Jason OMahony - Irish political blogger, Irish politics, EU politics
 

Fianna Fail should have a read of Sinn Fein’s surprising budget submission.

Posted by Jason O on Nov 17, 2011 in Irish Politics |

SF put away the crayons, and take out the grown up pens.
SF put away the crayons, and take out the grown up pens.

If you can, take a goo at Sinn Fein’s budget 2011 submission here. It’s well worth reading, and I say that not because it’s the usual far left Utopian stuff I rail against, but because it isn’t.

Don’t get me wrong: It’s a left wing document, and it advocates higher taxes on those earning over €75k (A rate of 48%), hikes in capital taxes, the closing of generous pension write-offs and a 1% wealth tax on non-working assets. But it’s not the usual Richard Boyd Barrett “Corrib Gas will pay for everything” guff. It’s thoughtful, costed (I can’t comment how well) and here’s the thing: It would look very comfortable in the hands of a French Socialist.

That’s not to say I agree with it. I’d love Sinn Fein, indeed every party, to be able to submit their proposed documents to the Fiscal Advisory Council to at least publicly verify that the sums are correct. There’s no reason why Sinn Fein should not make the request, on the basis that such an endorsement, provided their figures are indeed correct, would be worth its weight in gold.

Secondly, SF, like most political parties on the left, don’t seem to understand that taxes themselves have an effect on economic activity. For example, SF assume that a rise in Capital Gains Tax will bring in a certain amount of extra money. What they don’t understand is that a rise in CGT will often make property owners decide not to sell, and wait for a future government to cut the rate in the future. Waiting a few years to save a couple of hundred grand can be worth it.

Thirdly, I’ll be fascinated to see the effect the higher income tax rate will have on SF support amongst better paid public sector workers. Having said that, it could attract  lower paid private sector workers for the exact same reason.

I remain sceptical, because the plans still hinge on most problems being solved by the well-off and business being willing to sit every year and be milked, tax wise. That rarely happens, and if anything governments that try it can attract lesser returns each year as ambitious and talented people go elsewhere in search of lower taxes. SF, like Labour and the ULA, still takes the Progressive Democrat approach to the overall tax take, that it is possible to have high public spending and low taxation for the great majority. It just isn’t true.

Having said all that, the Fianna Fail response to all this will be interesting, because this is the sort of document that a Sinn Fein/Fianna Fail coalition negotiation would be based initially upon, and it’s not cloud cuckoo stuff.

In fact, it’ll be pretty hard for FF to claim that it is trying to recover its working class base without embracing policies like these. Assuming SF does not get to those voters first, that is. One thing it will do is open a conversation point in FF, between those willing to go left with Sinn Fein, and those willing to look at Fine Gael as a possible alternative.  

1 Comment

Eoin
Nov 17, 2011 at 9:29 am

Jason,
You assume the Fiscal Advisory Council know what they’re talking about – so far they’ve shown themselves to be a bunch of amateurs doing the job on the cheap and without a single fiscal expert in the group.


 

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