With a landmark surplus at their disposal the government have failed to make transformational change to fight the housing and healthcare crisis. Kieran Allen looks at what’s really in Budget 2025 and whether or not this will buy the election for the Fine Gael and Fianna Fáil.
‘Do you think they have bought the election?’ grinned the RTE interviewer. ‘Definitely,’ replied his interviewee. They both have reckoned without the political savvy of people.
The political advisers have done their calculations. They think a reduction in student fees, cuts to PAYE taxes, a baby grant and a host of other items will buy them an election. But they forget one thing: people are sick of a hundred years of FF and FG rule.
The revenue largesse comes from two sources. First, there are massive corporate tax receipts which occur because US corporations use Ireland as a tax haven. By onshoring intellectual property, they claim vast profits are made in Ireland and only a small tax flows back to the Irish state. Even though the rate is tiny for giants like Apple, the scale of onshoring is so massive that it results in big corporate revenues. It is estimated that just six US corporations are involved in this scam. It is as unstable as the state’s previous reliance on stamp duty during the Celtic Tiger building boom.
The other big source is the payment of €14.1 billion which Apple must pay in back taxes. But this is money that FF. FG and Labour never wanted. They paid out €10 million to their friends in the legal profession to NOT get it. Thankfully, they lost.
The result is a right wing government with lots of money and who cynically try to buy an election. However, even with all that cash, their own neoliberal ideology means that they spend, but do not interfere, in the private market. This means that on the key issues, they inevitably fail. Let’s look at four.
Cost of Living: Inflation has fallen but prices of food and energy are still high. Ireland is now as dear as Norway. The budget gave two grants of €125 as ‘energy credits’. It is so derisory that a spokesperson for Age Action pointed out that even with a €12 a week increase, pensioners would still need a further €18 a week to get back to their purchasing power of 20209.
FF and FG are ideologically opposed to price controls even though they have the legal power to impose them. They scorn the idea that the ESB should be returned to a-not-for profit status even though Ireland used to have the cheapest electricity in Europe. We now have the most expensive.
Housing: Despite experiencing a massive housing crisis, this government has refused to increase its target for social housing. It will not use the Apple money to set up a state construction company to deliver the houses.
Instead, it tinkers with the market. It gives renters a €250 a year increase in a tax allowance. But in a ‘free’ market, landlords will use this to push up rent. What was needed was to combine a tax allowance for renters with a rent freeze plus a facility for rent reductions. But this would go against the grain of neoliberal thinking.
Tax: Right-wing parties try to win elections by presenting themselves as tax cutters. Their aim is to cut the top tax rate for their friends while giving working people a small break in return for reduced services.
The government could have abolished the hated USC for all those under €100,000. It could have raised the same revenue by a wealth tax. It could have closed tax loopholes for corporations. But, again, that would go against their right-wing ideology.
FF and FG refuse to implement a third or fourth tax rate for wealthier earners. Instead, they add another €2,000 to the marginal tax rate, bringing it to €44,000. This means that a consultant who earns about €200,000 gains far more than a worker who is paid €35,000 a year.
Public Services: Everyone knows that Irish workers get little back in public services for the taxes they pay. So, this government makes small gestures.
It announced an extra 450 hospital beds. But it failed to say that Ireland only has 291 beds per 100,000 people, a figure that is 43% lower than the EU average of 516. The budget brought extra investment in childminding. But the privatised system leads to the dearest costs in Europe. There is no attempt to build a public not-for-profit system. There is free transport for children under nine. But what happens when you are aged 10,11 or 12.? It is a gesture toward the demand for free public transport for all but most money goes to those who can afford electric cars.
So, it is a ‘giveaway’ budget designed to win the election in the next few weeks. Then back to the same old FF-FG rule. Maybe voters are not so easily taken in.
