Kyran Fitzgerald.


Tory machinations of interest on this side of the Irish Sea too

George Osborne’s budget and Duncan Smith’s resignation need careful scrutiny for their implications for Ireland, writes Kyran Fitzgerald.

Tory machinations of interest on this side of the Irish Sea too

It is time to dredge up that old quote from a former British prime minister Harold Wilson: A week is a long time in politics.

Last Monday, the UK chancellor George Osborne was applying the final touches to his latest budget, his eighth.

Not bad for a man of 44 years of age, he must have been thinking.

By the end of the week, we had a resignation from the cabinet of the welfare secretary and former party leader, Iain Duncan Smith.

Many commentators suggested that Mr Osborne was mortally wounded politically following what amounted to a full frontal attack by a prominent colleague.

The Daily Mail was reporting that the country’s prime minister had directed some earthy language at Duncan Smith during a testy resignation phone call.

The Tories were back at war with each other, echoes of the 1990s, all over again.

Could the fortunes of Labour leader Jeremy Corbyn have just taken a dramatic turn for the better?

Last Monday, the man in charge of the finances of our larger neighbour would have had plenty on his mind, of course.

Britain’s public finances remain in a fragile position.

Then there is the looming referendum and the threat of a British exit from the EU.

Fears about Brexit have been causing businesses to put investment and hiring plans on hold — not good for a man trying to balance the books.

There would be bad news to break.

Cuts in supports to the disabled and an extra year of austerity-driven cuts, to name just two.

But goodies would be on offer to the business community — cuts in taxes aimed at boosting entrepreneurial activity and overseas investment.

There would also be a tax on sugary drinks that would capture most of the headlines.

On Wednesday, the chancellor would have given our own IDA food for thought with his announcement of a cut to 17% in corporation tax.

No doubt about it. The UK is eying some of our foreign investment pie.

With the likes of Google ramping up their London operations and committing to pay a greater share in taxes to the UK Treasury, the Irish Government, caretaker or coalition, has reason to look nervously over its shoulder.

Mr Osborne has remained an admirer of Ireland’s strategy for attracting foreign direct investment.

This country now attracts more US investment than any other European country bar the Netherlands.

Ireland is only famous for its accommodating tax system.

Imitation is the greatest form of flattery.

The Government, here, must be concerned at the growing gap in the tax treatment of the higher paid, skilled workers, particularly single people between Ireland and the UK.

Over there, the higher 40% rate of tax only becomes payable from next April on that portion of salary in excess of £45,000.

Mr Osborne has been steadily raising the salary level at which the top rate kicks in, in part, because he seeks to appeal to his own voters, in part because he recognises that Britain’s ability to soak up skills has helped transform London into, arguably, a leading global city.

This time round, he also moved to cut the main capital gains tax rate from 28% to 20% as part of a strategy to woo entrepreneurs.

The rate is due to drop to 18% by 2020 under his plan.

Attract in the job creators and you create the jobs.

He also moved to boost the commercial rates threshold as part of an effort to assist smaller firms.

Ireland, saddled with legacy debts, is left panting in this race for talent.

Outgoing Finance Minister Michael Noonan did throw some support the way of higher earners.

The rate of universal charge has been cut and the threshold above which the higher effective tax rate applies has been raised.

The marginal rate has been reduced to a maximum of 49.5% in the case of incomes under €70,000 or so.

Factor in our soaring housing costs and you begin to realise why so many of our younger skilled workers might be making travel plans.

What is clear is that Mr Osborne has not made life easier for our policy makers, but his centre-right strategy has bred its own set of problems in Westminster, leading to a prospect of a revolt among some younger Tory backbenchers.

That’s the group which helped to kill off plans last year to cut benefit payments to the lower paid.

Mr Osborne has been, in many ways, a skilled operator.

His freeing up of the pensions market and unexpected launch of the living wage, effectively a large hike in the minimum wage, disarmed many critics.

His promotion of an investment strategy aimed at boosting the North of England is not before time, coming from a politician with a parliamentary seat close to Manchester.

But he also attracted due criticism for continuing with freebies such as free transport and fuel allowances for wealthy elderly people, Tory supporters, many of them, while imposing welfare cuts on the vulnerable young and on those reliant on rent support.

On Friday, Duncan Smith tendered his resignation, flashing his blade in the darkened corridors of power.

Some claim that his real mission was to up end the prime minister’s ‘Remain in the EU’ plank in the June referendum.

If he succeeds in this aim, then Britain is on its way out of the EU and the Tory party is headed for a period of internal civil war.

The Tories leave the Labour people in the shade when it comes to infighting and back stabbing.

The knives really are out this time, in this latest real life episode of House of Cards.

The outcome is of more than passing significance for those of us, on this side of the Irish Sea.

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