Varadkar’s misleading tax attack on Sinn Fein

Would a Sinn Fein Government really cost the average couple in Ireland €6,000 per year in extra taxes, as the Taoiseach claimed over the weekend? There is, in truth, no way to know that until Sinn Fein publishes its election manifesto setting out its tax and spending commitments. For all we know, the Taoiseach may be right and the Sinn Fein manifesto might promise such a thing. But for now, in the present, we can say somewhat definitively that his comments at the weekend were largely based on nonsense of a more-than-vaguely dishonest nature.

How did he arrive at the €6,000 per year figure? Simple: It is the claimed value of the reductions in tax delivered by his Government, which, he points out, Sinn Fein and other parties of the left opposed. The reasoning is simple enough: Had they been in Government, not us, you’d be paying €6,000 a year more than you are now.

To be more specific, he was talking about the increase in the entry point for the top rate of tax. In 2011, this figure was set at €33,000 per year. If you earned a penny more than that, it was taxed at the top rate. The same figure next year will be €42,000, meaning that the tax changes over a decade have been worth €3,000 to an individual on that salary, or €6,000 to a couple.

It is true, in the Taoiseach’s defence, that Sinn Fein opposed each of the budgets that increased the entry rate for the top rate of tax. What is dishonest is his assertion that Sinn Fein would reverse those tax cuts – which they would have to do, to cost a couple six grand per year. The party has made no such commitment.

In fact, the Sinn Fein tax policy for the recent budget, while entirely unconvincing as a matter of policy, made no reference at all to increasing personal tax rates. Instead, the party sounded the usual populist blabber about taxing banks and the super rich:

Launching the (alternative) budget in Dublin on Wednesday, Sinn Féin promised to ramp up housing, cut household costs and increase taxes on higher earners, including ending tax relief on pensioners earning more than €50,000 a year from their “gold-plated” pension pots – where that is classified as a pension pot worth more than €1.5 million.

Under the alternative budget Sinn Féin say they would take in €400 million in an increased and expanded bank levy, compared to the €87 million the State took in last year – and an increase of €250 million compared to the party’s own alternative budget last year.

Sinn Féin is also promising to take in €308 million from a €400 second-property charge, an increase of €216 million from last year’s figure. However, the party has dropped a precise figure from what it expects to earn from a wealth tax at a rate of 1 per cent on net wealth above €1 million.

There is much to criticise in the Sinn Fein plans – for example, many Dublin homeowners will be very keen to find out if property is included in the figure for “net wealth”, because in that case the wealth tax will simply be another property tax. And of course, if property is excluded, then the Sinn Fein policy is essentially an incentive for the super-rich to (gasp) speculate by buying up property. As for the idea of taxing banks, that’s just populism 101, which trusts that nobody will wonder whether the banks will simply make the money back in higher interest rates on homeowners and other lenders. Chances are, you’ll just pay that tax yourself, indirectly, on your mortgage.

But for all that the Sinn Fein tax policies are, for the moment, populist blabber, that is a far cry from wanting to jack up income taxes by six grand on working people. And in fairness to Sinn Fein, a review of the records shows that while the party voted against every budget that cut taxes on middle income earners, the party was never of the public view that the tax cuts were the reason to oppose the budgets. In general, Sinn Fein, like every other opposition in all of Irish political history, opposed the budgets because they didn’t provide enough money for health and social welfare. Just as Fine Gael, should it ever find itself in opposition to a Sinn Fein Government, will find a reason to vote against every budget. It’s what oppositions do.

Nevertheless, the Taoiseach’s attack, dishonest though it may be, is a clear indicator of where Fine Gael intends to go at the next election: The party will pose as defenders of middle class wallets against the untrammeled socialism of the Shinners and the left parties.

The problem with this, unfortunately for Fine Gael, is that the party’s record on tax cuts and defending the public from grasping left wing politicians is not exactly stellar: The Universal Social Charge, for example, remains conspicuously un-abolished. And it has been a Fine Gael Government that has presided over carbon taxes, annual increases in fuel taxes, and a massive expansion in the size of the state. Their own record in Government does not do much for the argument that tax cuts are a political winner, in Fine Gael’s own eyes.

The €6,000 figure, then, is exactly what it sounds like: A scare tactic designed to make Sinn Fein deny it and to put the figure in the public mind in the hope that some low information voters will hear it and it will stick in their heads, regardless of whether it is bullshit or fact.

I’m not sure it will work. But I suppose from the FG point of view, it’s very much worth a try at this stage.