Paul Staines has views on Irish politics and economics
Whilst I’m very disappointed that Ireland’s Progressive Democrats (PD) are campaigning for a Yes vote on the Nice treaty again I noticed Milton Friedman in an interview in this month’s Central Banking (sorry, subscription required) excusing Irish membership of the €uro because they are a small country with an export orientated economy, he thinks the same can also be said for Central and Eastern European countries eventually joining the €uro.
But the PD’s ‘Yes’ campaign coupled with the Young Progressive Democrats putting out a policy paper explicitly stating they are liberals, not libertarians, makes me wonder if I’ll be throwing my PD party membership card and my Tory party membership card into the fire.
But I’ve just heard something that strikes me as an indictment of Gordon Brown and a tribute to PD leader Mary Harney’s tax cutting agenda. As the Tories tour Europe looking for policies, perhaps they should just dust off some of Thatcher’s old manifestos. Mary Harney did just that; she implemented major tax reforms, cutting Ireland’s basic tax rate to 22%, substantially raising tax thresholds, cutting the number of those liable to pay the top rate of tax, as well as cutting the top rate of tax, exempting the low paid from tax altogether, and finally slashing capital gains tax from 40% to 20%! State spending went from over 50% of GDP down to 26% today.
Lo and behold, guess what happened? The Laffer curve smiled on Ireland and the Celtic tiger roared. So much so that Ireland, which was an economic basket case a little over a decade ago, now has lower tax rates than the UK, higher economic growth rates and, unbelievably, higher per capita income than the UK. Bejesus, would ya believe that?
Come April, Gordon Brown will be putting up basic UK taxes 2% as we move into an economic downturn. Thick Scot, smart Paddies.
Paul Staines
