| 0.5°C Dublin

Andrew Lynch: Anger over USC could become the Irish Water of 2015

Close

Pat Rabbitte.

Pat Rabbitte.

Pat Rabbitte.

Could the Universal Social Charge hurt Enda Kenny in 2015 just as much as Irish Water did in 2014?

Judging by the discussions taking place in Government Buildings these days, the Taoiseach himself certainly seems to think so.

He and Joan Burton are reportedly trying to hammer out a tax reform package that will kill off the issue before it kills them - but no amount of creative accounting can disguise the fact that they have precious little room for manoeuvre.

SIPTU are already upping the ante. Ireland's biggest trade union has put down a motion for the Labour Party conference in February, demanding that the much-hated USC is scrapped.

If this does not happen, president Jack O'Connor warns that their traditional giant 'Vote Labour' poster might not be plastered all over Liberty Hall at the next general election.

Sadly, calling for an end to USC in 2015 is a bit like calling for world peace or Christmas all year round. It just isn't going to happen.

As Labour's former leader Pat Rabbitte (left)pointed out yesterday, the €4bn-plus raised by USC will hardly be found down the back of a government sofa - and in any case the Coalition has more important things to do than keeping SIPTU happy.

This does not make Enda and Joan completely helpless. If the Taoiseach and Tanaiste want to have any hope of re-election, they should use 2015 to both cut USC and give us a timetable for gradually phasing it out over the next few budgets.

recession

After all, it was originally presented as an emergency tax to get Ireland through a sticky patch - which means that the recession will not feel really over until those dreaded three letters have been taken off our payslips.

Despite last Wednesday's passionate Right2Water rally, the Government is quietly confident that water charges will die down as a political issue after Christmas.

However, the public anger directed at Irish Water this year may just be waiting to transfer itself to another cause.

If anything, the USC is an even more powerful symbol of austerity - and it could end up costing Fine Gael and Labour just as dearly in the ballot box.

So how can the Government head this off? For a start, Enda and Joan need to get their priorities straight.

While the Tanaiste consistently calls for USC reform, the Taoiseach keeps contradicting her by hinting that he would prefer a cut to the top rate of income tax.

Kenny should have a word with his own Fine Gael backbenchers, who could tell him that USC comes up more often on the doorsteps for one simple reason - it affects a hell of a lot more people.

With both Coalition parties now wildly unpopular and an election due by April 2016, time is of the essence.

They are drawing up plans for a 'spring statement' on the economy next April, which could mean that in 2015 we get two budgets for the price of one.

From a PR point of view, this makes a lot of sense. A mini-budget would allow the Government to start cutting taxes earlier, generating the all-important feelgood factor that both Fine Gael and Labour so desperately need.

It would also help them to set the agenda, snatching back control from the street protesters.

Of course, the Department of Finance absolutely hates the idea of a mini-budget. For the economic Sir Humphreys, making tax changes for 2016 based on just three month's figures in 2015 is suicidally reckless.

EXPOSED

True, it could leave Michael Noonan looking badly exposed if the world economic tide goes out - but the Government is so far behind at this stage that it cannot hope to get a second term without taking some risks on board.

Whatever Kenny and Burton decide to do with USC, it needs to be dramatic and easy to understand.

They were both ministers in the Rainbow government that campaigned for re-election in 1997 on a confusing platform of income band changes.

Back then, Bertie Ahern's Fianna Fail promised tax cuts pure and simple - and won a contest that most pundits expected them to lose.

USC reform now holds the key to this Government's future. If they bottle it, then those three letters could stand for something else as well: Useless, Sinking Coalition.


Privacy