Minister for Finance Paschal Donohoe has been given the mission of ‘de-dramatising’ the budget by Taoiseach Leo Varadkar.
When he stands up at 1pm today to give his hour-long budget speech, that should not be too difficult. Many of the key budget decisions have already been revealed- such as the modest tax cuts package, the €5 increase in pension and social welfare rates, and the restoration of the 13.5 per cent VAT rate for the hotel and restaurant sector.
But the big test is the use the government will make of the €1 billion corporation tax windfall. There have been suggestions that the planned €10 increase in the carbon tax could be scaled back or abandoned altogether due to fears among rural Fine Gael TDs about a backlash from car commuters with hefty weekly diesel or petrol bills.
But an increase in the carbon tax would provide a relatively stable source of revenue. Relying on some of the corporation tax windfall would be a much riskier manoeuvre.
Labour finance spokeswoman Joan Burton has pointed out that Donohoe increased commercial stamp duty by 4 per cent last year to bring in an extra €376 million. But she said that total stamp duties for this year were projected to be €1.574 billion rather than the €1.67 billion that was expected.
“There is a €100m hole in the Minister's figures but he has managed to fill the gap with increased corporation tax returns,” she said.
One experienced colleague suggested to me recently that Government’s approach to the Budget could be described as ‘Bertie-lite’
Donohoe is conscious of the growing demand from taxpayers to ‘get something back’, ten years on from the economic crash.
When he spoke at the National Economic Dialogue in the Printworks building in Dublin Castle during the summer, he spoke of the need to show that democracy could make a difference to ward off the growth of populist politicians. He did not mention Trump, but it was clear that was the kind of operator he was talking about.
“If a democracy gets to a point where it believes it can make no progress on things that matter to its citizens, if a democracy gets to a point that the only thing that looks inevitable is decay, then it opens up really big questions regarding what kind of choices countries will make and what can take the place of the kind of systems that we have at the moment,” he said.
But at the same time, Donohoe has been given a battery of warnings about the impending threat of Brexit, the risk of over-heating the economy, the concentration of corporate tax payments and the prospect of fines for missing our emissions reduction targets.
One experienced colleague suggested to me recently that the Government’s approach to the Budget could be described as ‘Bertie-lite’. There are the pension and welfare increases, the modest tax cuts and a bit extra for public sector wages and public services. Fine Gael will hate the phrase, but there is something to it.
You can read more about all of the Budget developments on our live blog on the Sunday Business Post website, which will start at 1pm when Donohoe gets to his feet in the Dáil.