Greens clear on tax hikes but vague on spending cuts
THE Green Party gave reasonably detailed explanations about its plans for tax increases when unveiling its economic manifesto yesterday, but was vague about where the axe would fall on spending if the party was returned to Government.
The Greens want to tax property, make pensions more expensive for the better off and increase VAT as part of a plan to raise €3bn in the years ahead.
The single biggest source of income would be a site tax which would be related to the value of land. The party hopes to raise €675m from such a tax, which is provided for in the IMF/ECB bailout but ignored by all other parties bar Sinn Fein because any form of property tax is seen as electoral suicide.
The other big generators of tax revenue under the Greens would be VAT together with the abolition of pension relief at 41pc and its replacement with a lower rate -- measures seen generating close to €600m each.
The party would tinker with income tax but does not see any extra revenue coming from it even if an extra band is introduced.
Like Fianna Fail and Fine Gael, the Greens want to cut spending by two euro for every euro generated from new taxes.
Unlike all the main parties, the Greens are blunt about the likely effect of this promise to suck another €9bn out of the economy. This "is no easy task and will cause a drop in living standards", the party acknowledges on the first page of its seven-page manifesto.
This refreshing honesty is not matched in the rest of document, which is reticent about what part of the public sector will bear the brunt of the €3.9bn the party believes can be saved from public spending.
About €800m is seen coming from the elimination of social welfare fraud and other savings, but the party promises there will be no cuts to benefits. What will happen if unemployment rises further, as economists expect, is not explained.
The Greens expect to shave €1bn off the public sector pay bill (in line with the Croke Park Agreement) and €2bn off spending on projects, although where the savings will be made is not clear beyond the vaguest of hopes that cloud computing could reduce government costs by an unspecified amount.
The figure is considerably less than the €3bn under the existing four-year plan and perhaps the only major deviation from that plan.
Capital spending will be cut by €1.75bn -- a reasonable figure in line with other parties -- but again the party is coy about where the knife will fall.
The party is more specific about what it will keep; singling out the €700m Metro North project and a €600m programme to finance better insulation in homes.
Among all the state assets that could be sold, the party singles out just one -- RTE's network of transmitters, which the Greens reckon can be sold off for €150m.
Like Fianna Fail, the Greens are not really moving far from the policies they agreed in November when the Government signed a bailout with the IMF and EU. This makes for an unexciting economic policy but does at least allow the party to claim consistency.
While consistency is an admirable quality, it is a long way from the bundle of ideas the party produced before the 2007 election -- ideas such as carbon taxes and insulation grants the party ruefully admits have since been stolen by their rivals and become mainstream.
This time around, it is hard to imagine anybody wanting to steal anything from the Greens' muted policy document.