It’s a cliché – prudence is the wisest approach
ADECADE ago, Salisbury council in the UK banned the term “singing off the same hymn sheet”, warning employees that the religious connotations of the saying, common parlance for centuries, can offend non-believers. The ban spread. Other councils chimed in and added some more phrases, such as an edict not to use the term ‘colour-blind’ but instead refer to a person as having ‘colour visual impairment’. No such strictures apply here.
This week saw Taoiseach Leo Varadkar, and Finance Minister Paschal Donohoe, in harmony and singing from said hymn-sheet. They may have struck a discordant note for those hoping for major tax cuts. Modest alterations may be made but, by and large, the advice of the ESRI and the Fiscal Advisory Council (FAC) will have to be heeded. A tight fiscal regime may be unpalatable but it is necessary. The economy is expanding rapidly and the prospect of over-heating must be confronted. Mr Donohoe will doubtless keep at least one ace up his sleeve as a sweetener. His singling out of middle-income earners as a deserving case is understandable.
As to whether there is evidence of the ‘colour-blindness’, the Government seems anxious to pay lip-service at least to the difference between being in the black or in the red. According to Mr Donohoe, using all the available “fiscal space” would – under EU rules – allow for an additional €900m in the budget. He claims to be resisting the urge to splurge, on the grounds it would increase the deficit. And given that we are nearing full employment, he would be wise to recognise the danger of adding “fuel to the fire”.
The FAC had cautioned that any unexpected increase in tax revenues should be used to bolster the country’s reserves and pay down debt – sage counsel. We need to be ready to absorb any shocks or adapt to changes. Worries about Brexit have been well flagged; a rethink on global tax policy, and the ramping up of Mr Trump’s trade war, present real threats. We can’t rely indefinitely on the kind of cash-flows we current enjoying from the multinationals. No government can hedge against all unforeseeable results or circumstances, but it is always smarter to repair the roof while the sun is shining – that rainy day will come.