Summer economic statement fails the test of a progressive plan for public finances
Prioritises regressive tax plans
Today’s long awaited Summer Economic Statement proposes a Rainy Day Fund at a time when the country is barely getting into stronger recovery mode. It would have been much more appropriate to prioritise better public services at this stage of the recovery.
The tax package in the plan launched today appears to have a built-in bonus for the better-off. In contrast, Labour in the recent General Election envisaged capping USC for anyone over €70,000 and giving no relief to anyone earning over €120,000. Today’s plan seems both unfair and unwise in a recovering economy. Where there is provision for more capital spending it is limited and not sufficient to address both bottlenecks in the economy and the demographic pressures the country faces with a growing population of younger people and of older retired people.
In this context, the rainy day fund sounds catchy but is difficult to fathom. In an economy which has faced enormous limitations on capital expenditure due to the crisis from 2008 on it seems odd to set aside €3billion for this fund. Furthermore, it is not required under the EU fiscal rules. The small matter of Landsdowne Road is also not addressed after 2018. So in effect there is no provision for public sector pay restoration after 2018.
Labour in government worked to produce a balanced recovery which would grow employment. As Labour left government, unemployment was down to 7.8% from a high of over 15%. But there are still many people, especially young people and older unemployed people who are very anxious to get into the workforce.
People across the country have made heroic sacrifices. They deserve a lot better in terms of restoring the level and quality of public services and the development of a fairer and more progressive tax system rather than favouring tax cuts that proportionately benefit the better off and the highest paid.