Maybe Charlie McCreevy is right. Maybe cutting income tax would prompt us to go out and spend, spend spend, and thereby push up inflation. Now I understand economics as much as I do the internal workings of Sizewell B; but just as I know that if I put a Cruise missile through the Sizewell B nuclear shield, I should stand well clear when I do so, I can understand his point.
Yes indeed, to permit us to have more of our own money might indeed be too perilous to contemplate. We have been raised in an economic culture which praises State confiscation and worships State endeavours as being morally superior, no matter how incompetent those state endeavours are.
They are generally free of the profit motive; and though profit is no longer the dirty word that it once was in large areas of Irish life - as we have seen most recently in CIE - the nanny State is expected to take over from management whenever it feels it should, oh just for a day or so, to establish the worthy credentials of the politician concerned, regardless of the consequences. The quid pro quo is that State-owned companies are freed of the absolute obligation to make money.
State enterprises
It's nice talking about Charlie McCreevy, because I like him, but of course there's little he can do about such attitudes in even the medium term. The politico-economic culture of Ireland will have to change a great deal before we recognise the conclusion of our own logical premises: State enterprises, answerable to civil servants and politicians, do not work. And when they start the necessary reforms to make them even remotely viable, as with my friend Eddie O'Connor at Bord na Mona, along comes that sterling example of political probity, Michael Lowry, to meddle, meddle, meddle.
State-owned, State-run and State-interfered-with industries are still central to the economic culture of political life in Ireland. But that culture is irrelevant to the laws and culture of the really productive economy, which exists in the same territory but under a different legal system, rather as in the old South Africa. All real growth occurs in the real economy, whose basis is low taxation - and not all of it is quite legitimately low. We all know that the IDA would never be able to lure American executives here if their salaries were subject to Irish rates of tax.
They are not. Vast fiddles are done, strange twilight and offshore tax statuses are established for such people, so that they have one income in Ireland and another in some other country, which they might not visit once in a financial year, simply in order to get over the otherwise insurmountable tax-problem.
Long-term view
In real growth, low-tax economies such as the US, politicians worry far less about the adverse consequences of cutting tax, because their economic culture is sophisticated and predicated on the long-term view. Cut income-tax in such economies, and the consequence is not necessarily a spending boom followed by inflation, but, especially if the right inducements are offered, a rise in savings. Money goes back into industry. Pension funds rise. Tomorrow is secured.
It will be a while before we get anywhere near realising that responsibility for our future should be shifted away from the State onto our own shoulders. So for the time being, while so many of us are in a financial, intellectual and ethical contract with the State which permits the State to take as much money from us at source as it wants, but in return will look after us in illness and in old age, it is hardly surprising that finance Ministers, anxious to keep inflation down, are reluctant to let us have our own money - for, like freed slaves, many of us will not know what to do with it.
There is a way to let us keep more of our money, to let us enjoy the riches we earn, without measurably pushing up inflation - and that is to cut VAT and excise, especially in an area close to my heart: wines and sparkling wines, for which we pay the highest taxes in Europe. That, first of all, will make the nation happier, always a good start. People will stop buying wines in the North, so revenue stays here. Inflation would be reversed. No doubt a certain amount of money would be liberated to be spent elsewhere, with a certain inflationary effect, but not enough to counteract the deliciously downward movement resulting from lower purchase-taxes.
Subversive concept
There is a subversive concept here: that the State should be looking to reduce its tax-take from the economy overall, and not just switch, as Margaret Thatcher did, from involuntary (PAYE) to voluntary (VAT and excise) taxes.
The State would embark on a withdrawal from economic life, in which it would intrude only for the purpose of creating regulatory laws, which it would police, with quite horrible consequences for tax-evaders, polluters, embezzlers and beef fraudsters - the very opposite of what we have seen in our present economic culture.
If there is anybody in Fianna Fail to do this, it should be Charlie McCreevy, whose instincts are sound and anti-statist. He is, incidentally, the only Fianna Fail politician unsoiled by the taint of Kinsealy, and therefore the only possible Fianna Fail candidate for the Park. But it would be unthinkable to lose him as Minister of Finance. There is a simple solution. Put him the Park, let him keep his Finance portfolio, and rename him: CHANCELLOR!