Sixth Successive Austerity Budget May Be The Final Straw

The annual budget announced by the Irish Government has been received with a greater degree of anger and protest than previous announcements. This is the sixth successive austerity budget that Irish Governments have enacted. All have been unpopular but this latest budget may represent a tipping point.

Already reeling from years of tax hikes and cuts in services the Irish public had elected Fine Gael and the Labour Party on the basis that a new direction would be taken. A very different direction from that followed by the previous Fianna Fail administration.

It is not that the Irish people expected a sudden end to the financial pain that the country has endured – far from it. But they were entitled to expect that Fine Gael and Labour would not simply continue to enact Fianna Fail’s policies. These were the very policies that caused Fianna Fail to be trounced so convincingly at the last general election.

Fine Gael promised a new direction while Labour promised to protect the less well-off and vulnerable. These latest budget announcements have clearly made a lie of those promises.

Cuts to child benefit, a new property tax, increases in social insurance payments, cuts to services to pensioners! 3.5 Billion euro in cuts and tax hikes were announced which will result in just about every family being hit by an average of at least an extra 1000 euro annually. The important word in that last sentence is ‘extra’. The property tax alone will take hundreds from every household on top of the other taxes.

‘You cannot tax your way out of a recession’ is a tenet that clearly the current Government does not agree with. It is just impossible to quantify the amount of cash that is being taken out of the Irish economy, both in terms of actual currency and in terms of consumer and investor confidence, at precisely the time when that economy needs to be stimulated.

It seems that Fine Gael are playing a long game. Get the pain over with now. Take the hit and hope things turn around in the next couple of years before the next election. If all fails then blame the last Fianna Fail Government for getting us into this mess. If the economy turns the corner and things improve then they can claim the credit. Pretty cynical stuff.

And what of the Labour Party – the protector of the vulnerable. By introducing a property tax in Ireland they have likely provided Sinn Fein with the final nail to pound into their coffin. The property tax will be an annual tax and it is almost certain to be one of the big issues that may even decide the next general election. Labour look certain to be decimated. Fianna Fail and Sinn Fein can offer to scrap the tax if they are installed in power – that would be a sure vote-grabber. Pretty cynical stuff.

The next few days and weeks will show if the Irish people still have some fight left. Is this really a tipping point or have the Irish simply given up and succumbed to the weight of recession and austerity? And cynicism.

About the author

Michael Green Michael Green is Manager of The Information about Ireland Site

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