For balance, here’s John Gormley’s response.  The Greens are getting a bit upset at Pat.

(Okay – not entirely balanced, the vid’s smaller, it’s below the fold and John’s just not got the wit of Pat, but at least it’s a token effort at balance!)

creative commons: Cynergy

And it doesn’t stop there.

Ruairi Quinn TD:

“Although the government has decided to increase the school building programme, it has cut back on the funds to furnish national schools. What’s the point in building classrooms that will have no desks or equipment? This smells like a dig-out to builders.”.

Of course, it wouldn’t be the only dig-out to builders in this budget.

Minister Brian Lenihan

But where’s the plan?  Why is there no articulation of how this Budget, and the two or three to follow, will bring us out of this situation and get things running properly again?  Why no enunciation of how, by cutting extraneous services, agencies, Ministers of State and, indeed, tax loopholes, we can return the public finances to a more sustainable state?

I’m not looking for a solution to the world financial crisis, but surely it’s not beyond the bounds of appropriate management of the Irish Exchequer to have some idea of where we’ll be this time next year, and what we’ll be doing.  While events may mitigate for or against some of the measures, at least there’ll be a rough plan.  At least we’ll be working towards an ultimate goal rather than towards simply trying to get the next six months over with.

I’ve long been an advocate of changing our budgetary system.  Rather than having a big budget every year, I believe that we would have a more stable and better managed economy by having a “Super Budget” every three years, then having “Mini Budgets” in the intervening years.  The Super Budget would set the overall economic, taxation and spending plan for the three years (including any predicted significant changes that might be gradually introduced during the three years), while the Mini Budget would simply implement mid-term changes and adjust for changes in the economic circumstances.

Of course, if there were a major change in the Exchequer situation during the term of a Super Budget (like this year), you could always have another, but that should be the exception rather than the norm.

The advantages include having more predictability and stability, which is good not just for us, but also beneficial for multinational corporations wishing to locate here and existing multinationals who are bidding against their company’s operations in other countries for internal jobs.  The effect of the type of pro-cyclical budgeting that Fianna Fáil have engaged in over the past ten years (where spending is ramped up hugely when the economy is growing fast, and cut back drastically when it slows) would be generally avoided, while more counter-cyclical budgeting (where you hold back some money when the economy is growing fast in order to keep inflation and growth at manageable levels, and then spend that money when the economy slows down, thereby lessening the effects of the downturn) would be easier.

Unfortunately, it would make pre-election splurges (like those of the 2002 and 2007 Budgets – but noticably not 1997) much more difficult to do and easier to notice.  So we won’t see Fianna Fáil going anywhere near it anytime soon.

As we all know by now, Fianna Fáil have taken the medical card away from pensioners, causing huge consternation and uproar.

Just as bad was the bare-faced bailout for developers, where the Government will now provide mortgages to those who can’t get bank mortgages – fair enough, as long as they confirm that people can pay. Until, that is, you read the details. It only applies to new houses. Now, if your aim was to unfreeze the property market by getting some property sales going, wouldn’t you include second hand houses too? This is clearly not being done to ease the property market. It’s being done to help out developers.

But the big one that’s gone unnoticed is that, despite being “desperate for cash” as one FFer put it this week, the PRSI ceiling still wasn’t moved. Under the current system, PRSI is only charged on income up to €50,700 (changing to €52,000 in January). This is about as regressive a tax as you can design. Taxes are supposed to levy more as you earn more. PRSI levies less as you earn more.

Last week’s Turbine had a good rundown:

Income above €50,700 is only liable to the 2% [health] levy (or a 2.5% levy above €110,000). If the ceiling is abolished, all income would be liable to both PRSI and the levy.  It’s worth looking at the impact of such a change on take-home pay. The ceiling, currently €50,700, caps the amount of an employee’s income liable to PRSI at 4%. Income up to this point is also subject to a further 2% levy.

Some calculations below the fold.

Mr Regular (€50,000 salary)

All of Mr Regular’s income is currently under the PRSI ceiling, so he is paying a total of 6% PRSI and levies in 2008. After taking account of the weekly PRSI exemption, his 2008 PRSI/levies liability is €2,735. The abolition of the ceiling will have no impact on his PRSI/levies liability in 2009 (assuming no change to the weekly exemption or rates).

Ms Up-and-Coming (€80,000 salary)

A portion of Ms Up-and-Coming’s income is currently over the PRSI ceiling, so that not all of her income is subject to PRSI in 2008. After taking account of the weekly PRSI exemption, her 2008 PRSI/levies liability is €3,460. Should the ceiling be abolished in 2009, Ms Up-and-Coming will be worse off by €1,172 per annum.

Mr Made-It (€175,000 salary)

A significant portion of Mr Made-It’s income would not be liable to PRSI in 2008. After taking account of the weekly PRSI exemption, his 2008 PRSI/levies liability is €5,826. Should the ceiling be abolished, Mr Made-It will be worse off by €4,972 per annum.

Answering a Parliamentary Question (ref 12243/07 if the link isn’t working) from Ruairi Quinn TD in 2007 (which I’m reasonably sure I wrote, and I’m certain I submitted), then Minister for Social & Family Affairs Seamus Brennan said that removing the PRSI ceiling would result in a return to the Exchequer of €295m.

Mary Harney and Brian Cowen have both said during the week repeatedly that the withdrawal of the medical card from the over-70s will save €100m.  So, by removing the PRSI ceiling and making sure that the rich pay more, we could not only let those who have given a lifetime of service to the country keep their hard-earned benefits, but we could also do any of the following too:

• Leave the standard rate of VAT at 21%, rather than increasing it
• Not increase the excise duty on petrol
• Cancel the Air Travel Tax
• Double all the benefits to pensioners in this year’s budget: increase the pension by €14 instead of €7 per week; and increase the fuel allowance by €4 instead of €2 per week; and increase the fuel allowance period by a month instead of a fortnight