Sunday 20 August 2017

Big cuts in income tax get governments re-elected – but often at a very high cost

Taoiseach Enda Kenny pictured with Minister for Finance in Aras an Uachtarain after the new ministers were presented with their seals of office
Taoiseach Enda Kenny pictured with Minister for Finance in Aras an Uachtarain after the new ministers were presented with their seals of office

Once the bell rings for the Dail's summer recess, only one thing will matter to the Government: re-election. The cabinet reshuffle and other vague policy promises matter only to placate the media and to buy time.

The line that they must wait to see how the figures look over the summer is actually correct but the underlying truth is that the Government is only asking how little needs to be cut to satisfy the iron-clad requirement that the difference between government expenditure and taxation be less than 3pc of national output.

Let's assume the Government survives into its fifth year, and so has two budgets to go until it must face the electorate again.

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