The dream economic scenario unfolding before the Minister for Finance Brian Cowen, and outlined by him in the Budget speech earlier this month, is testimony in itself to the budgetary policies followed, not so much in this budget, but in the many ones preceding - including some going back as far to a time now receding in the memory - to when there was a coalition Government in office.
One of the key aims of economic policy is the achievement of balance between major branches of the economy - for example consumption and investment - and between the public and the private, and, over time, between good times and bad.
Balance was in evidence in this year’s Budget - evidenced by the budgeting of a surplus in the year to come, and in the achievement of a structural surplus in the exchequer finances in the subsequent years. This is to be commended, especially given the point we are at in the electoral cycle.
It is very encouraging too, that there is evidence of a sensible re-emergence between public and private, and that there is a return to the commitment to lower the top rates of income tax, and not just reduce income taxation through the altogether also commendable option of widening the tax bands.
For too long in Ireland the notion of penalising the rich, (as distinct from doing the most that can be done for the weaker sections of society) has held sway amongst politicians. This type of thinking, (it is seen all too often in our urban transport policy as well, as evidenced by the delight of planners in punishing motorists) is negative, and in economic policy terms quite unproductive. The economic reality is that lower tax bands, lower tax rates, and increased public expenditure on social welfare, health, and other measures to create a ‘caring society’ is the optimal mix - compare economies where ‘socialist’ thinking holds major sway, and countries such as Ireland - which, as the dream scenario indicates, is getting the balance right.
From a financial services perspective, the Budget introduced no specific measures, apart from a commitment from the Minister to consider introducing a new stamp duty relief for members of stock exchanges. Industry will therefore have to wait until the Finance Bill 2007, to see if Minister Cowen responds to requests on a number of issues specific to the sector, including introducing amendments to the holding company regime, and extending the double taxation relief pooling to branch structures. |
