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11 December 2003 Edition

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McCreevy's smokescreen

BY ROBBIE SMYTH

Charlie McCreevy

Charlie McCreevy on budget day

Of all Charlie McCreevy's budgets, his seventh, delivered last week, has to be the most bizarre. It was incredibly light on detail, filled with stealth taxes and meagre offerings for the low paid, aged and deprived.

And what was most effective and resourceful, ingenious even, was that when he had laid out his spending plans most of the media coverage and political comment centred on McCreevy's proposals to move eight Dublin government departments out of Dublin into 25 separate locations around the 26 Counties.

This was his masterstroke, his smokescreen. All year, the stumbling economy, the changing tax patterns, the misspent billions, the crisis in the health service, in school building, in housing and homelessness, in public transport and road building, all pointed up the need for fundamental reform in how Fianna Fáil and Progressive Democrats do business.

The discontent created in the public has also generated massive falls in voter support for Fianna Fáil and substantially decreased approval ratings for Bertie Ahern, the teflon finally chipping.

All of this evaporated in the melée and rows over whether or not to move government departments out of the capital.

This week, An Phoblacht tries to break down the McCreevy smokescreen and analyse what was really going in McCreevy's seventh budget. We highlight the responses of Sinn Féin's Leinster House TDs to Budget 2004.

A budget of inequality - Ó Caoláin

"An empty package wrapped in tinsel paper marked 'decentralisation'", was how Sinn Féin's Caoimhghín Ó Caoláin described Budget 2004 "

Ó Caoláin said: "This is a Budget of Inequality which does nothing to narrow the gap between wealth and poverty maintained by Minister McCreevy in every Budget since 1997.

"The Government has broken its promises to deliver substantive increases in child benefit and old age pensions to levels that will meet the National Anti-Poverty Strategy targets. An increase of €1.50 and €2 per child per week is pathetic from a Government that boasts that it is addressing child poverty.

"The social welfare increases in this Budget are inadequate and are already undermined by stealth taxes such as local authority charges, the savage 16 cuts to welfare entitlements and the cuts in CE schemes. It is disgraceful that the government did not use its increased revenue to reverse these cuts, especially the miserly and dangerous Rent Allowance cut.

"Tax benefits for the lower paid in this Budget are also totally inadequate and are also undermined by stealth charges and health charges like the raising of the ceiling for the Drug Payment Scheme and the increased charges for A&E. This has especially hit those whose incomes are above the qualifying level for the medical card - the 200,000 people were promised by Fianna Fáil that the medical card would be extended to them. This budget spurned that promise".

Budget overview

• 50,000 new workers will be on the 42% tax band

• 39,200 minimum wage workers will taken out of the tax net

• €10 weekly increase in social welfare payments

• No row back on 16 social welfare cuts announced in budget estimates

• Government still not fulfilling its own commitments on child welfare

• Film tax relief extended until 2008

• No moves on tax reform

• A new €1 billion five-year school modernisation fund announced, but increased use of public private partnerships is included.

• 15% of total spending will be public private partnership by 2008

• Tax credit for RD expenditure announced

Coalition an "IBEC front" -- Crowe

The Dublin Southwest TD was the first Sinn Féin representative to speak in Leinster House after McCreevy's budget announcements. In a passionate speech Crowe attacked the double standards at the heart of government policy on tax and spending accusing them of being merely a front for the aspiration of employers and the wealthy in Irish society. Below is an edited version of Crowe's address.

"Speaking after the publication of the estimates a few weeks ago, Father McVerry, a Ballymun-based priest who has dealt with disadvantaged young people for the best part of his adult life, said that the poor in society have been shown the two fingers by the Government.

Those are strong words. Any hope that the Government might have had a change of heart between then and now has disappeared in the aftermath of the Minster's Budget Statement. This is the seventh budget in what is a seemingly endless and vicious assault on working people and the working poor.

On taxation, Deputy McCreevy has left his big business friends, the high flying executives, untouched. The wealthy can once again rest assured that millions buried in offshore accounts will not be touched. Unfortunately, especially for those on low incomes, the Minister again failed to take those on the minimum wage out of the tax net.

McCreevy tinkered at the edges of our taxation system when fundamental and real reform was required. He has done nothing to end inequality.

Legalised taxation evasion is rife in this State. The Government has created a tax system where the top earners can pay little or no tax. In 2002, a survey of the top 400 earners found that a fifth of the top earners paid less than 15% in tax and some of them do not have to bother paying any taxes at all.

Why is it that workers pay tax at 40% but their wealthy bosses have seen their capital gains tax set at 20%? Employers' PRSI could be returned to 12% as employers' payroll tax is the lowest in the EU. 12% is an internationally competitive figure still. However, this would mean the Government would have to stand up to IBEC, and for the last six years this Government has served merely as IBEC's front operation in Leinster House."

Ferris highlights lost millions

Speaking during the debate on the Budget, Martin Ferris attacked those who claim there is no alternatives to current economic thinking. As an example of this, he pointed to the scandalous give away of Irish oil and gas reserves, with the massive loss in revenue which that entails.

"If this state had done what the Norwegians had done and put in place the proper structures and taxation and royalties scheme, we would be in a far stronger position and wouldn't have to be tinkering around the margins of direct and indirect tax rates and social welfare payments for those who can least afford it," he said.

Ferris also criticised the failure of the Budget to adequately provide for the future of rural communities at a time of radical change.

"In general I am disappointed that more has not been done to establish the kind of programmes that will be necessary to help farmers adapt to the changes brought about by the reform of the Common Agricultural Policy," he said.

"What is required is a new strategy that will allow farmers to take advantage of decoupling, and to prepare rural communities in general for the future. The Rural Social Scheme announced in the Budget and the funding made available for it, will be inadequate to fulfil that task. Besides, rural communities will suffer as much as everyone else from the consequences of the failure to protect public services."

Housing ignored again

Arthur Morgan angrily criticised Charlie McCreevy for ignoring the housing crisis once again.

"This Budget will have done absolutely nothing for people attempting to house themselves and their families. What is in here for the 48,000 people on housing waiting lists in this State, 85% of which have an annual income of less than €15,000 per year? The Government has chosen to attack rent allowance for the second consecutive year. This measure will, I have no doubt, bring about an increase in homelessness where vulnerable people will find that they cannot get into the private rented sector.

Morgan called for the reinstating of the first time buyers' grant, for proper funding of local government funding for housing and for an immediate ending of tax relief for speculative buyers of second homes.

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