Two cheers for Mr McCreevy's Budget

Two cheers for Charlie McCreevy. One for actually being slightly radical - as opposed to merely claiming to be so - the other for delivering on the coalition's electoral promises. Many of the commentators berating him for cutting tax rates would normally consider themselves to be democrats: it is a curious sight to see a minister condemned for merely doing what he promised the electorate he would do, if elected.

By all means criticise something on the grounds that you don't like it, but acknowledge that your opinion is a minority one. Don't try to occupy the moral high ground on tax: we voted for this Budget.

How many times have so-called liberal democrats savaged a politician for failing to deliver on manifesto promises? They can't have it both ways.

The case for tax cuts was well made by Mr McCreevy. High marginal rates are a disincentive to work and enterprise and also encourage evasion. We know all about the level of tax avoidance in Ireland in recent years and there are two possible responses.

You can either force greater compliance through the legal system or you can reduce the incentive to avoid.

The latter is easily achieved through lowering tax rates. The evidence from the two tax amnesties - and elsewhere - suggests that the majority of people who could avoid tax actually did. Whatever we might think about the moral and legal choices made by these people there is a clear sense that a collective decision was made by a significant part of Irish society to not pay all of their taxes.

The State has co-operated with this decision - and in a sense condoned it - by introducing the amnesties and failing to jail any of the offenders. If you are caught you are tribunaled rather than jailed.

So reducing taxes has the pragmatic justification that it encourages people to pay them. This is spectacularly evident in the area of capital taxes: in a little-noticed part of his Budget speech, Mr McCreevy pointed out that the result of cutting capital gains tax by half has been a 160 per cent increase in revenues in only two years. Similar effects have acted to increase the haul from income tax - the boom in tax revenue growth has not just come from economic growth, people are more compliant.

Tax cuts are also part of the Irish economic success story. Economic growth is determined by lots of things and one very important one is the tax regime. Creating a `low' tax State within the euro group of countries will be vitally important in maintaining Ireland's competitive advantages in the years ahead. The poverty lobby wanted more hand-outs. Instead, or perhaps as well, there will be more jobs. How radical was Mr McCreevy? Given that so many people seem to be upset by the Budget the temptation is to say it was extremely radical. But this would overstate the case. The one truly radical feature of the package was the change to the taxation of married couples.

This seems to have annoyed everyone and has been condemned as discriminating against those couples where one partner is not in employment.

In a narrow, relative, sense this is true: two-job couples will be better off compared to their one-job counterparts. But in an absolute sense, one-job married couples are not worse off at all; their allowance is unchanged.

Mr McCreevy would have been better advised to maintain the real value of the old married couple's allowance, increasing it by inflation, rather than freezing it in nominal terms. That way he could have correctly argued that the position of such couples was left totally unchanged. But this is a minor quibble. The motivation behind the measures - to increase the supply of labour at a time of full employment - is an honourable one.

The measure also begins to correct a glaring anomaly: two people sitting side by side, doing the same job and earning the same gross wage face very different tax bills solely as a result of their marital status.

As a society many in Ireland might think that to subsidise marriage is a good thing.

But the vastly different taxation of married and single people is in fact very unfair and does not sit easily in a modernising pluralist society. There are far better ways to encourage the family.

To classify as truly radical, the Budget would have to address all of the problems created by the inefficient interaction of the taxation and welfare systems. The total elimination of so-called poverty traps, whereby people lose out by leaving the dole and taking a job, requires an integration of the tax and welfare systems that simply hasn't happened.

It is true that the raising of tax allowances addresses some of these problems but there is still much work to be done. Also, a radical finance minister would have abolished mortgage tax relief - and other middle class subsidies - rather than slightly increasing it, as he seems to have done. Mr McCreevy has actually managed to raise property prices.

Only two cheers because, as always, the Minister could have done more. If he was truly reform minded there should simply have been more measures: he should have taxed company car parks, for instance. But it would be churlish not to give credit where it is due; at least he didn't give any more money to the GAA.

Mr McCreevy has gone a long way to help secure future economic growth, surely the best way to help our society.

Chris Johns works in the fund management industry.