THERE are two "issues" for voters to consider, as they weigh up the tax "goody bags" being dangled by all the political parties. One is the details of the various tax proposals. The other, and more fundamental one, is which government will best be able to introduce genuine tax reform while getting better value for money from public spending. In other words, who can deliver?
The first week of the campaign was dominated by the intricacies of the tax packages on offer. For a brief period the complex debate about how best to cut taxes moved to the front pages, as the Government and Opposition argued over whose plan was better. On balance, the Coalition's idea of concentrating considerable resources on increasing personal tax allowances is perhaps the better approach. But it soon became clear that it would not be an election-winning issue for either side, as the public no doubt takes the view that promises to cut taxes over five years are most unlikely to be delivered to the letter.
The recent strong economic forecasts from the ESRI have helped all the parties to hold out a future where rapid growth helps pay for lower taxes, higher spending and cuts in borrowing. The sums run into billions. Most of the parties are hoping to reduce taxes by £1.5 billion over five years, increase spending by £2.5 billion or more and still have hundreds of millions more to play with.
But such talk means little to the voters.
Most people particularly in the PAYE sector - feel they pay too much tax. Most also want better public services in areas such as health and education. Strong growth may allow the next government to deliver both but any weakening in economic performance could lead to problems, particularly with monetary union looming.
Looking at spending, Fianna Fail and the PDs are arguing for much tighter control. Meanwhile, Labour and Democratic Left, while promising to keep the public finances in check, argue that some increases in spending are needed to spread the fruits of growth. However, one of the key issues - and a hard one to debate - is ensuring value for money in spending.
Total spending under the current Government has grown by around 18 per cent. But are we getting a return in terms of a commensurate improvement in services? Meanwhile, the immediate task for the next government will be to control public sector pay demands.
The problems with the tax systems are clear enough. Overall, the tax burden in Ireland is not out of line with the European average. It is lower than many European states, but higher than in Britain.
But the tax system here still penalises relatively low-paid workers with high tax. Single workers move on to the top 48 per cent rate at income levels considerably below the average wage. And because residential property tax and many local charges have been abolished, the Irish tax system will remain heavily reliant on taxes on income.
An interesting issue if the Green Party happens to hold the balance of power after the election is that it strongly believes the tax burden should be moved away from labour and on to energy taxes and local taxes.
All the parties promise to devote more than £300 million a year to cutting income taxes and PRSI. The PDs promise more, calling for annual cuts in excess of £400 million on the basis of tight spending control. But all the plans are based on the hope that economic growth will remain at 5 per cent or more a year moving into the next century.
All the parties have more or less committed themselves to the details of how they see the tax system being reformed over the next five years. There have been many promises made to help the lower to middle-income earners - the 750,000 taxpayers earning £15,000 or less. But all the plans mean the more you earn, the more you receive in tax relief.
Reasonable calculations on the basis of what the parties are offering, for example, suggest a single earner on £10,000 would be around £400 to £600 a year better off after five years. The gains for a single worker on £50,000, meanwhile, range from around £1,900 to upwards of £5,500. Now you might argue that the gain of, say, £500 a year is a 5 per cent gain for someone on £10,000, while a rise of £2,500 would be necessary to give the same proportional benefit to a £50,000 earner.
The distribution of gains varies under the different plans. Fine Gael, for example, has aimed firmly for the middle ground, concentrating resources on the middle-income earners - around £15,000 a year for a single person. Lab our and Democratic Left plans, meanwhile, give more significant proportionate gains to lower earners.
For single earners, the biggest percentage gains under Fianna Fail's plan go to those on £20,000, while the PDs believe they can deliver a larger overall reduction to most tax-payers. But their proposal to reduce the tax rate from 48 per cent to 40 per cent would be a positive bonanza for higher earners; overall calculations based on their proposals show gains of more than 10 per cent of income for single workers earning £20,000 or more.
However, if the PD plan to replace tax allowances with credits was introduced, some of the benefits to higher earners would be clawed back.
Few people conform to the model of the "average" taxpayer. The distribution of gains for a married couple with one earner differs from that for single people, for example, while all the parties have made promises in relation to families with children.
Labour and Democratic Left are promising to increase children's allowance, Fine Gael favours a special subsidy for the under-fives, while Fianna Fail says it will introduce a £2,000 tax allowance to be paid when one spouse remains at home - or against vouched child-minding payments - in its first Budget.
The final run into election day is likely to see the battle of the first budgets. Fianna Fail will promise to introduce a 20 per cent tax rate on the first £2,000 of income on day one, the PDs will promise to push their tax-cutting agenda and the Coalition has already said that 60 per cent of the resources in its first budget would go to increasing personal allowances.
The closing days of the campaign will also see the parties intensify their verbal battles over who can be trusted with the economy. On the basis of experience, the electorate might reckon that all parties have a commitment to maintaining control on the public finances, but that they all may find it difficult to control spending, if times get tough. This may not matter if the economy continues to steam ahead. But if growth slows then the question is where will the priorities lie?
