With a general election just weeks away, Lucinda Creighton’s Renua Ireland took the opportunity yesterday to launch its manifesto, entitled “Rewarding Work, Rebuilding Trust”.
It might best be described as long on ambition and short on detail. The mooted tax cuts carry a whiff of Progressive Democrat policies while the promise to axe motor tax and the TV licence is reminiscent of the Fianna Fáil manifesto for the 1977 election that netted Jack Lynch a healthy Dáil majority.
The eye-popping proposal is the introduction of a flat rate of tax of 23 per cent. This radical measure gets a full 16 lines in the 76-page document. Renua is proposing the abolition of the current income tax model, the Universal Social Charge and employee PRSI.
“We will introduce a simplified flat tax of 23 per cent, with a basic income payment to all individuals,” Renua says.
Renua believes the flat tax model would eliminate the “disincentives to work” embedded in the current system, where a 52 per cent marginal rate applies. But it is light on detail as to how precisely this would be cost neutral to the exchequer.
Renua would also replicate the tax credit available to all PAYE workers for the self-employed, at a cost of €123 million, and would scrap tax reliefs, tax shelters and most tax credits except in cases where “appalling economic planning has led to a market failure”.
It estimates the savings at more than €1.5 billion but don’t forget that the film industry here has benefitted from such schemes in the past.
The party is also intent on “modernising” our capital gains tax – it plans to cut it from 33 per cent down to 10 per cent in certain circumstances – in a move that it believes would generate an additional €1 billion in revenue over the lifetime of the next parliament. Charlie McCreevy did something similar in his time as minister for finance during the Celtic tiger boom.
In addition, Renua has proposed the introduction of two local public banks to provide “cashflow-based lending and specialist banking services” to Irish businesses, based on a model used in Germany.
Do we need a new political party, cut from the same cloth as the existing mainstream ones, offering the sun, moon and stars to voters? Renua will get that answer from the electorate in the coming weeks.
