Budget 2024: Part Two
Ireland's budget: A corrupt class marches towards catastrophe
16 October 2023
Ministers Michael McGrath and Paschal Donohoe.
As we explained in part one of this series, The issue of Ireland's budget is not the €10 billion surplus generated by transnational tax dodgers, but €25 billion if we include the extra €15 billion in corporation tax required to keep the country running.
What is Irish capitalism doing to escape from this unsustainable situation?
The answer is nothing. Ireland's capitalist class is a comprador class. It never succeeded in developing an independent Irish industrial base. It operates as an agent of imperialism, managing the economy in the interests of imperialist powers and transnational companies. It has made a killing as a tax haven, but because of its nature it cannot use the tax proceeds to develop an independent industrial base, instead moving them to a rainy-day fund.
The tax debate devolves into a struggle between investment, tax cuts and sweeteners for the workers.
There are further constraints. Investment is not direct, but is largely confined to infrastructure. Ireland really has very few public services, marred by endemic corruption, and infrastructure and many services are outsourced to private industry. At all costs the capitalists try to avoid extra expenditure in terms of permanent improvements in the lives of workers. This budget is dominated by one-off giveaways to help generate pro-government sentiment before the next election.
This situation is unstable. Interest rates are rising. Europe and the US a pressing Ireland on its tax practices. The 12.5% tax rate is coming to an end. Ireland is boosted as one if the richest countries in the world and Irish workers wonder why this wealth isn't available to them.
There were no surprises when the budget was finally published. Some commentators saw it as a cut and paste of the 2023 budget.
It was above all a tax-cutting budget, geared towards the well-off, with a nod towards the workers by increasing the standard tax rate. A number of measures on housing - tax relief for landlords, mortgage tax relief, will simply pour petrol on already out of control profiteering.
There are gestures towards the cost of living on childcare cost and the basic welfare payments, as well as the minimum wage, but these lag behind the rate of inflation.
Many of the gestures towards workers and the poor are clearly voting bait for the coming elections and many, such as a series of energy payments, are in the form of one-off payments that will make government look good but will not raise the overall living standards of workers. Many also are paid out generally, with no concentration of funds towards the poor. The ratio of payments, €5.3 billion core spending increases to €7.2 billion temporary one-off payments, shows the scam behind the smoke and mirrors.
One of the measures worth noting is the decision to reduce the Universal Social Charge (USC) from 4.5% to 4.0%. Essentially this is a debt tax, introduced to pay the banking debt at the time of the credit crunch. So, if Ireland is now one of the richest countries in the world, why is it not removed? The answer is, of course, that Ireland is still in debt and is simply relying on capital inflow to continue and wishing away a very likely collapse.
€1 billion is reserved for covid and for Ukrainian refugees. Essentially this is a large Nato tax to support continuation of the Ukraine war. The much smaller numbers of other refugees continue to be treated abominably.
What of infrastructure?
Money will be spent on health infrastructure, but given the inefficiency and corruption of present plans it is unlikely that much will be achieved.
On climate the immediate theme yet again is tax incentives aimed at carbon dioxide reduction.
The big plan is for the future. A €4 billion rainy day fund is to split in two. One part, the future Ireland fund, will build up to €14 billion, investing in the markets with in intention of meeting future health and pension needs.
The other, a climate, infrastructure and nature fund, will fund state spending to encourage investment in times of recession. One quarter will be available for undefined climate change programmes.
As predicted, there is not one cent for the building of any independent industrial capacity in Ireland.
There are of course many opposing voices. One of the most substantial of these is NIRI, an economic institution linked to the trade unions. It says tax cuts won’t help poorer people and warns against breaks for landlords.
“A focus on adequacy and benchmarking on the welfare side would make more sense, rather than a series of politically popular but economically questionable universal payments to everyone.”The agency warns against mortgage tax relief.
“The theme here is that the people that would benefit from this tax package are people that are higher up the income distribution, who are not experiencing difficulty with the cost-of-living crisis.”Sinn Féin's focus was on aid for the less well off, but in classical reformist style it is costed to show that the party will balance the books and act responsibly.
Mary Lou McDonald said her party’s budget proposals would invest in housing, healthcare and climate action and are targeted at “anybody who needs a house”.
Sinn Féin lists increases in basic payments. However, the party has dropped plans to introduce an immediate wealth tax on net wealth above €1 million, so their reformism is tinged with a sharp shift to the right.
PbP's presented a "left" perspective. They say;
"Profiteering and wealth inequality are the real reasons for the cost of living, housing, and other crises facing our society".Which is of course not a socialist response. Capitalism is the cause of crisis, its abolition the response.
The rest of the submission is an attempt to outbid the government. In proper reformist style it is costed, with proposals for a wealth tax and a bigger corporation tax. There are no proposals to change the nature of the society.
The dominant issue is the massive housing crisis a burning issue for government and opposition, but the government answer is yet again more tax cuts with subsidies for landlords and mortgage tax relief.
The government has invested billions in a "Housing for all" strategy. This has failed utterly and there response now is to pour petrol on the fire, with a raft of subsidies and tax breaks for landlords. They nod towards homeowners with mortgage tax relief, but in practice this tax will further inflate house prices. A minor nod is offered to renters.
The trade unions quietly accepted the housing strategy but have now retreated. They now call for a housing agency, but essentially this would co-opt public land and transfer it to the private sector. They call for social and affordable housing, but this is either low-cost housing or rent kept low by public subsidy. In each case the laws of the market continue to rule.
Sinn Féin's Eoin Ó Broin outlined plans for a public housing programme delivering 21,000 social and affordable homes at a cost of €1.44 billion and one month’s rent rebate and a three-year rent freeze. Again, it relies on the transfer of public land into the housing market. Sinn Féin also support mortgage tax relief.
PbP's proposals again focus on social and affordable housing and on a state construction company.
So, all the opposition proposals are set within a framework of a housing market dominated by private capital.
It is worth noting that in the run-up to the budget the government removed a temporary ban on no-fault evictions. The result is a massive increase in homelessness, including a surge in homeless families. This wasn't an issue in the budget debate. Nor was there any mention of tenant rights, almost non-existent in Ireland.
The Irish government budget for 2024 is extraordinarily reckless. It has been condemned by its own advisors, by economic experts and by its own advisory body. However, the opposition groups do not propose solutions and are firmly within the model of dependence on imperialism.
As an example of this dependence, we see the decline of yearly trade union budget protests, ending completely in 2021 when ICTU accepted the government's "Housing for All" strategy. The left call for "People Power" but will not break with or criticise the union bureaucracy. The new call is for a "left government" led by Sinn Féin. Given that Sinn Féin is a capitalist party and that it continues to move to the right, this is magical thinking.
We have seen in the North the absolute collapse of the political model the Good Friday Agreement represented. The economic model of the Celtic Tiger has also a history of collapse and bankruptcy.
Irish society is careering towards catastrophe. It depends utterly on the mechanisms of a tax haven and the inflow of capital. The absolute necessity is for a working-class opposition, a working-class party. A starting point is opposition to this corrupt budget, this corrupt regime.