Cantillon: Merrion Street heats up as budget day gets closer

Autumn is in but it’s getting hot, at least on Merrion Street. Only 17 days remain before the budget. First came a bonanza of fiscal speculation over the 2016 plan. Now comes the graft of calculation, selection and elimination.

Easy to say, difficult to do. The thrust of the plan has been clear for months. All eyes are on the Universal Social Charge, the super-efficient tax which brought billions of euro into the bedraggled exchequer and antagonised the worker. Nothing is pinned down for definite just yet. But it looks the 7 per cent rate will go down 1.5 percentage points while the 3.5 per cent rate eases by 1 percentage point and the 1.5 per cent rate eases by half a percentage point.

So far, so expensive, yet there is more. Tánaiste Joan Burton, above, has promised to eliminate a PRSI anomaly which would penalise beneficiaries of a minimum wage increase. Minister for Finance Michael Noonan wants to help truckers and the self-employed. Neither is there any getting away from an inheritance tax cut and assorted other goodies. The more it all adds up, the more it seems likely to crash through the €750 million barrier on the tax side which was set in the spring. Having held the line on ministerial demands for a massive increase in spending, the denizens of the Economic Management Committee must now decide whether to go further on tax.

True, the Government is bound by stringent fiscal rules.

But those rules permit an increase in an expansionary package if the expansion is funded by increased revenue. Hence talk of a hike on cigarettes and diesel duty, and an all-too-convenient increase in the bank levy. Tobacco is easy prey but regressive. With State support fees down, the banks are a relatively soft touch. But the punter would probably pay in the end. This is politics, eh.