Let's face it, it's either take the cuts or raise taxes to fund spending

"IT IS ALWAYS difficult to speak on a motion of no confidence when the motion relates to oneself and it is especially difficult for a man as modest as myself," Charlie McCreevy told the Dáil this week during the confidence debate on his stewardship as Minister for Finance. This was even before the publication of the Book of Estimates, which foreshadows the forthcoming budget.

If he was a new Minister for Finance, many people would really be lauding him for having the guts to take such a bold and necessary stand. But, of course, he is not a new minister. He has been there for over five years and he is the one who must bear the ultimate responsibility for the profligacy of his fellow ministers who recklessly sought to buy the last election. Not only that, they have given themselves handsome pay increases, and they are now calling on others to cut back. This is a lousy sense of leadership.

It is all uncomfortably reminiscent of when Charlie McCreevy first entered national politics in 1977, following Fianna Fáil's infamous giveaway manifesto of that year. He was the first of the politicians with the guts to denounce the auction politics in which all of the parties had been engaging. It was a great pity that he did not have the courage to outline the true situation before this year's general election.

During the election campaign, McCreevy denied that the Government was aware of impending cost overruns and was planning to cut back on spending. He stated baldly in a letter to the Fine Gael leader on May 13, however, that there were "no significant overruns projected and no cutbacks whatsoever are being planned, secretly or otherwise."

We now know that his department wrote to the other departments on February 26 and April 17 to cut a total of 32m from their budgets to facilitate the series of election announcements.

With hindsight, it seems safe enough to assume that the coalition would have been re-elected anyway. But, of course, that is with hindsight. Even though people usually think that the great mass of the Irish people elect a government, it is the relatively small number of floating voters who really change governments.

The coalition was in an even worse position than George W Bush going into the recent Congressional elections. Traditionally, the party in the White House usually loses ground in mid-term elections, but Bush confounded his critics by winning extra seats in both houses of Congress and regaining control of the Senate. It was a tremendous political achievement, but unlike the performance of the coalition here it was not unprecedented.

In this country, prior to 2002 every coalition government was ousted at the next general election. This happened in 1951, 1957, 1977, 1982, 1987 and 1992. The current coalition is therefore unique.

Why was this Government returned?

Richard Bruton of Fine Gael attributed the success to the profligate policies of what he called Operation Bertie, in which money was offered as the solution to all the problems.

"It was all about glad-handing the public, finding photo opportunities and taking part in grand openings," he told the Dáil. The electorate was promised "that largesse would be dished out to sports clubs and sports people."

Fianna Fáil certainly made extravagant election promises, but they were almost modest in comparison with those made by Fine Gael and the Labour Party. If mere promises won elections, the opposition should surely have won comfortably.

The Taoiseach responded to the opposition attacks this week by accusing Fine Gael of trying re-write history with the motion of no confidence in Charlie McCreevy. "It is an attempt to whitewash the fact that Fine Gael treated the general election like an auction. It was prepared to auction off the family silver. It was prepared to take the brass off the door, to take the door off the hinges and to flog the lot."

This was greeted by howls of indignation from the opposition benches, where the truth clearly hurt.

Even though it was obvious before the general election that the economy was already in trouble, the various parties vied with Fianna Fáil and each other in making reckless promises. Fine Gael spokesmen had lost the run of themselves with their fatuous slogan, promising to "grab the Celtic snail by the horns."

That must have been the craziest slogan ever produced by any Irish party. They also promised to compensate those who lost money on Eircom shares, as well as the Dublin taxi drivers.

Maybe they won the taxi driver vote in Dublin, but that promise did little to attract the support of the long-suffering public. The man behind the idea of compensating the taxi drivers, Jim Mitchell, then deputy leader of Fine Gael, lost his seat in the general election. Indeed, Fine Gael lost 23 of its 54 seats.

McCreevy was not far off the mark when he reminded his Fine Gael critics that they were more than decimated (which literally means the loss of one in ten); they were almost halved. Even if the current Fine Gael leadership was not responsible for what happened then, we should not lose sight of the fact that we would be in even more trouble now if members of the Government had done what Fine Gael or the Labour Party had advocated.

Instead of the expenditure cuts, would people prefer that we persist with the reckless spending and fund this by raising taxes? That's what got us into the culture of offshore accounts and tax evasion. Our tax system was penal and the black economy was thriving.

Many of best brains left the country, because they found that taxation was crippling here.

As a result, our economy found it extremely difficult to compete internationally.

Earlier this year, a survey published by the Organisation for Economic Co-operation and Development (OECD) found that Irish workers enjoy one of the lowest rates of taxation in the industrialised world.

In 2000, a married worker with two children and a non-earning wife paid only 5% of his salary in income tax on the average wage of €£26,620 in this country.

In comparison, workers in Britain pay over 14%, while those in the United States paid over 15% of their income on the average national wage.

Of the 30 countries in the OECD, only workers in Mexico, Iceland, Luxembourg and both the Czech and Slovak Republics paid lower taxes than workers in Ireland. This did not take into account further cuts in taxation here in 2001, when Ireland and Holland had the highest tax cuts of all the OECD countries.

In contrast with what was happening here in the 1980s, those were revolutionary changes for which McCreevy deserved a great deal of the credit, because he adopted the ideas being propagated by the Progressive Democrats. That should be kept in mind when people are criticising him for his mistakes.

Of course, there is still some massive inequity in our taxation system. Why should a racehorse owner be allowed to earn millions tax free while the stable lad looking after the horse has to pay normal income tax?

Surely even a racing enthusiast like Charlie McCreevy must realise that this is grossly unfair. It's time he collected from some of his wealthy friends.