Budget Day in Ireland is next Tuesday, October 11, and we will be examining in detail the delights it will bring in this space next week.
We can't tell you in advance what will be in the budget for 2017 before it is presented to the Dail next week, now can we?
Well, actually we can ... or at least we can make a good guess at most of it, for two reasons.
The first is that there is so little room for maneuver that Minister for Finance Michael Noonan's hands are tied. And the second is that the few very minor changes he will be able to make have been well flagged in advance.
Why is this the case? Well, despite all the talk before the recent election about "fiscal space" (remember that?), all the hype about the recovery in the economy and about how we (once again!) have the strongest growth rate in Europe, the truth is that the state's finances are still stretched.
Our revenue and spending (including debt interest) for 2016 will each be somewhere around €50 billion. After all the sums are done, it is reckoned (by himself) that Noonan will have just €1 billion more to play with in the budget for 2017. That's one-fiftieth of the overall spending level.
So any changes will be very minor. After this budget, people are only going to feel fractionally better off, if at all. It can't be any better because the money simply is not there.
And since (as part of the bailout deal) our budget is still being overseen by the EU, we can't get up to any financial funny business, even if we wanted to. We are limited by a deficit target of three percent of GDP so we can't borrow a few billion for a spending spree.
Of course none of this will stop the government making a great song and dance out of the budget next week, with all kinds of complicated announcements on tax and spending. But the reality is that most of us here will notice very little change in our wallets or purses, or the state services we get.
One of the factors this time is that we have a minority government, supported internally by independents and externally by the main opposition party, Fianna Fail. They all want to have their two cents worth of input, and the government has to keep everyone happy.
Noonan has already said that the €1 billion available will be divided roughly two to one between extra spending and tax cuts, a proportional division favored by Fianna Fail. That means there will be just €300 million or so available for tax relief, a tiny fraction of the overall tax take. Already flagged is a slight shaving of our Universal Social Charge (USC), which is the extra income tax that was introduced during the financial crisis.
People here who earn €30-€40,000 will probably be €4 or €5 a week better off if that happens, so no one will be partying as a result. The basic fact is that middle income earners here -- the "squeezed middle" -- will still be bled dry after the budget because the state needs the money.
A single person here enters the top 50 percent tax rate on anything they earn over €34,000; it's a multiple of that income before the top rate starts in the U.K. or the U.S.
On the spending side, there will be an extra €600 million or so to play with. Already flagged are a list of things the government wants to do, like tax cuts for first time home buyers, more state aid for childcare, action on the housing crisis, more spending on essential state services like health and education.
But again, what can be done will be very limited, even though the budget speech will no doubt make it all seem like a package of major initiatives.
One of the big problems for the government on the spending side is the issue we were discussing in this space last week -- the demands from so many state workers for huge income hikes justified by the misguided idea that the economy has recovered, even though the recovery is only partial so far and many private sector workers have got no increases in pay at all.
The Dublin Bus drivers, who we were writing about last week, eventually settled their strike for an 11 percent hike over three years. This follows the Dublin tram drivers a few months ago who got 18 percent over four years.
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Last week brought a decision by the gardai that they are to have a four-day strike here in pursuit of their pay claims. And teachers and health workers are lining up to take action as well.
So the government's plan to use the €600 million that will be available for extra spending to expand state services could well be undermined because much of the money will be eaten up by higher pay for state workers.
Nor should anyone believe the hype about these increases paying for themselves through extra efficiency. The Dublin Bus drivers did not give any concessions on productivity to get their pay hike last week, for example.
Billions in extra spending has been poured into the health service here in recent years with little improvement in hospital waiting times. The same has happened in other areas of state services -- lots of extra spending on pay with no discernible improvement in the service provided.
This is one aspect of a key characteristic of Irish politics over many years. Even though our politics is centrist rather than left wing, our politicians behave like kids in a candy store at budget time. So it's all about increasing welfare benefits, about high tax and high spend, about coming up with ways of expanding state services and providing them free as much as possible.
This year, for example, it's all about giving a huge tax refund to first time home buyers, expanding child care and giving more to pensioners, who are rumored to be in line for a €5 increase in the state pension, bringing it up to €238 a week.
We're all in favor of making life easier for old folk, of course, but the state pension here is already TWICE as high as in the U.K. This is in line with our welfare system in general, which provides the highest benefit payments in Europe and has produced a hard core of long term unemployed who don't find it makes sense for them to work.
Giving a huge tax break (expected to be up to €10,000) to first time home buyers may seem like a caring move. But the reality is that it will push up house prices even more, since the real problem is lack of supply.
What we really need is for the government to cut taxes on site development and house building to encourage builders back into the business. But cutting taxes is not the way our politicians think.
The instinctive position of Irish politicians at budget time is to look for ways in which the state can give away more (and win support from voters as a result). The problem is that all these things have to be paid for by someone.
And that someone in Ireland is mainly the top 20 percent of earners who pay 75 percent of all the income tax (including USC) here. The bottom 50 percent of workers pay just four percent of the total income tax take. The lowest earners -- 750,000 out of a national labor force of around two and a quarter million -- pay no tax or USC at all.
One of the biggest problems here, as we mentioned above, is the "squeezed middle,” typically younger families in the €30,000-€70,000 joint income bracket, who pay very high taxes and all the new charges (property, water, etc.) and get very little from the state in return.
To avoid waiting lists many pay for private health insurance, so they don't cost the state health service anything. Some pay for private education. And it's the same with other things -- they pay for everything they use and cost the state very little.
Yet they lose a huge amount in tax. It will be interesting to see in next week's budget how much the minister can do to ease the burden they are carrying.
Another notable aspect of budgets in Ireland -- and Irish politics and administration in general -- is the low level of efficiency and accountability in the way vast amounts of public money are spent. The attitude of our politicians is to throw money at every problem, and then fail to follow it up to see how effective it was.
Donald Trump may be a buffoon, but there was a grain of truth in one remark he made when combating the accusations from Hillary Clinton that he has paid no federal tax. "They would waste it,” he said.
The way hard earned taxpayers' money is "wasted" by government programs is a problem not just in the U.S. but in many states around the world, with Ireland being up there with the worst squanderers.
Instead of giving all our attention at budget time to how government can simply spend more and more money, what we should be doing is announcing ways in which the state will get more for less. In Ireland, in particular, there has been a tendency to see the budget as an annual lottery in which everyone has to be a winner.
It would be good if we could see that beginning to change next week. But don't hold your breath.
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