The Minister for Finance has this in common with the President: both have particular responsibility for the stability of the ship of State, while being uniquely well placed to push out the boat, writes Martin Mansergh.
Brian Cowen's course is quite similar to that of Gordon Brown, the British Labour Chancellor of the Exchequer. Mr Brown will fight the British general election next year on a strong economy. Over the past few years he has successfully maintained an almost dull stability, denied to Labour predecessors living through sterling crises, while seeking to improve Britain's social services.
Britain's advantage is that many of its services are further developed than ours. Ireland's advantage is its healthier public finances. Mr Cowen will invest much needed additional money in public services, without prejudicing growth in the economy or the strength of the public finances.
The need to maintain competitiveness and to keep down inflation means there are prudent limits on expenditure increases, even when the money appears to be available. To obtain less value for money is in no one's interests. Charlie McCreevy was flaunting his political incorrectness, when he said (roughly): "When you have money, you spend it." In practice, he didn't quite do that. Mr Cowen is, even verbally, an orthodox Minister for Finance.
Shortage of revenue is not the issue at present. The return of double-digit increases in revenue, characteristic of the Celtic Tiger economy, means that talk of seriously raising tax rates is off the agenda for the moment, even for the main opposition parties.
It is important neither to exaggerate nor to undervalue the contribution to growth of low rates of income tax, corporation tax and capital taxes.
The basis of the resurgence of confidence in the Irish economy in the late 1980s was the taking of tough decisions to correct public deficits and social partnership. In the health area, despite some rationalisation, the course of correction was probably too drastic.
Nevertheless, the resultant growth achieved allowed a first wave of tax rate cuts in the 1989 to 1992 budgets. They were made possible by economic recovery, not the other way round. The reductions resumed in the late 1990s prolonged and intensified the Celtic Tiger period, which began in 1994, in the wake of the devaluation of January 1993. Again, it did not start with tax cuts.
On the contrary, the then Minister for Finance, Bertie Ahern, in the Fianna Fáil-Labour partnership Government took measures to broaden the tax base.
The Irish tax system reflects the mobility of labour and capital in today's globalised economy. We cannot afford income tax or social insurance rates substantially in excess of Britain's if we want working here to be attractive.
Thanks to euro membership, tax evasion can be vigorously pursued without fear of the destabilising outflow that followed introduction of the DIRT tax. Apart from once-off gains in interest and penalties, greater enforcement and compliance broadens the tax base. The discussion of tax breaks has been oversimplified. They fall into three categories.
First, there are reliefs availed off throughout the population, mortgage interest and health insurance relief, freedom from tax of pension contributions and child benefit, and charitable contributions above a minimum threshold. Second, there are reliefs on high-risk activities with normally little guaranteed return or profit for most people, such as the business expansion scheme (BES), film relief, artists' and writers' income, industrial R & D activity, and horse-breeding, which, since the Indecon report, is no longer regarded as a potential pot of gold.
Third, there are property reliefs, many of which are to be phased out, and which are largely responsible for a handful of millionaires having no income tax liability. It must be borne in mind that these reliefs have been instrumental in transforming "dear, dirty Dublin" into what the Economist Intelligence Unit now calls "dear, dazzling Dublin".
The drab towns severely criticised by Michael Collins have also been transformed. It has also to be acknowledged that environmentally and from a quality viewpoint the results of some schemes have been uneven. The issue is not just one of collecting tax from those able to pay but also of encouraging the wealthy to reinvest in this country rather than abroad.
Reconciling the strong developed public sense of justice in relation to tax with pragmatic considerations of the public good is no easy task.
The EU battle over corporation tax, won at Nice in 2000, is over for now. Even the Labour Party leader, Pat Rabbitte, has pledged that the 12.5 per cent rate announced by Ruairí Quinn in May 1997 and implemented since by the FF-PD Government after negotiating EU approval will stay.
ICTU research points to Britain to suggest a higher rate is sustainable.
One need look no further than North of the Border to see the impact in Ireland of high rates of corporation tax on drying up the type of inward investment we attract here.
It is not true we have no property taxes. The rate of stamp duty, which goes up to 9 per cent on the purchase of houses worth more than €635,000, is much steeper here than elsewhere.
Addressing the problems of cohabiting couples represents a challenge to capital tax revenue. The key to much of this debate will be finding the cash rather than a problem with the morals.
With the easing of a financial situation, that for a year or two looked more difficult, income tax concessions that tend to restore the status quo ante will be looked for. But the emphasis has moved towards services and infrastructure improvements in the Book of Estimates and the Budget.
If predictions of a Celtic Tiger II economy are correct, it will not be fuelled by further tax-rate cuts.
Rather, the objective will be to hold and, if possible, improve a healthy revenue bottom line, without creating a crisis of confidence that could be caused by a decision to reverse, selectively or systematically, the fall in tax rates since 1989.