The worst thing about the Irish Budget 2010 is that the most vulnerable groups in the society are seeing cuts to their vital services, but business is not required to contribute a penny.
Regular readers might now be scratching their heads, thinking I’ve fallen into the lefty trap, gurning about social responsibility of industry. You will recall from postae passim that I don’t believe in hurting business for social engineering, and that, in general, I think low taxes are a pretty good thing. I still hold to those beliefs, but a low tax, low intervention state is not what exists in Ireland. In Ireland, people pay very high rates of tax and social insurance to be harrassed by the state. I’ve covered that before.
Industry, in my view, doesn’t have any specific responsibilities except the injunctions not to break the law, not to injure staff and not to pollute the environment.
The government, on the other hand, especially in a country constituted such as Ireland is, has a responsibility to enact legislation to protect the most vulnerable- at least not to do things to harm them. Leaving aside the self ridiculing policy of cutting social welfare rates to encourage jobseeking in a time of recently unprecedented levels of unemployment, many of the policies in the budget seem wrongheaded at best.
A startling fact was outlined to me by a staffer at the Irish National Organisation of the Unemployed: The only direct contribution to support mainstream employment in Ireland, other than training through FÁS is financial support for redundancy payments. The government will pay a company to make someone redundant, but offers scant support for businesses seeking to employ staff. This seems foolish, especially in a time of recession. Business should be required to make its own reserve arrangements for redundancy except in exceptional circumstances. Support for retention of staff would have more value in today’s circumstances than a handout to make it easier to fire someone. That seems to have been an opportunity lost in the budget, but that’s just one of many, and scarcely as startling as some of the decisions actually taken in the address.
Take the decision to cut the tax on a pint of beer by 12c, with other falls in duty on wines. On the face of it not earth shattering, but the core objective of it is to get people, who will now be poorer, to drink more beer, and more importantly to buy it in the Republic and not Northern Ireland, thereby contributing to state coffers. Quite literally a drug pusher cutting prices to ensure loyalty.
The decision to keep Corporation Tax st its current 12% in Ireland was also wrongheaded. Brian Lenihan argued that the rate was a brand for Ireland overseas, but what a dull brand it was. Surely a more impressive motif would be an even lower startup rate of tax for new businesses and those newly setting up in Ireland. The 12% rate is an also-ran in the world, it needs renewal.