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Our treaty decision should wait until Europe's landscape settles

It is time to send a clear message to Enda Kenny and his ministers by snubbing the ballot box, writes James Fitzsimons

The political landscape across Europe is changing rapidly. But there is no sign that the changes will benefit Ireland. We are signed up to a bailout package that imposes austerity on a large part of the population. And in spite of claims to the contrary, the Government has done very little to make things better.

At the end of the month, it expects us to ratify the fiscal compact, even though we don't know what the new political leadership has in store for us. Some claim that a 'Yes' vote is the least worst option.

Last week Richard Bruton, the Minister for Enterprise, claimed we could have a second referendum if the majority voted 'No'. Either he doesn't know what is going on in government or he revealed to us what they are really thinking. Either way, he quickly retracted what he said. There have been a number of denials that there could be another referendum if the first one fails.

None have been more resolute than the Taoiseach, Enda Kenny. It's a pity we cannot feel confident that he would steer us in the right direction if he got the 'Yes' vote he seeks. A better bailout was promised, but it never came. We were told taxes wouldn't rise but they did for the most vulnerable who cannot afford to pay.

If we vote 'Yes', we might have access to cheaper funds through the European Stability Mechanism (ESM) when we need them in the future. But the worsening financial situation in Spain is about to place huge demands on the ESM. We might be squeezed out before we even apply for the next bailout. And that assumes that Greece and Italy do not get any more help.

If we vote 'No', in spite of what the Government says, there is no reason why we cannot change our minds later on, if the need arises. The question is whether or not we can rely on our Government and public servants to make the right decisions when the time comes. The record shows that they will get it wrong. If you thought the Government would fight for the write-down of debts our banks owe to the big European banks, you should know by now that they threw in the towel.

With a government that is so determined to pander to the whims of the big powers in Europe, a 'No' vote is unlikely to help us. That's no reason to vote 'Yes', but it might be the reason not to vote at all.

Michael Noonan, the Minister for Finance, and others have claimed a 'No' vote will result in greater austerity and more tax. Under EU rules our standard rate of VAT can be increased to 25 per cent. Given half a chance the current administration is stupid enough to do that.

Vote 'Yes' and the Government gets its way. Vote 'No' and the public can expect to be subjected to reprisals with high taxes as the biggest threat. With 40 per cent of government revenue being spent on welfare, the most vulnerable will suffer more from a 'No' vote. There is growing acceptance that austerity alone isn't working, but even that doesn't mean we can rest assured that voting 'Yes' will help our cause. Francois Hollande, the new French president, is no proponent of austerity. But he would be happy for the Irish people to pay higher taxes if that is what it takes to avoid having French banks accept their the losses. His predecessor, Nicholas Sarkozy, may have been a thorn in our side when he demanded that companies should pay more tax in Ireland, but Mr Hollande will be no different.

Our Government may be steadfast in its resolve to retain our 12.5 per cent tax rate for companies, but when there is nowhere left to collect the tax to honour our financial commitments, what will the Government do? It backtracked on all of its other promises. In order for it to retain the concession we offer companies, something's got to give.

If it's left to the EU, it will demand more tax from companies. If we are to avoid that, the tax must come from somewhere else. The Revenue Commissioners are afraid to tax the rich one per cent as their income and wealth is mobile.

Already faced with water charges and property taxes, it's only a matter of time before income tax and VAT rises again. Vote 'Yes' and the EU will drive the tax changes. Vote 'No' and our own Government will. The majority have already resolved to vote 'Yes', based on recent opinion polls, on the basis it's the least worst option.

The best result would be for the majority of the electorate to abstain as a sign of their lack of faith in the Government. We shouldn't be forced to choose the least worst option. With the changing political landscape, we could make a more informed decision later in the year. With any luck we could avoid relinquishing what's left of our fiscal autonomy.

But even if we keep it, politicians are the worst people to make the choices for our future. That is being passed to technocrats all across Europe. The problem facing Ireland is that Europe's best interest does not reflect our own.

While Europeans are turning away from austerity our Government, led by Mr Kenny, embraces it. Mr Noonan laughed at the plight of Greece, claiming that the only fallout from its collapse might be that there is less feta cheese in the supermarkets. Their financial woes may be self-inflicted, but it makes no sense that ordinary Greek citizens would shoulder an unbearable burden to make up for political blunders. We have more in common with the Greeks than with the rest. It makes no sense that we should turn on them in their time of need.

This type of arrogance is what will bring our own Government down. Then what will we be left with? Without a reduction in the debt burden, or deferral of its repayment, we are facing even greater austerity. A competent government would defer the referendum until the reshuffling in the EU is complete.

James Fitzsimons is an independent financial adviser specialising in tax and financial planning

Sunday Independent