Spending the surplus ‘and not just for cynical political reasons’

What a revealing piece by Stephen Collins last week when writing about the €65bn surplus. In it he quotes the following:

“It’s all very fine and noble to worry about future generations, but unless we can convince today’s voters we care about improving their lives, we will simply hand Sinn Féin a pot of gold to cement themselves in power for a very long time,” said one Fine Gael backbencher.

Just as an aside, only those of Collins’s ilk could seriously present the following as an argument. 

However, the political narrative has been dominated not by the things the Government has done, but by the things it has failed to do, most notably the struggle to solve the housing crisis. The fact that booming cities such as San Francisco, Sydney and London have similar, or even worse, housing and homeless problems is no excuse as far as voters here are concerned.

Why should it be an excuse? The retreat from social housing or state house building programmes was a political act. One that left us horribly exposed as a society to all manner of woes (one need merely look at the situation with regard to refugees to see how this has worked through the system). Comparing us with vastly larger cities doesn’t really convince. 

Anyhow, back at the surplus he writes;

So what is the Government to do? For a start, it is certainly right to invest a considerable proportion of the surplus revenues in a ring-fenced, long-term fund to meet the pension shortfall expected in the decades ahead. It is not only the sensible thing to do, but there is no conceivable way all the money could be spent in the next few years without doing more harm than good.

That said, there is also a strong argument for spending a chunk of the surplus to give voters some jam today, and not just for cynical political reasons. In truth, people deserve a reward for accepting the restrictions of the pandemic with little complaint and not losing their tempers over the cost-of-living crisis. It is a marked contrast with the chaos caused by the strikes in the UK health service and the violent protests in France over the increase in pension age.

Now that ‘not just for cynical political reasons’ does imply that it does include cynical political reasons. Though note too the idea of ‘reward’ for good behaviours. 

Still it will come as no surprise that he bangs an old old drum. That of lower taxation for the ‘middle-income earners’. Note not a mention of VAT etc in the following:

A significant reduction in the tax burden on middle-income earners is long overdue. One of the long-standing problems with the tax system is that workers start paying the top rate far too quickly. Given the money now washing into the State coffers, a significant widening of the tax bands is warranted to give hard-pressed workers a real increase in their incomes.

But you thought it wasn’t just about cynical political reasons, did you? Consider his concluding paragraph!

One of the reasons Sinn Féin has made inroads into the middle class electorate is that so many workers feel resentful that as well as being squeezed out of the housing market, they are losing far too much of their income in tax. Fine Gael needs to do something eye-catching to recover ground with this segment of the electorate.

Interestingly Michael McGrath has already shot down what appears to be a fairly coordinated push by Fine Gael Junior Ministers (and a number of people in the commentariat) on the issue of tax ‘breaks’ for middle-income workers.  

A call from Fine Gael Ministers of State for a €1,000 tax break for middle-income workers was described as an “unusual approach” by Minister for Finance Michael McGrath, who said the proposal had not been raised with him personally.

The Fine Gael intervention comes just over 4½ months before budget day, prompting surprise among some in the Coalition, though one Fianna Fáil source said “kite flying is constant and gets earlier every year”.

A senior Government source poured cold water on the plan, pointing out that it would be significantly more expensive than last year’s total tax package.

Fine Gael Ministers of State Jennifer Carroll MacNeill, Martin Heydon and Peter Burke outlined how they want to see tax relief of more than €1,000 for full-time workers on an average wage of €52,000. A spokesman for Taoiseach Leo Varadkar said that he had been aware in advance of the call by the Fine Gael trio.

Mind you, McGrath notes that we’re four and a half months out from the Budget. I’d put good money on some nod to the hard-pressed ‘middle-income worker’ in said Budget.