Note of caution amid all the electioneering

WITH a general election looming early in the new year, the clamour for tax cuts is relentlessly mounting as politicians of all hues cynically promise the sun, moon, and stars to voters in the hope of being returned to the gravy train of Dáil Éireann where TDs enjoy lucrative pay, perks and pensions. 

As the poll deadline approaches, the familiar game of playing for the glittering prize of personal gain is getting under way in earnest. Even those who genuinely adhere to the lofty principle of serving the public might be tempted to lay aside that ideology. In an ideal world, high standards of public service rather than dipping in the greasy till, should be the goal of every politician, whether they are left, right or at the centre of the political spectrum.

But as we also know to our cost, Ireland is far from being an ideal world. The promised abolition of domestic rates, for instance, which swept Fianna Fáil back into power after the 1977 general election is a painful testament to that classic example of auction politics which has now come back to haunt homeowners in the form of a property tax which some resent but all must pay.

So, with electioneering getting into full swing in the days and weeks ahead, it is timely to strike a note of caution. From past experience in election times, people know they should be on their guard when the prospective politician appears on the doorstep to ask for their No 1. Because when that happens, the seemingly inevitable result is that we lose the run of ourselves when faced with a basket of goodies, including the juicy offer of tax cuts.

Despite yesterday’s upbeat forecast for the economy in 2016 from the Economic and Social Research Institute, which predicts a growth of almost 7% this year and close to 5% next year, the ESRI also sounds a loud warning note. Effectively, it advises the outgoing government not to overheat the economy by cutting taxes or by making big spending increases. This comes at a time when Taoiseach Enda Kenny is promising to abolish the hated USC tax, a temping offer if ever there was one.

According to the ESRI, an economy growing at such a rate needs a stimulus in the form of tax cuts or big spending rises like the proverbial hole in the head. To take some of the heat out of the economy, it suggests the next government spends less than it takes in by moving to a budget surplus earlier than planned. Obviously, turmoil on international markets, or the looming risk of Britain leaving the EU, could yet have major repercussions on the Irish economy.

It also warns Ireland needs to build 25,000 houses a year in order to end the housing crisis. Putting a tax on land banks or a use-it-or-lose-it policy could free up development land.

Everyone would like tax cuts to put more money in their pockets. But the reality is there is increasing demand for services such as health and education. People living longer suffer costly ailments. Cancer victims are crying out for expensive medicines. Populist politicians who promise tax cuts either to retain or win power must be challenged to explain where they’ll find money for these and other vital services.