The Minister for Finance, Mr McCreevy, grows more confident by the day. Having learnt the lessons from his own goals of previous Budgets, he showed Leinster House yesterday that, in bad times as well as good, he can produce a Budget which will have broad public (and voter) appeal. No Minister for Finance in the history of the State ever had it as good as Mr McCreevy who, year after year, has been able to deliver tax cuts along with spending increases. This year an Exchequer surplus was denied him but he still managed to find the money for both increased benefits and higher spending.
The Minister surprised government and opposition parties by not resorting to borrowing. This may appear to be a financial engineering feat of some consequence but in reality it owes little to financial adriotness and much to simple camouflage. The social insurance fund is showing a surplus - which it may one day need - but he takes it. The Central Bank makes a profit on the euro switchover and he takes that too. In terms of budgetary integrity, there is little difference between going into debt or using up valuable reserves. Mr McCreevy did not, as his critics claim, falsify the figures but there is something of the three-card trick in the way he presented them.
The grab for revenue has been both careful and sloppy. Although there was plenty of justification (and more than a little resignation) that tobacco products would be hit hard, they were not. Mr McCreevy decided to let the drinks industry almost completely off the hook. Smokers, drinkers and publicans will be relieved and appreciative.
The excise duty on diesel and petrol is to rise significantly. This can be justified by the sharp fall in oil prices but there is no increase in the duty on home heating oil even though that too has come down in price sharply. The standard rate of VAT will be returned to 21% on the grounds that the reduction in the last Budget was not fully handed back to consumers. This is hogwash. The VAT U-turn was executed because Mr McCreevy needs the revenue. It will drive up prices, reduce spending and widen further the already large VAT gap between this State and our major trading partners.
The building industry will be delighted with the reinstatement of mortgage interest relief and the concession on stamp duty. Hopefully, there will soon be a noticeable increase in rental accommodation. The would-be first-time buyers have been virtually ignored. The pensioners and social-welfare recipients will receive worthwhile increases and child benefit will rise significantly. The latter increase will come through in early May and start off with a double payment. Any voters wishing to avoid the general election would be well advised to book a May holiday.
Mr McCreevy has delivered a competent, if uninspiring, Budget. He has not fulfilled all his hopes but that is an unavoidable consequence of the revenue downturn. At least this Budget favours the lower income groups, as it should. No matter how Mr McCreevy argues otherwise - and he was at it again yesterday - in totality his Budgets have favoured the high earners. He will discover in May if the voters have long memories.