Budget 2008 will be presented on Wednesday and for political anoraks there’s something terribly satisfying about the fact that Minister Cowen has restored the hallowed nature of the occasion and the air of revelation and expectation that surrounds it. In recent years the ceremony of budget day had begun to diminish as the month long drip feed of information that was the estimates process meant that surprises were fewer and farther between. But the spectacle has been restored this year and all information will again be released upon the same day.
As always there is much speculation about what exactly he will do. Will he reform stamp duty, will he cut the top rate, will he revise the PRSI ceiling, will he cut spending, current or capital, how much will go on the pint etc…
We’ve been hearing for months how his hands are tied due to tighter than expected economic contraints. It’s not all that unexpected though – McWilliams has been warning us for years! And I’m sure it won’t be all that big a surprise to Tánaiste Cowen either. He’s a clever man and he didn’t come down in the last shower so I’m sure he will make a good fist of it, making perhaps some necessary tightening measures whilst keeping the broader economy intact and ensuring social justice is met.
After the huge increases in child benefit in recent years and the €1,000 a year under-sixes payment (due next week, thankyou Minister) he will hardly revisit childcare again this time. He will keep the focus on pensions though moving towards the government’s stated target of €300 a week old age pension by the end of the current term. The PRSI ceiling revision was a component of the election manifesto and I think it is a just and sensible measure, removing an artificial protection for high earners which meant the lower end paid disproportionately more. Alarm bells seem to be ringing that he will leave the top rate unchanged at 41%, rather than reducing again and quite frankly I think he’s right – one small concesssion for the individual, one giant cost for the state.
I do fervently and confidently believe he must, at minimum, maintain capital spending at the current level, or better again, increase if he has any scope to do so. Whatever about an economic blip now, it is essential for the long term economic outlook that we put serious infrastructure in place in this country that will stand us into the future. In the recent International competitiveness report this was cited as one of our weak points, it is being addressed through huge spending programmes, particularly Transport21, but that must continue. No slippage there is acceptable. I’ve often made the argument that we are a young nation, that we were levied by a foreign land for centuries, it’s only a generation since we gained real economic freedom, and all of that is true, but now at last we do have some money so lets get the house in order.
On stamp duty I think it is inequitable, the reform was over hasty and I would have preferred us continue preaching the fiscal rectitude gospel which ironically the Minister will be practising by now anyway. The biggest flaw with the reform that was introduced is that there is no upper limit on first time buyers duty free purchases – which allows for obvious abuses of the system. I don’t think we’ll see changes there this time though.
It is expected we will see a curtailing of the many high end loopholes which currently enable accountants siphon millions for their wealthy clients – however I am sure new and more innovative ways will be uncovered instead by the collective creative acumen of the financial consulting industry – a constant game of cat and mouse there in every country me thinks..
Lastly on a personal interest area, my own pet request in this budget is a relief on commuter parking. A month or so back I made a pre-budget submission to the Tánaiste, through Deputy Áine Brady’s office, for an extension of the taxsaver scheme to park and ride fees, giving every possible encouragement for use of public transport, ultimately getting people out of their cars and onto the train or LUAS. It shouldn’t cost a whole lot and it would be a nice sweetener now that pay parking is being rolled out across the commuter network. Any minor reduction in revenue should be offset by economic and social benefits as people free up time to spend at homes or in their communities rather than being stuck in traffic jams.
Anyway on Wednesday, all will be revealed.. I look forward to the grand unveiling!