You still can’t tax your way out of a recession

SO WHAT can be said about the budget announcements stretched out over two days earlier this week?

Given that they were preceded by Enda Kenny’s State of the Nation polemic which bore a marked resemblance to a similar one of 30 years ago when the nation was also in a bad way, one can only conclude that one Charles J Haughey is still with us, if not in body, then in spirit. The more things change the more they stay the same.

Whilst Charlie advised us that we were all living beyond our means, he continued to live the high life and still bought his bespoke shirts in Paris.

Enda Kenny also told us we were living beyond our means but did absolutely nothing to rein in the gravy train that he, his fellow politicians, current and retired, and senior public servants, continue to enjoy at our expense. It was probably one of the most unfair budgets of our times, and if 24-hour international news reports are to be believed, we will see more of the same right up to 2023.

One of the alleged objectives of the budget was to get people back spending and to get the economy growing again. One can only wonder how increasing Value Added Tax — an oxymoron if there was ever one — from 21% to 23% will stimulate the economy.

Worse still, the Government chose not to factor in the fact that sales will almost certainly reduce and the VAT take decrease as a result, in determining the alleged benefit to the economy. It just makes no sense.

Unless, of course government has more stealth taxes up its proverbial sleeve and intends tagging VAT onto anything that moves. We are close to that already and that process was restarted recently with the re-designation of bread items such as croissants.

If that continues we will then of course have no choice at all. However, in the meantime, those of us close to the border will simply go across it more frequently and those of us too far away will just not spend unless we absolutely have to. In the meantime Irish businesses suffer yet again.

Government, current and previous, have trumpeted their intention to improve the efficiencies of our hospitals and to, among other things, reduce waiting lists in our hospitals.

Yet, with one fell swoop this government with its intention to stop the use of “subsidised” public beds in public hospitals for private patients will cause dramatic increases in health insurance given the relatively low number of private hospitals and the considerable charges involved.

Government encouraged folk to buy “green” cars to help the environment. Now they are being penalised for doing do. The car retail industry is already near collapse. This will only accelerate that collapse and put yet more folk on the dole queues or on the emigration “ships”. The net result is less folk to spend money on stimulating the economy.

The one single biggest expenditure item, that of public sector pay, pensions and numbers has not been addressed at all or only partially. As it stands our public servants are paid more than those in virtually all European countries including our paymasters Germany.

The bottom line in all of this is that the ordinary people of Ireland, particularly the private sector — those whom even Enda says he accepts did not cause the problem — are being asked to shoulder the real pain. Those who caused it are still getting away with it.

Taking a reported €6,000 per annum away from the likes of Bertie Ahern’s pension of €150,000 is a little like blowing into the wind. It has no impact.

The reality is that you cannot take money from peoples’ pockets and expect them to spend more.

It’s been proven time and again that you cannot tax your way out of a recession, even if you call them indirect taxes.