourable tax treatment for working couples. It was intended to encourage more women to enter the workforce, by cutting the tax bill paid when both partners were working.

The corollary meant that married couples where a spouse was working in the home would not benefit from a reduction.

A total of 508 furious phone calls of complaint, mostly from stay-at-home mothers, were logged at Fianna Fail HQ. A media stage-managed backbench revolt ensued, which forced Mr McCreevy into a partial climbdown with an extra tax allowance for stay-at-home spouses - the home carers' tax credit.

Scathing commentary from RTÉ's then economics correspondent, George Lee, added to the minister's agony. Critics spanned the spectrum of public life from the Irish Family Planning Association to the Catholic Archbishop of Dublin.

It falls to the two big tormentors of McCreevy on that Budget day 16 years ago to present their first yearly national tax and spend blueprint which has real money to spare. As well as the €1.5bn permitted for service increases and tax cuts, Messrs Noonan and Howlin can dip into some of the extra €2.5bn in tax revenues reported last week.

How can they go wrong?

Well, they know we are once again a nation with economic expectations. After eight years of service cutbacks, wage cuts, frozen welfare rates and some welfare reductions, we have been told recession is over.

Hype is once again the big enemy now.

Irish Independent

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