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Tax them until the pips squeak… er… not quite as the government unveils a 3% income levy… and Lisbon? Ah, we’ll always have Lisbon… November 18, 2008

Posted by WorldbyStorm in European Politics, European Union, Irish Politics.
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This is some craic. Isn’t it? The most malleable Budget in years recedes into memory, although its aftereffects remain. What’s that one hears about servers in Dáil Éireann being overwhelmed by emails on the cervical vaccine issue? And now we read that:

THE GOVERNMENT is expected to introduce a further series of measures in the next two weeks to deal with the economic crisis, including a 3 per cent levy on incomes over €250,000.

Great stuff. €250,000. And not before time. I’ve already noted that the concept of progressive taxation, however blunt, and this is blunt, seems hitherto to have eluded the Cabinet. So, two cheers for this measure. A step in the right direction after a whole series of missteps. But here’s an oddity.

The Government had already decided, after consultations with the trade unions, to exempt those earning less than the minimum wage of €17,542 from the income levy introduced in the Budget.

So…

The 3 per cent imposition on the higher-income group is expected to generate €60 million in revenue, which the Government says is equivalent to the amount that would have been collected if the levy on the lower-income group had been maintained.

I wonder. Is this in part meant to be a demonstration – as some would see it – of the futility of raising taxes for those on higher incomes as a source of revenue? Because let’s not forget that the reduction of the top rate some years back resulted in a loss of annual revenue of circa €480 million.

Quite a difference, I think we’ll all agree, with €60 million.

And I love the juxtaposition of the minimum wage sum with this as if this in some sense indicated a parity. As it happens, and I’ve expressed this before, I don’t believe anyone should be outside the tax net in the sense that all should pay tax and then those towards the lowest incomes should be rebated. It’s a small thing that I like to go on about called social solidarity, the sense that we’re all part of the society, that we are all citizens. But this smacks of a point being – grudgingly – made.

There’s also some further sleight of hand in all this as when the IT notes:

On that basis, the Government insists it has not made a U-turn and sources said this type of adjustment was normal between the Budget and the Finance Bill.

Right. Right.

Whatever.

But look, much as with the issue of recapitalisation of the banks (and check out the Money section of the Sunday Business Post for thoughts on that), something the government has said time and again it won’t do, but we all know it ultimately will – and anyone like to bet on which of our major institutions will be first to merge? Anyone? – the reality is that the next Budget, like it or not, will see further increases in taxation. It’s going to happen. Which means the battle for progressives is to ensure that they are not accompanied by cuts in public provision.

**************

Meanwhile. Lisbon reaches out. The latest fit of optimism for the YES camp, as brought to you by Stephen Collins in the Irish Times, is that…

A SECOND referendum on the Lisbon Treaty has a chance of being carried, according to the Irish Times/TNS mrbi poll which shows a swing to the Yes side since the referendum defeat last June.

The poll shows a change in public attitudes since June with 43 per cent now saying they would vote Yes, 39 per cent No and 18 per cent having no opinion.

Now me. I’d say that the word ‘chance’ in the first sentence is the crucial one. There is indeed a ‘chance’. It’s better than no chance. Not so compelling as a ‘good’ chance. Somewhere in between. Guess what end of the scale. That 18% having no opinion (yeah, really?) is what strikes me as the important figure.

On the other hand when I was told about this this morning I was initially disbelieving. I’d have thought that the figures would have been tilted sharply against the government in line with

The IT is ahead of us…

When the “don’t knows” are excluded this gives the Yes side 52.5 per cent, with the No side on 47.5 per cent. It compares to the referendum result in June of 53.4 per cent No and 46.6 per cent Yes.

But it’s still pretty dicey. Because we can’t really exclude the “don’t knows”.

It is true that there has been a shift in opinion towards the Yes side within voting groups.

Among the most well-off AB voters the Yes side is in the lead by 57 per cent to 27 per cent while among the less well-off DE voters the No side leads by 47 per cent to 29 per cent. What will be heartening for supporters of the EU is that among the biggest C1 social category, covering lower middle-class voters, the Yes side has a lead of 53 to 33 per cent.

And…

Farmers are now in favour of the treaty by 46 per cent to 32 per cent which represents a substantial shift since the last Irish Times poll before the referendum in June.

