The Brexit budget

The budget for next year was presented to the Dáil on 8 October. In his speech the minister for finance, Paschal Donohoe, made much of the threat from a no-deal Brexit. This would have dire consequences for Ireland, as Britain is our main trading partner in the EU.

The obvious question is why the minister did not postpone the budget until later in October, or even after 31 October, to see if there was a no-deal Brexit.

At one time the budget was a major event. Ministers were forced to resign if any of the details leaked beforehand. Now it is largely a media event. Most of it has been “leaked” beforehand, and the only relevance is seeing the actual detail.

The budget itself provided tax increases for the working class and welfare recipients. By not increasing tax credits or social welfare amounts, people end up paying more taxes, because prices and the cost of living are still increasing by 1.4 per cent.

The limited social welfare increases will be “targeted.” As wages increase, they will be hit by more tax. Exemption limits have not changed for more than ten years, with the effect that the tax burden has increased on the poorest sections of society.

The self-employed were one of the few gainers in this budget. The earned-income credit is increased, even though there are already generous deductions in the form of expenses available to the self-employed. This enables the self-employed to make extra profits, tax-free. The Revenue Commissioners have already exposed widespread abuse by so-called self-employed transferring tax credits to spouses who are in employment in order to get tax rebates.

By the end of budget week the Economic and Social Research Institute reported that households would see their disposable income fall as a result of the budget. Earlier in the year the Committee on Budgetary Oversight suggested that the state could be losing anything from €5 billion to €15 billion a year in revenue because of tax reliefs and reductions available to individuals and companies. Vulture funds continue to make vast profits from property transactions while paying little tax.

The minister used the threat of Brexit as a cover for increasing taxes on the poorest sections of society. He also used the environmental threat to increase carbon taxes; but this was more revenue-earning than a serious attempt to address environmental issues. The minister did nothing to address corporate tax issues, such as the Apple case (where the Government continues to support Apple) or tax shopping by big corporations to gain a tax advantage.

Two days after the minister’s budget speech the taoiseach met the British prime minister in England. It defies reason to think that the minister for finance had no knowledge of this meeting on Tuesday. It is even more incredible that he didn’t have some knowledge of the issues to be discussed.

Whatever happened in the meeting between Varadkar and Johnson, it seems to have been a catalyst for Johnson agreeing a deal with the EU. In fact after the deal was agreed with Michel Barnier, Varadkar seems to have been widely credited with making the breakthrough.

In 2016 just over 17 million people in the United Kingdom voted to leave the EU and 16 million to remain. In other words, it is fairly evenly divided on the subject. As well as this, of the four constituent regions of the United Kingdom, two—Scotland and Northern Ireland—voted to remain. The other two, Wales and England (with the exception of London), voted to leave.

Johnson and the ERG Group of Tories sabotaged the Theresa May deal in pursuit of a no-deal Brexit. They are financed by hedge-fund managers. These funds make money by speculating on uncertainty and chaos. They’ve already made millions on the 2016 Brexit vote and hope to make more on a crash-out Brexit.

The deal negotiated with Barnier seems to be substantially the same one that May negotiated, with the removal of commitments to things like workers’ rights, environmental standards, and the National Health Service. There is little doubt that the wolves would love to see the NHS privatised, and a lowering of standards in relation to the environment and consumer protection. Workers’ rights in the EU are minimal but still better than none. Hence the removal of that commitment.

Since the Brexit debate began there has been a growth in the right wing in Britain. The 16 million who voted remain have rights as EU citizens. Under the proposed deal these rights should continue. However, the United Kingdom has no written constitution: rights are based on law and precedent. The Windrush Generation found out recently what rights they had: none. People from the West Indies who had been living, working and paying taxes in Britain since they were children found that under policies introduced by Theresa May as home secretary they were no longer welcome. They were sent back to countries they had not seen since they were children. It is no coincidence that they are mostly black and working class.

It is hardly surprising, then, that there has been a phenomenal growth in applications for Irish passports. Before 2016 the number of applications from Britain and Northern Ireland for an Irish passport was less than 6,000. In 2016 this increased to just over 18,000, and by September this year it was over 80,000. There are now more than 100,000 applications per month from all sources.

It is plain that thousands of people born in the United Kingdom but with a connection to Ireland want to have the protection of the Irish state. Some of these would have moved from Britain to countries such as Spain and Portugal. After all, if the EU allowed the commitment to workers’ rights in the May deal to be dropped so easily, then an Irish passport might offer stronger protection.

Perhaps elements in the EU would be happy to see a “Singapore-on-the-Thames,” now that the EU itself is experiencing increased competition from China and a possible recession.

Paschal Donohoe does not seem to have factored any of this into his budget calculations. At the time of writing it seems that Brexit will take place with a deal. Therefore should there be a new budget?