By John Spain

Ironically it is Fianna Fail, the old masters of buying elections, who have adopted a responsible attitude and refused to indulge in so-called auction politics. So far, anyway.

But some of the other parties, including the very ones who have always criticized Fianna Fail for buying votes, have thrown fiscal caution to the wind and promised loads of money to voters if they get into government.

The fact that we are now at a turning point in the economy here witness all the jobs that have been lost in recent months and the way the property market has gone flat has not stopped them.

The Progressive Demo-crats, for example, have promised to increase the old age pension to *300 euro a week if they form part of the next government. The promise represents a 50% hike in the current weekly rate of *200 which was announced in the last budget.

The PDs, of course, are part of the present government and portray themselves as the essential watchdogs of the corrupt opportunists in Fianna Fail, their coalition partners. Yet here are the PDs unashamedly trying to buy Ireland’s substantial grey vote.

The PD leader Michael McDowell has denied that the promise is an election gimmick. But it’s hard to see it any other way.

The PD promise on pensions comes after their other promise a few months back to “reform” stamp duty on property sales here, a promise which would cost over *1 billion a year and have a serious impact on government finances.

The PDs are not the only paragons of virtue to be indulging in this unseemly bidding war for votes. A couple of weeks back the Labor Party was at it as well, promising to cut 2% off the 20% standard rate of income tax if they are part of the next government.

The promises from the PDs and from Labor were particularly hard to swallow because it is usually the PDs that aim to curb state spending and to lower income tax, and it is usually Labor that aims to increase spending on benefits like pensions and to keep taxes high enough to pay from them. Yet here they were reversing roles in their desperation to buy votes.

I’m not saying that increasing pensions or cutting income tax are not desirable objectives if we can afford them. But there is something very suspicious about supposedly responsible parties picking on particular things that make easy headlines in the run-in to an election.

This is not the way to make important decisions about the economy. At the very least such promises should only be made as part of an overall coherent economic plan for the future.

In response to critics, McDowell said, “What we’re talking about is giving pensioners a fair share of the increasing wealth of the Irish economy. This is an achievable target which we will deliver on.”

Which sounds reasonable. But what about spending on the virtually non-existent state services for parents with severely handicapped children, for example?

Or spending on our primary schools, where almost one third of all children are still in classes of 30 or more, far too large for a teacher to manage, never mind teach? Or state spending in dozens of other areas, all of which need more funds?

Increasing pensions is a lovely idea, but such spending decisions always involve a choice between competing needs. There is never enough money to do all the things the state should be doing.

Picking on some things simply because they are sure to grab a headline before an election is not the best way of making these choices. The PDs should know this. And the Labor Party traditionally the defenders of the weakest in our society should certainly know this.

But there are other agendas at play here these days. The days when Labor simply represented the working man are long gone.

These days Labor is out to capture as much of the middle class vote as it can, and in that context tax is a critical issue. Labor’s promise to cut the standard rate of tax to 18% has transformed the campaign for the election in two month’s time. At a stroke the former socialists have buried their reputation as a tax and spend party and stolen Fianna Fail and the PDs’ tax-cutting clothes.

Where the PDs are concerned, they have been losing support recently because they are seen as uncaring, cold and elitist. What better way to make them appear more human than to give a massive boost to pensions?

Fine Gael, the main opposition party, has now got in on the promises-promises game as well, with a major proposal to lower stamp duty on property sales, stealing the idea put forward at the end of last year by the PDs.

Stamp duty is a very sore point for anyone buying or selling a home here. The top rate is 9%, payable in part on most houses in the better parts of Dublin. The duty or tax is so punitive that it makes it much harder for young couples to buy better homes, and it makes couples already on the property ladder reluctant to move since it means handing over so much to the government.

So stamp duty on property is a much-hated form of tax. The rates of duty have not been lowered as the boom multiplied property prices, and so the sale of an average to higher end house in Dublin now can mean a stamp duty tax take of anything from *50,000 to *100,000.

The result is that the duty now drags in over *1 billion euro for the state every year and has become a vital part of state revenue.

