As usual there has been the annual “kite-flying” when it comes to our budgetary process.
It all seems a bit ridiculous that it is decided by a few top officials and then unveiled to us in some form of ceremonious ritual.
The whole process seems far removed from democracy — with little if any opportunity, for opposition elected representatives to debate or add constructively to our national budget.
This year, we’ve been told that the budget will be “different” — that it will effectively set out the stall for the coming number of years.
The cynic in me says this multi-annual approach isn’t new to Ireland — in fact this tactic has been employed over the past number of years with great effect.
This was particularly well utilised in the case of the delayed introduction of PRSI on savings; the cessation of mortgage interest relief; the taxation of maternity benefit; the removal of tax-free PRSI thresholds; the hiking of carbon tax on fossil fuels; the withdrawal of property reliefs for investors, and the increase in retirement age for State Pension to name but a few measures.
In each of these cases, the shift in tax policy was spread out over time, and in some cases over years, to effectively increase tax take steadily and without much fuss.
This time round, I expect a raft of good news, including reductions to income tax, to be revealed up front and to be delivered over the coming years, subject of course to successfully getting through the not-too-far-off general election.
This new multi-annual approach is in fact not a new approach at all.
On the contrary, each pre-election manifesto should read as a multi-annual plan. Given that, there are just over 18 months at most before our next general election, it’s worthwhile re-looking at what each party had suggested their 2011 to 2015 plan would be.
Looking first at Labour, the success rate in terms of achieving their pre-election manifesto measures is a mixed bag. Thankfully, from a farming perspective, some of the suggestions seem to have disappeared off the radar. Labour suggested curtailing the site-to-child exemption, as well as stock relief for farmers.
Furthermore, Labour suggested capping agricultural relief at 75% rather than the 90% available for a long number of years.
Some measures have however been introduced, such as the 3m cap on assets qualifying for capital gains tax exemption (the success of this shift in tax policy is questionable, given that CGT can be entirely avoided by passing assets post-mortem).
The suggestion of a third income tax band of 48%, as opposed to the current high rate of 41%, has not come to fruition, neither has the proposed cap on Capital Acquistion Tax reliefs at 3m for the tax efficient transfer of business assets.
Our current system of agricultural relief and business relief works well for farmers, but is easily manipulated by the super-wealthy as a tax efficient method of transferring wealth from one generation to the next, at effective tax rates of less than 3.3%.
It is a pity this tax loophole has not been adusted to ensure these reliefs are used only in genuine cases of farm or business transfer.
On the Fine Gael side, the suggestion of a small capital gains tax charge on the disposal of principal private residences, and alternatives to property tax, haven’t seen the light of day since 2011.
Equally the suggested levy on packaging, and a single business tax for micro-enterprises didn’t gain much attention.
Meanwhile, areas where the parties have lived up to their pre-election promises include the increases in DIRT tax and in tax rates for capital gains and gifts and inheritances, as well as the hike in carbon taxes.
Next Tuesday the mystery around our financial destiny will be unveiled.
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