I think it’s an interesting poll, because anti-EU sentiment has run higher than I can ever recall since Lisbon, so the fact that there has been a shift towards a Lisbon Yes would appear to indicate that other forces are bearing upon people. That’s even more marked when one looks at party voters and their inclinations…

In party terms, Fianna Fáil voters are the most positive with 51 per cent intending to vote Yes and 34 per cent No. Supporters of the Green Party also say they will vote Yes by 45 per cent to 33 per cent.

Fine Gael voters back the treaty by 46 per cent to 36 per cent while Labour voters are also in favour by 47 per cent to 38 per cent.

In the last poll in June only Fianna Fáil and Green supporters professed themselves in favour of the treaty with a majority of Fine Gael, Labour voters rejecting the advice of their party leaders and voting No.

How to read this? Was it a case of people giving the government a lash at a time when the situation seemed relatively good all things considered, and is it now a case of people being less keen to do so again? That would certainly account for the Fine Gael voters. But there is a paradox here which makes me think that there might well be a chink of light for the government. Note that despite party polling, as with the example on Friday, indicating that the government is down, the issue here is up. So, as with the actual Treaty, party affiliation or support is of less importance either good or bad to the levels of support the issue has. And considering how abysmal the government poll ratings are that has to be good for them.

Incidentally, yesterday evening I read this from the Green Party, a press release from Deirdre De Burca. Seems like the Danish model, established after their NO vote in the 1990s, is the way thinking is trending amongst those circles. So how would that work?

After Danish voters said ‘No’ in June 1992, EU leaders gave specific assurances to Denmark at their summit in Edinburgh the following December. Denmark got ‘declarations’ on key issues of concern, which were underwritten by the EU leaders’ political endorsement.

The Danish government further copper-fastened these assurances by registering them as an international treaty. Later the assurances were given further legal certainty by giving them recognition in another EU Treaty.

De Burca thinks that this might be a way forward…

“This formula – combining Irish, EU and international law – could offer the Irish people guarantees they effectively demanded as of right when voting ‘No’ last June. It would also allow the resolution of a dilemma without disrupting the treaty ratification in other member states,” Ms de Burca summed up.

Perhaps… The appeal to international law is in some respects quite persuasive, and to be frank, they have to come up with something better than what has been available before. That it implicitly generates a second speed, or rank within the EU is neither here nor there. Denmark has been living off that arrangement for over a decade and a half now (and are pretty keen to jettison it, but that’s another story). But is that enough to cut the Gordian knot? I guess we’ll find out soon enough…

Even pitched in those terms, and note how one international element that is disliked (the EU) is played off another that is set up as an higher authority (international law), it’s still a risk, an huge risk. But it’s one I’d bet they and the government more generally are almost willing to take. After all. How much worse could it get? And the next stop after a second rebuff? I’ll be we’d see a vote on our relationship with the EU itself.

I wouldn’t do it. I think that Lisbon II is lost before it’s begun. I suspect we might actually be fast-tracked to that next stop and that the ballots will ask us whether we want in or out. But it could be that amongst all the political gloom, both general and specific, someone in Government Buildings is looking at this, making a calculation and advising that the ‘chance’ is worth it.

Comments»

1. Jim Monaghan - November 18, 2008

I regret saying this but if we had an independent currency we would probably be owned by the IMF at this stage.Somewhere between Ukraine and Iceland.
From a Capitalist point of view Bruton (the small) is right on recapitalising the banks.The unholy alliance between the banks, builders and the state (ff) is the cuase of the extra bubble effect here.
Scary times indeed.

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2. Jim Monaghan - November 18, 2008

Oh A reformist demand. How about neutrality in the constitution on say the Austrian model. Was this not the price the USSR got for allowing Austrian unity?
Alas, the religiuos righ are mobilising around te stem cell business. There was a report of the IONA institute with one of the Lenihans and FG Creighton in attendance.
I dont want a package where right and left causes are intermingled. A referendum broken down where we could pick and choose like the one on abortion would suit.
There will be lots of trickery

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3. WorldbyStorm - November 18, 2008

Jim, two very good points. I think you’re absolutely right about the Iceland point. I think it’s particularly pertinent when we consider how capital here has been enmeshed in a political economy overseen (and distorted) by FF’s bizarre (in the long term) approach to the construction sector. Secondly, yes, not something I’d personally be in favour of ie. neutrality in the Constitution. But if the people want it fair enough.

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