It is also a distorting tax, acting as a real drag on the property market here especially when property is cooling off. Now with the property market flat as the boom ends, there is an extra reason to reduce stamp duty to stimulate activity.

The Fine Gael election promise, announced just over a week ago, is to reduce the duty considerably at all levels, but particularly for young couples. But it’s not that simple, no matter what the PDs or Fine Gael say.

The only property tax in Ireland is the stamp duty payable when houses are bought and sold. We don’t have local annual property taxes like in America or many other countries. It’s like we take in all the years of property tax when a house is sold.

If we were to get rid of the huge stamp duty on property sales we would need to bring in annual property taxes on all houses to make up for it. And it would be a brave political party which tried to do that now.

You see, we did have such taxes once called rates but they were abolished by Fianna Fail exactly 30 years ago when Jack Lynch led Fianna Fail to its biggest single party majority in the history of the state. He did so by promising the voters that he would abolish domestic rates (the annual property tax on houses). Reintroducing them now would be political suicide for any party.

So Fine Gael and the PDs are both suggesting that stamp duty on house sales should be greatly reduced or even abolished below a certain level, but they are not following the logic of that and saying that it should be replaced by a low level annual property tax that would apply to all houses. They are not saying how the huge loss in government revenue is to be made up.

Fianna Fail has held itself aloof above all this grubby auction politics so far. But there is a growing feeling among ordinary Fianna Fail supporters that this is a dangerous strategy.

With a growing feeling out there that the boom is now over and with more jobs being lost every week, the feeling is that Taoiseach (Prime Minister) Bertie Ahern may have missed the boat. If he had called the election last autumn he would have coasted home to another five-year term as taoiseach. Now the future is not so sure.

There is also a strong feeling that Ahern should have forced his Finance Minister Brian Cowen to make substantial changes in stamp duty on property in the last budget in December. That opportunity was lost, and now they have been outflanked by the opposition on the issue as the election approaches fast.

It’s the same on income tax. Even though it was Fianna Fail and the PDs who changed Ireland from a high-tax economy to a low-tax one (7% has been taken off both the top and standard rates of income tax since 1997), not enough has been done on tax recently to keep the electorate sweet.

Almost all of the reductions took place in this government’s first term, up to 2002. The only tax cut since then was the 1% reduction in the top rate to 41% in the last budget with the promise of a further 1% reduction after the election.

That is simply not enough for many voters, who still feel they pay far too much tax. And because it applies to the top rate it is seen as further relief for the rich. All of which left the door wide open for the Labor Party to come in with its audacious promise to lop 2% off the lower standard rate.

Fianna Fail has pointed out that the trouble with all of this — whether it is *300 pensions, or cutting the basic rate of income tax by 2%, or chopping stamp duty on house sales is that it is going to cost at least *1 billion euro for each and maybe far more than that. Where’s the money going to come from, especially now that the boom is over and tax revenues are likely to level off?

But the voters may not be listening eaten bread is soon forgotten and the voters want more.

Has Ahern lost his touch? Has he delayed too long? Is he being too high-minded about fiscal responsibility when he could be down there buying the voters with promises like everyone else?

That remains to be seen. Next weekend, Fianna Fail holds its Ard Fheis (annual convention), and given that it is happening on the eve of the election Ahern’s address to the party will be interesting.

No doubt he will point with justifiable pride to his 10 successful years as taoiseach, with unheard of levels of wealth achieved in the south and a settlement in the North virtually secured. He will argue that his government has delivered and therefore should be trusted to maintain progress into the future with another five years in office.

But will that be enough? The problem for Ahern is that the auction politics now underway has shifted the focus away from the government’s past record and switched it on to which party is going to make the best simplistic money promises for the future.

Ahern will no doubt point out that his government recently launched a seven-year National Development Plan which provides an overall strategy for keeping our prosperity going. He will say that this is far more important than specific individual promises on tax or spending that may or may not be delivered, no matter how tempting they may seem.

There is also the possibility that between now and the election Fianna Fail will abandon their responsible stance and indulge in their own vote-buying spree. And those boys are the masters of that dark art.

Promises, promises, promises ... will we ever grow up?