Analysis:The Tánaiste went one better than Labour on tax cuts, writes Stephen Collins, Political Editor.
The PD national conference gave Michael McDowell a platform for a determined attempt to grab the initiative back from Labour in the run-up to the election and to wrap the tax-cutting mantle around his party once again.
The Tánaiste repeatedly stressed the credentials of the PDs as the party most committed to the free enterprise economic model and used his television address to the nation to try to convince voters that doom awaits if Labour and the Greens are in government.
Ironically, though, while Mr McDowell denounced auction politics at the start of the conference he then proceeded to match Mr Rabbitte's promise to cut the lower rate of income tax to 18 per cent and threw in a 3 per cent cut in the top rate, to 38 per cent, for good measure. The Tánaiste then put another tax sweetener into the election package in the shape of stamp duty reform.
When the tax measures are taken in tandem with the commitment already announced to raise the old age pension by €100 a week, the PDs have started their election campaign by offering the electorate a range of goodies. So how can the Tánaiste declaim against auction politics on the one hand and then proceed to offer more than his Labour opponents?
McDowell's answer lies in the second injunction he made at the conference - his commitment to conviction politics rather than auction politics. McDowell claims PD tax cutting policies have credibility because they are born of conviction, by contrast with those of Labour which have been devised out of expediency.
There is some justice in this. From their foundation in 1985 the PDs have had tax cuts as their core value and for most of that time they have been denounced by Labour for precisely that belief, particularly their attachment to cutting tax rates.
The PDs have been attacked repeatedly by the left as "selfish" and "Thatcherite" for their espousal of tax cuts and that is why Pat Rabbitte's conversion came as such a shock.
Imitation, though, is said to be the sincerest form of flattery. It was famously remarked of former British prime minister Margaret Thatcher that her big achievement was not that she changed the Conservative Party, but that she changed the Labour Party.
The Labour leader's conversion to tax cutting just goes to show how far the PDs have shifted the centre of gravity in Irish politics. The Tánaiste's frustration at Labour's policy swerve is understandable, particularly if it neutralises one of the key PD election promises. Until last weekend McDowell kept repeating the charge that in Government Labour would raise income tax, whatever they might say during the campaign. By offering to actually cut tax, Rabbitte has certainly blunted that charge if not neutralised it completely.
It means that the PDs will no longer be able to get the expected mileage from claiming that Labour in Government automatically means higher taxes. McDowell is quite entitled to maintain that his party has more credibility than Labour on the issue but it seems that whichever of them is in office the lower rate of tax is coming down to 18 per cent.
Part of McDowell's annoyance with Labour for stealing his clothes may also be due to the fact that the PDs are feeling guilty that their tax-cutting agenda has been put on the back burner since they won their second term in office with Fianna Fáil in 2002. The 1 per cent cut in the top rate of tax in December's budget was the first in the lifetime of this Government. In its early days it even failed to index the bands although it has caught up on that front now.
There was a clear shift in the focus of the second Fianna Fáil-PD government from tax cutting to more social spending. Charlie McCreevy's departure for Europe symbolised that change as did the Taoiseach's decision to take seriously the advice of Fr Sean Healy on budgetary policy.
McDowell tried to move the focus back to tax cuts last September when he proposed changes in the stamp duty regime and maintained that the exchequer was collecting money it did not need. By allowing tax cuts to slip off the agenda the PDs gave Labour the opportunity to march on to their territory. The fact that there is plenty of money in the coffers to cut the basic rate only makes matters worse. Still, if tax does become a focus for the electorate the PDs will certainly have credibility on the issue.
One huge source of encouragement for the PDs going into the election was the big attendance at the Wexford conference. There were over 1,000 accredited delegates to the three-day event and the conference was both better attended and had a younger age profile than its Labour counterpart last weekend. There is certainly life in the party yet and, whatever about poor opinion poll results, its election prospects are wide open.