PDs play tax cuts card again

Though most politicians think the issue closed, the Progressive Democrats are determined to put tax cuts back on the agenda, …

Though most politicians think the issue closed, the Progressive Democrats are determined to put tax cuts back on the agenda, writes Mark Hennessy, Political Correspondent.

Struggling with seemingly endless crises in health and justice, the Progressive Democrats have been working quietly for months on their new tax cuts policy away from the glare of publicity.

The promises are undoubtedly dramatic. The top rate would drop to 40 per cent, while couples would not pay that rate until their incomes exceeded €100,000, or €50,000 for singles. Couples earning less than €40,000 a year would pay no tax at all, or €20,000 for singles, while a single person earning €25,000 would pay €880 in tax, a drop of €1,000 on their current bill.

The package is deliberately focused on the "coping classes", many of them young and most of whom are in the private sector, challenged by international competition, and faced with higher mortgage and childcare costs.

READ MORE

However, the party is not playing a one-card trick. Just 10 per cent of predicted extra State income would be given back in tax cuts, with the rest going on better public services, if all remains rosy in the world of the Celtic Tiger.

In her speech to the party conference in Limerick, Tánaiste Mary Harney told delegates that the State - contrary to pervading political opinion - could have both tax cuts and extra spending. In the past, the PDs were seen by many voters as good on tax cuts, but not so tuned in to the other influences that dominate modern-day living.

With Mary Harney's decision to move from Enterprise, Trade and Employment to Health and Children in September 2004 and Michael McDowell in Justice, the PDs' image has changed. The party once seen as the ones to knife taxes had instead become the ones in charge of hospital trolleys and street crime. The change has done little to help, and more than a little to harm, their image.

Yesterday's tax package, at a stroke, may force voters to recalibrate opinions, while causing short-term complications for Fine Gael, coping as it must currently with Labour's more jaundiced view on the subject. In reality, the PDs are playing to the voters' own self-interest, since despite their bitter complaints about bed trolleys, few have shown any inclination to consider paying anything extra.

Last July, Taoiseach Bertie Ahern voiced his view - subject to the usual qualifications that he always offers in anything that he says - that the era for tax cuts was over.

In reality, however, he would have little problem agreeing a post-election deal faced with the PDs' proposals, subject, of course, to Exchequer revenues remaining healthy. Election 2007 is shaping up to be the most unpredictable in decades, though nearly all polls suggest Fianna Fáil will lose seats.

Although the PDs ruled out a FF pre-election pact, delegates are more than keen for another tour of duty with Mr Ahern and a campaign call for voters to pass second preferences on to Fianna Fáil may happen.

Faced with an unknowable Dáil arithmetic, the PDs must, nevertheless, keep their options open, believing that many in Fine Gael will privately heartily approve of the thrust of their tax package.

So far, Labour has ruled out coalition with the PDs, though it might have to reconsider its options if its favoured Fine Gael/Labour/Green alliance fails to come up with the numbers.

Since Sinn Féin is expected to gain Dáil numbers, the rainbow option faces difficulties unless Fianna Fáil suffers meltdown and voters desert Bertie Ahern in droves.

On Saturday, Michael McDowell was happy to play "the Shinners are coming" tune, believing that middle-class voters who might otherwise go to Fine Gael will opt for the PDs to weaken Sinn Féin's post-election influence. He played a variation of that tune in 2002 with his "Single-party government - no thanks".

Then, Fine Gael-leaning voters abandoned Michael Noonan to ensure that Fianna Fáil was not left in Cabinet alone.

If Sinn Féin gets the 16 seats McDowell has warned about, though, it will not just be the rainbow that will be in trouble, since any combination bar Fianna Fáil and Labour will be impossible - an option firmly ruled out by Labour.

Faced with higher oil prices, the PDs are happily embracing "green" energy, ignoring the fact that the Government's own planning policies - or lack of them - has made the State one of the world's most oil-dependent.

Indeed, expensive oil and higher interest rates, as long as they do not go so high as to provoke a house price collapse, could benefit the Government, some PD leaders believe, since voters may stop taking economic success for granted. In such a scenario, voters could get nervous of change and shy away from the rainbow - particularly if they have not by then become convinced that FG leader Enda Kenny is a taoiseach-in-waiting.

For now, the Progressive Democrats are praying that Mary Harney will get health reforms through and noticeable improvements visible before polling day, or that she will, at least, get credit for trying. Voters are rarely so generous. Faced with trade unions and consultants determined to play a blocking game until her term of office ends, Harney has bet the farm that she can deliver.

Though she can nudge, prod and cajole, she cannot force powerful lobby groups to become more efficient, while she remains ever at risk to public attack from weekend trolley tallies.

Last Friday, it stood at 131 - too high, but lower than before. Cynics may no doubt see a connection between the figure and the fact that doctors had travelled to the Irish Medical Organisation's Killarney conference on Thursday.