Charlie’s Budget a copout

THERE are three questions that face every finance minister on budget day: who gets the tax breaks, what’s going on the pint and how big is the gaffe?

As sure as there are leaks, speculation and feigned outrage from the opposition benches, every budget day has its blunder which will later have to be reversed, reduced or paid for at the polls.

John Bruton's was the most spectacular when his attempt to tax children's shoes brought down the Fine Gael-Labour coalition in a moment of fiscal firmness turned political suicide in 1982.

Fianna Fail's abolition of domestic rates in the 1978 budget came undone in the recession that followed when it became clear there was no other handy source of funds for local authorities. Pavements cracked, potholes grew, water and service charges were imposed and the row over the funding of local authorities has raged ever since.

Fianna Fáil were again in power in 1988 when Ray McSharry announced a tax amnesty he calculated would bring in £30m in undeclared revenues.

On one level it was a huge success, trawling in £500m, but on another it was a blatant admission the rich fearlessly flouted the tax laws and would continue to do so as the DIRT and Ansbacher scandals would later show.

In 1994 as the first paw prints of the Celtic Tiger were leaving their mark, house prices began to rise and the Fianna Fáil-Labour coalition pounced, reducing the exemption thresholds for Residential Property Tax.

The move was about as popular as a dead beetle in a crisp packet. The thresholds were reversed the following year and in 1997, the tax was abolished.

The most unfortunate budget day blunderer wasn't even by a finance minister.

Phil Hogan was Fine Gael minister of state at the department in 1995 when the main Budget points were accidentally released to the media before the minister had even cleared his throat to deliver them. Hogan took full responsibility and resigned.

In the same budget, the rainbow coalition abolished third level fees. A bit like the domestic rates of old, finding a way to make up for the shortfall has become an annual head-scratcher and there is a belief that the fees will return soon either in an upfront or disguised form.

Champagne Charlie McCreevy made his first unpopular move in 1999 when he introduced individualisation to the tax regime, giving extra concessions to dual income families, or discriminating against stay-at-home spouses, depending how you looked at it.

There were enough citizens looking at it from the latter viewpoint for cries of treachery to fill the air and McCreevy was forced into promptly creating a new tax allowance for the stay-at-homes at an additional cost of £125m.

Since then, the minister's budgets have prompted an annual blunder versus brilliance argument as various commentators condemn the recklessness of increasing spending and tax cuts from a depleting kitty while at the same time admiring his ability to get away with it.

Some said this year's gaffe had been made already with last month's hugely unpopular first time buyers' grant abolition as well as the changes to the drug refund scheme. Others said the minister was only warming up.