16 October 2003 Edition

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Government "failing dismally"

BY ROBBIE SMYTH

McCreevy 7, Return of the Stealth Tax is coming, launch date 3 December. In this latest installment, Finance Minister Vader lays siege to our disposable income with his competitiveness death star secretly sucking funds from PAYE tax payers, consumers and ordinary households, while interstellar tax evader Jabba O'Brien and other mercenaries still evade capture.

Seriously though, budget time is on us once again and the submissions, lobbying and forecasts are all gathering pace. This week, the Economic and Social Research Institute and the CORI Justice Commission added to the in pile already filling up with contributions from IBEC, the employers' organisation, SIMI, the motor trade body, and economists too numerous too mention.

It is McCreevy's seventh budget and perhaps more than any other member of Fianna Fáil, he has shaped the ideological development of government policy. He is unashamedly an advocate of business, deregulation and privatisation in his policies.

McCreevy believes that equality comes through a robust growing market economy that will employ and provide for all. The need for redistribution, if it occurs at all, to McCreevy happens through welfare payments and tax cuts.

This year McCreevy's theme is competitiveness. This week he said: "What we must do is ensure that Ireland is first off the blocks when the recovery happens. The key to achieving this is maintaining and improving our competitiveness."

So what does competitiveness mean? It certainly doesn't seem to mean having an efficient health service, or delivering infrastructural developments on time and within budget. It doesn't mean tax reform. It just seems to mean one thing - low wages and lower wage rises.

When challenged about his record, McCreevy rests his laurels on the twin successes of cutting income tax while increasing government spending. In McCreevy's world, the economy is "robust and resilient" and the economy will be the "first off the blocks when the recovery happens".

The CORI Justice Commission presents a completely different reality to that of McCreevy. CORI believes that "a society is measured by how it treats its most vulnerable people. By this measurement Ireland is failing dismally".

CORI believes that the budget should "give priority to tackling the widening rich/poor gap" as wells the deficits in infrastructure and social provision. They propose a minimum increase of €12 a week in social welfare and increasing corporation tax to 17.5%. CORI have a number of other progressive tax policies, which include making tax credits refundable, increasing capital gains tax and to "develop policies which allow taxation on wealth to be increased".

IBEC have an entirely different agenda from CORI and propose no change in taxation at all because this would affect "competitiveness". IBEC want a "holding budget".

Last week, the Economic and Social Research Institute came on board the steady as you go boat, with a call for McCreevy to "do no harm" in his budget. This came after new inflation figures of 2.9%, the lowest level for four years, showed that consumers and retailers had accommodated last year's VAT, ESB, gas, post, VHI and phone charge price rises, leaving McCreevy the scope to do the same again this year.

The minister, though, also has multi billion euro cash reserves in the Central Bank awaiting EU approval for spending. So we could have a budget with no borrowing and no change in the patently unequal status quo.

The budget is unique because it is the one true test of what a government cares about and values. Last year it was more tax cuts for business, no real tax reform, no new efficiency in spending, delayed increases in social welfare and child benefit, still unmet promises on child care, school buildings, hospital beds, the list goes on.

Then there was the cut in first time buyers' grants and the stealth taxes, so a "holding budget" mightn't be the worst option for the poor, sick and marginalised, for the low paid, because McCreey's "competitiveness" means only one thing - the weak and powerless will pay most.


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