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Budget Statement 2018

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Snippet Contents:

I am aware the Minister for Finance is fond of reading and the theatre. He might well have looked to Shakespeare’s plays to provide him with a title for his address today. "As You Like It", would, I guess, be his first choice, a nice romantic tale to please the punters - something, however small, for everyone in the audience. Now that a few hours have passed, my own judgment would lean towards "Much Ado About Nothing" for today’s less than dramatic offering.
The White Paper published last Friday reveals a total spend, current and capital, of close to €60 billion. Today we devote a whole day to dissecting plans to add about another €1 billion to this. The discussion today is about €1 billion out of €60 billion - all this fuss and argument over not much more than 1% of the total. We have been stuffed to the gills with rhetoric and bloated promises about jam tomorrow, based on optimistic scenarios of perpetual growth that could blow up in everybody’s face if Brexit goes horribly wrong. The big boast today is that we have a balanced budget for the first time in a decade. I am not as enamoured of this as the Minister and Taoiseach. First, it is an obligation of current European rules rather than a specific decision of an Irish Government. Second, the incorporation of capital investment spending in the total distorts the picture. We should join with other European states in having this policy adjusted to enable specific investment projects to be outside the deficit calculation. That is the only way we are going to revive many of the European economies and put in place vital infrastructure for people in this country and other European countries.
This budget is framed by the past and seems set on repeating some of the mistakes. We are now ten years on from the eve of the financial crisis, which started in September 2007 with a run on the Northern Rock bank. In his budget of that year, the then Minister for Finance, Brian Cowen, defiantly proclaimed over and over again the mantra of those days, "Ah but, the fundamentals are sound." The Minister for Finance previous to Brian Cowen relied on stamp duty revenue and used it to pay for tax cuts and permanent spending increases - his name was Charlie McCreevy. Those policies of unsustainable tax revenues laid the foundations of Ireland’s ruin. Today, unfortunately, the Minister for Finance has been tempted to travel down the same path. I am amazed that Fianna Fáil seems to have totally forgotten how it blew up the finances of the country. Today the Minister for Finance has raised €400 million from a 4% increase in non-residential stamp duty to pay for tax cuts and spending increases. Have we learned nothing from the past? A budget framed on transactions in the volatile Irish property market is laying the foundations of future crisis. One of the central lessons for Ireland from the crash was not to rely on transaction taxes on property to fund tax cuts and increases in current expenditure, yet this policy is a pillar of today's budget. I cannot understand it. While I understand the context of the Minister’s actions, here we are today as history repeats itself.
There is another aspect that is deeply troubling. Never before have I seen such a commercially sensitive tax increase leaked days in advance of the budget. This raises serious questions about the competence and the ethical framework of these budget leaks. Tonight the Dáil will vote to raise commercial stamp duty from 2% to 6%. Members can be assured that in the last 48 hours, property sales of millions of euro, possibly billions, were rushed through. We are all aware - at least, I am aware - of the devices that can be used to mitigate the tax, given the property sector knew about this, such as resting contracts and selling shares in properties as opposed to the underlying assets. We have been blinded by announcements by the Minister but nobody has so far looked at this fundamental issue. I recall a day when the current Commissioner, then Minister of State, Mr. Phil Hogan, actually resigned because of budget leaks which were only potentially advantageous to players in different sectors of the market. I am agog at this and think it is a real error of judgment by the Government.
The Charles Dickens character, Mr. Micawber, viewed a balanced family budget as defining total happiness while even a trifling deficit was the cause of total misery. A homeowner could be thrilled if he or she balanced income and expenditure but what if the roof of the family home was leaking or the house needed expenditure on better windows to retain warmth?