MICHAEL CLIFFORD: Tax cut talk is a wake-up call for us all

The message of Taoiseach Enda Kenny's latest 'metaphorical' phone call from a member of thepublic is that taxes will be cut to get him re-elected.Picture: Keith Heneghan

If there is one constant in Irish politics, it is the electorate’s wish to get fooled again with more promises, writes Michael Clifford

THEY’RE on the blower to Enda again. Some people can’t help picking up the phone and getting in touch with the Taoiseach directly. Maybe it’s because last year, in the US, Mr Kenny told business people he was handing out his number, and they should give him a shout if they had any problems.

In January, he said that he was getting calls from people around the country who were amazed that their pay packets had shown an increase, thanks to the Government’s very modest tax cuts in last October’s budget.

“It was great to see some people contacting us, saying ‘well, I’m not sure whether it was a mistake or not, but I seem to have gotten extra money in the last payment’,” Kenny told a gathering. The following day, under pressure to reveal who exactly these grateful taxpayers were, his spokesman reversed at speed, suggesting that the Taoiseach had been using a “turn of phrase”. Or, to put it plainly, he had been talking through his hat.

Last week, in the US, Mr Kenny took the opportunity to share the content of more recent calls he has been getting, this time from displaced Gaels. “I get phone calls from Singapore and from Australia and they say ‘you know, I’d like to go back — I know I can get a job — but your tax rate is too high’,” Kenny said.

“And that’s why we’ve started a process of reducing that tax burden in the last Budget, and it will continue in this one coming up, and the one after, if the Government happens to be re-elected.”

All these people telling the Taoiseach all these things. Where does he get time to run the country, if he can’t get off the blower?

His latest telephonic tale does tell a story, though. Tax cuts are going to be front and centre in the next general election. Fine Gael, and possibly Fianna Fáil, will concentrate on areas like the marginal rate; Labour will be more likely to woo people on the basic rate of tax. And Sinn Féin will promise to abolish water charges and property tax, and heap the cost on the rich, whomever they are.

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All parties will have other goodies up their respective sleeves, but tax will be front and centre. Remind you of anything?

Which party excelled at offering and delivering tax cuts in the decade before the economy, and with it much of society, went belly up? What was the clarion call of all parties in the years of illusory plenty?

Politically, whenever standards of living are discussed, everything is measured against how we lived prior to 2008. Any discussion of whether the country might have been living unsustainably was dismissed with the glib, and — at this stage — clownish retort: “We didn’t all party.”

This is in reference to a clumsy comment made by the late Brian Lenihan, that all of society had benefited from the property bubble. I don’t know about you, but I didn’t party. Like all of you, though, I did benefit.

I benefited from tax rates and improved services that were, to a large extent, paid for by the money that poured into the exchequer from property-related activity. Those at the top benefited most, by far. Some were infected with obnoxious greed. Others believed their own horse manure as to the infallibility of the economy, and the bigness of their brains. But everybody did benefit, make no mistake about that.

The failure among large swathes of the population to acknowledge that home truth is now allowing the political classes to effectively promise that we can all get back to the standards of living that we enjoyed in those days.

Consider the following, which was calculated with the assistance of a tax consultant. Take a family, including three children under six-years-of-age, in which one of the parents works outside the home, earning €50,000.

Back in 2008, that income yielded €40,563 net, when rates, allowances, credits and PRSI payments were taken into account. Throw in the child-benefits rates of the day, of €166 for the first two children and €203 for the third, and the early childhood supplement of €1,100 per child (which was payable at the time), and the family was receiving €9,720 from the State.

So with a net income of €40,563, and transfers of €9,720, the family had an income of €50,283, leaving them with a net transfer from the State of €283. Happy days.

Not everybody has three children under six, but neither is the above example exceptional. It is also the case that high-earners proportionately benefited far more back in those crazy days. However, when you consider that around two-thirds of earners have income less than €50,000, it throws the times into sharp relief. An oil-rich nation might well be able to sustain that kind of approach to taxing its citizens, but the notion that it was sustainable in this economy is simply for the birds.

Yet, it is those standards that politicians of all hue are hinting that they want to restore. After all, if the man and woman in the street didn’t benefit from those illusory times, isn’t he or she entitled to have those standards of living restored?

The whole thing is a con game and the electorate is willing to be played. For if there is one constant in Irish politics, it is the electorate’s wish to get fooled again with more promises, particularly from parties who are in opposition.

And what of the awful tax rates that now exist, which have Enda Kenny allegedly getting an earful from Irish people working abroad?

One friend on the €50k is now coming out with a net of €38,301, having paid taxes, PRSI and the USC.

That compares with the €38,346 he was receiving in 2002 — just €45 more than he’s getting now. Was this a high tax country in 2002? Hardly.

Of course, other issues are impacting hugely today that are a result of the recession. Water charges and property tax can add up to €500 a year, and the real bugbear of overbearing mortgate repayments for some, and arrears for others, are not easy to digest.

There are far more important matters in today’s world that require addressing, such as the state of the country’s services, and the growing problem of low pay. Don’t expect these to feature prominently in the election campaign. The trends set during the days of plenty are here to stay. Vote for us: less tax for you — and if that’s not sustainable, we’ll find somebody else to pay for it. It’s a pity that somebody hasn’t got onto the blower to Enda Kenny about more pressing or nationally important matters than tax. But even if they did, it’s unlikely that Mr Kenny would share those calls with us.

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