The squeezed middle needs help, not words

THE squeezed middle needs a break and the Taoiseach says he is the person to do it. But can he? He certainly raised expectations yesterday by promising to reward work and enterprise to benefit those who pay the highest rates of tax on “far too modest incomes”.

“High taxes on the middle classes are a barrier to opportunity and to work. They are a cap on aspiration and there should be no cap on aspiration in the Republic we wish to build,” he declared – and few people would disagree.

But the prospect of significant tax cuts has to be tempered by three considerations.

Firstly, the Taoiseach added the caveat that tax improvements would kick in “where we have scope in the budget”.

Secondly, the reality is that there will be little room for anything more than modest changes this year, given that much of the ‘fiscal space’ is already spoken for in the pay package agreed for the public service.

That deal will cost €887m over the next three years, a staggering price to pay for industrial peace which is still not guaranteed.

Much of the remainder will be used on extra spending on housing and on meeting the rising numbers in our education and health systems.

Thirdly, we know that Brexit will have a major impact on our economy and on our tax revenues into the future.

Yet Brexit warranted only two sentences in the Taoiseach’s address to the party faithful in Clonmel. It deserved more.

Leo Varadkar concluded yesterday by promising that Fine Gael “will never talk down to people”. But neither should it raise their hopes to unrealistic levels.