From Socialist Voice, April 2009

A budget to protect the rich and make workers pay

Brian Lenihan, on behalf of the present bankrupt Government, has made his third attempt to get a handle on the public finances, collapsing tax revenue, and a banking system burdened by debts that it cannot manage or pay back.
     His budget represents the socialisation of toxic debt, accumulated by reckless borrowings by Irish banks that loaned billions to the ruling elite, to the tune of 60 per cent of GDP. Now working people are going to be asked to pay a very heavy price. Revenue is expected to fall to €34.5 billion this year, from €40.75 billion last year and €47.25 billion in 2007, with a budget deficit possibly reaching 13 per cent of GDP.
     While the Government comes to the rescue not just of corporate investors but of many non-Irish investors in failing Irish banks to the possible tune of €80–€90 billion, this contrasts sharply with the imposition of the 2 per cent levy and the doubling of the health levy on middle-income and lower-income families to 2 per cent, 4 per cent, and 6 per cent. The thresholds are lowered, with people earning €15,000 per year or more paying 2 per cent, those earning over €75,000 paying 4 per cent, and those earning over €175,000 paying 6 per cent. The income levy is being extended to people earning as little as €15,000 a year. The job-seeker’s allowance is cut in half, and the supplementary welfare allowance is cut to €100 per week for claimants under twenty.
     There is a massive structural inequality in Irish society, whereby the richest—those earning over €100,000—have an income twelve times the average. This is wealth distribution, Fianna Fáil style.
     The burden of these measures could have been alleviated by abolishing the PRSI ceiling altogether and increasing the income levy on all incomes above €100,000 to 6 per cent, graduating rates upwards after that. The abolition of the Christmas bonus is in effect a 2 per cent cut in social welfare.
     Workers have been paying thousands in contributions to social insurance schemes for years and now see them come under attack, when unemployment will reach possibly 600,000 by the end of the year.
     There was not one initiative for job creation in the budget. The emphasis was totally within the narrow neo-liberal mentality of the Department of Finance and the EU Commission. The Government could have saved nearly two thousand jobs in the very week before the budget if it had taken over SR Technics and Waterford Crystal, in both of which companies the work force is highly skilled.
     The Government believes that it will get tax revenue of about €1.8 billion and make savings of €1½ billion by the end of this year. The Minister for Finance also stated that he wanted an additional €1.7 billion in tax revenue next year, followed by an additional €1.5 billion in 2011. The projected Government deficit for 2010 is €18 billion, and for 2011 it is €15 billion. It wants to save €5 billion each year over the next three years.
     It is clear that the gap between public spending and tax revenue cannot be met without massive cuts in public spending over the next three years.
     The extent of increased levies and taxes means that disposable income is greatly reduced, which will mean less money circulating, and this in turn will have an adverse effect on retail sales, leading to further jobs losses. It will also mean that many families will be struggling to make mortgage repayments and repay bank loans. The cure presented by the Government may well kill off the patient.
     Working people have been carrying a heavy burden for many decades. The members of the bloated political class have one, two or even three pensions while still serving in the Dáil. The higher civil servants, judges and top brass in the Garda Síochána have all been living high on the backs of workers. Medical consultants and other professionals have been paid salaries that are unsustainable.
     Over the last decade, under a neo-liberal ideology, the tax base was dismantled, with the emphasis moved from direct to indirect taxes, such as VAT and stamp duty on houses. When the credit boom collapsed we had a massive hole in the public finances, which the ruling class is going to make workers, the sick, the old and young people pay for.
     There is a clear need for a more radical departure. The policies of this Government and any prospective Government, no matter the composition, will ensure that those at the top will remain at the top.
     We need a more fundamental, radical democratic transformation in the political and economic system. The talking shop that is Dáil Éireann has nothing to say about the huge gamble that the Irish state is taking on on behalf of the elite.

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