How Sinn Féin’s promises could hit your wallet
Sinn Féin may have ‘won’ the election with policies promising to put more money in people’s pockets, but what would our f iscal future be like under a government inf luenced by the party?
Fianna Fáil and many Independents have had a good re-read of the Sinn Féin election manifesto and have apparently decided against going into coalition with them, for now at least. Fine Gael and Labour have also sent out negative vibes about coalescing with the party.
Its success in winning 37 seats, thereby becoming the secondlargest party in the 33rd Dáil, also led to a plunge in bank and property shares.
So, what is it about Sinn Féin that has everyone spooked?
The electorate obviously likes the look of their policies. And there is plenty to like about them.
They exposed both Fianna Fáil and Fine Gael for failing to look after two core groups of supporters – parents and pensioners, or rather would-be pensioners.
Sinn Féin played a blinder by spotting that people were rightly angry at the massive and humiliating hit of not getting a pension until 68, when many employment contracts oblige them to stop working at 65. In exit polls, the pension age issue was seen as eight times more important than Brexit.
Unlike other parties, Sinn Féin focused in on an insidious tax that has been undermining our schools and the relationship between parents and teachers. This is the ‘voluntary’ contribution parents have to make towards the running costs of ‘free’ schools. While other parties dithered, SF said they would abolish this unfair and unconstitutional stealth tax and legislate to keep it abolished. Cue, a big bualadh bos from teachers and parents.
FG promised – and failed miserably – to abolish the hated USC tax, which cuts through all the fairness built into the tax system through credits and allowances to grab money from your gross income. So it can hardly object to SF’s plan to abolish it on incomes under €30,000, even, if it would cost a massive €1.2bn. P roperty tax is another issue where SF made political inroads into unlikely places. There are people in the plushest parts of Dublin 4, who pay thousands every year in property tax, who supported Sinn Féin on this issue alone!
However, this is also where the populism that won so many votes begins to cost an awful lot of money.
Left-wing governments in wellrun places such as Scandinavia fund better services with higher taxes, including wealth and property taxes. US socialist Bernie Sanders increased property tax and imposed water and refuse charges in Burlington, Vermont, the city he ran well enough to win US presidential credentials.
This is where the wheels start to come off Sinn Féin’s plan.
Sinn Féin wants to increase spending by twice as much as anyone else – €22bn – while cutting taxes for everyone apart from the rich.
SF’s populist pledge to abolish property tax would turn what is usually a left-wing moneyspinner into a black hole in State funding.
The figures in its manifesto show exactly why property tax is the main workable wealth tax.
Sinn Féin proposes to replace it with a 1% tax on assets over €1m. But this will raise less than one-fifth of what property tax raises.
The party still needs to raise an awful lot of money from a tiny group of targets acceptable to the populist mindset, namely banks, multinationals and high earners.
It plans to increase the bank levy by €50m and raise another €175m by not allowing banks to write off their losses against tax.
Bashing banks helped win Sinn Féin lots of votes. But the party’s election success also initially wiped hundreds of millions off the value of State-owned banks.
So it won’t raise much money, if any, after such losses on the shares we own are taken into account. And we will end up footing the bill anyway, as banks pass on the cost in extra charges to you and I.
Sinn Féin knows that writing off losses against future earnings is a fair principle of taxation that applies to individuals and businesses alike. So why exclude banks from this in its other bank-bashing measure?
The party really goes after individuals earning over €100k a year (not families it should be stressed) – and the companies they work for – through massive hikes in tax and employers’ PRSI.
There will be few tears shed for such high earners. But the main employers who pay single people more than €140k a year are multinationals. These big firms are also the target of Sinn Féin’s biggest revenue raiser – a whopping €722m tax on their assets.
So the party’s main targets are the multinationals who employ one in five people in one way or another and are responsible for most of our economic recovery since the crash.
This is the kind of policy that has all the other main parties running for cover.
Leo Varadkar declared he was going to be leader of the opposition as if he couldn’t wait to see Fianna Fáil try to put Sinn Féin’s plans into practice.
He called on Sinn Féin to form a government ‘to try and keep those remarkable promises they made to the Irish people which got them so many votes... and to get Dáil approval for a republican socialist programme,’ Mr Varadkar said.
He almost seemed about to add: ‘And good luck with that one Micheál!’ M icheál Martin was having none of this and almost promptly ruled out a coalition with Sinn Féin with the resounding backing of 95% of his parliamentary party. Yet the financial markets were remarkably sanguine about the prospect of Sinn Féin chasing the multinationals out of Ireland.
As our financial prospects worsen, interest rates on new debt rises. Even a tiny uptick would add millions to our debt bill.
But our borrowing costs didn’t budge in the wake of Sinn Féin’s success and its claim that it will boost spending by €22bn – twice as much as most other parties.
This isn’t because the markets like Sinn Féin – but because they don’t believe the more radical measures will ever be put into practice. And nor, possibly, did Sinn Féin, which strangely failed to field enough candidates to be the dominant party, let alone win a majority.
We’re all sick of politicians not keeping their election promises. But in this case, it might not be a bad thing!