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Budget 2018 and rural Ireland

 Here at Beyond the pale we’ve taken a look at what budget 2018 will likely mean for rural communities, what is been given in the budget and more importantly what is not.

This year’s budget will be interesting as it will test Fianna Fail’s ability to both be Fine Gael’s silent partner in government and the main opposition party. While Fine Geal will be happy to pass another low spend fiscally conservative budget that looks after their core demographic of higher income earners. Fianna Fail conscious of their border vote base (particularly in rural constituencies) will have to be seen to get something from the budget.

Smoke and mirrors

Already Fine Gael have effectively confirmed tax cuts that will favour middle class households alongside tax relief for landlords. These measures will be countered in the budget by the likely introduction of a sugar tax alongside an increase in the tax on cigarettes. A minor public spending pledge of a 5 euro increase to state pensions has been suggested, but no mention of reversing previous social welfare cuts.

For ordinary working people the limited benefits of tax cuts has already been nullified by the increase to the local property tax which Fine Gael and Fianna Fail councillors throughout Ireland have supported.

Any further budgetary measures will have to factor in the local property tax increase before their benefit can be measured.

Farmers

There hasn’t been much noise from the department of agriculture so far. During his visit to the ploughing championship the Taoiseach raised the possibility of a low cost loan initiative for farmers which will no doubt be welcomed by the farming bodies if introduced. However low cost loan while good for farmers going forward offer no relief for farmers who loans are now being targeted by vulture funds.

both the IFA and ICOS call for income stability measures which are, in light of recent bad years caused by weather, becoming a vital issue to keep farms from taking on too much debt in bad years. It is unlikely that such measures will be included in the budget however as the commitment to income tax cuts will limit the government’s ability to introduce more sophisticated tax reforms.

There has been speculation about a possible increase in diesel prices following the emissions scandal last year, any such move would no doubt be unpopular and the government may introduce incentives to encourage the sale of energy efficient vehicles instead.

This is good news for hauliers and farmers who would suffer most from a hike in diesel prices.

Workers

So far there is little in the government’s proposals that have been leaked to excite ordinary workers. There has been no mention of significant investment in services and the planned tax cuts are aimed at helping higher earners.

There is little chance that Sinn Feins proposal to give an extra 80 euro a week to families is unlikely to be included in Fine Gael’s budget. Instead people will have to settle for a slight change to the USC bands to reduce the number of people paying the highest rate.

Other measures around income tax and relief for landlords offer little to ordinary workers.

The gains from the slight increases in pensions and changes to USC will be unlikely to leave people better of after the increases in property tax and excise duty and the sugar tax are factored in.

The alternative budgets

The calls from ICU, the Simon Community, and Sinn Fein for more investment in badly needed public housing are unlikely to be included in the budget. In the absence of such measures there is little hope of the housing crisis being tackled in any meaningful way. with over 8,000 people now homeless in Ireland these measures are becoming increasingly vital

Sinn Fein continued their tradition of publishing a fully costed alternative budget, in it they include measures which would allow an extra billion for public spending on health, education, housing, and social protection. As well as new tax measures such as reintroducing the second home tax and a minor tax increase on incomes over 100,000 would provide sufficient fiscal space for increased public spending.

ICTU’s calls for an end to reduced vat for the tourism sector is also unlikely to feature despite the persistence of low pay and the recovery of the sector to pre recession levels.

Verdict

Budget 2018 has the appearance of a non starter, despite the government’s talk of growth and giving back to people who work hard, budget 2018 will do little for ordinary workers. Instead those on higher incomes will benefit from tax cuts that will leave little space for much needed public spending.

They will likely be some welcome measures for farmers in the budget. However with the uncertainty of Brexit and the issues caused by bad weather contributing to long running difficulties for family farms it remains to be seen how far these measures will go.

Overall the budget will offer nothing to rural pensioners, workers and unemployed young people. This will mean there will be no increase in the majority of people’s spending power or any reversal of the economic stagnation of rural towns and villages.

 

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