With all the kite flying going on, there seems to me to be some confusion in the government and media about what a cut is and what is a tax increase.
In my mind a cut is whereby the government decreases its actual expenditure or mandated expenditure; while a tax increase is a measure that increases government revenue.
• A €50 charge on medical cards is a tax increase, as it increases revenue, and is also mad.
• The pension levy on the public sector, or super pension levy on the 100 odd on more than €100k pensions, are tax increases on a particular group of workers
• Transferring sick pay from the state to employers is a tax increase, on employers, as the expenditure does not change, just who bears it. Abolishing it would be a cut.
• A rise in government charges for whatever service (for instance court fees) is a tax increase, as the underlying expenditure continues.
• A €500 call out fee for the fire brigade is not a cut, but a tax increase.
• A decrease in the teacher pupil ratio is a cut.
• A reduction in child benefit is a cut.
The vast majority of kites flown to date would fall under the tax increase definition. The national accounts support this confusion whereby fees paid direct to departments are netted against expenditure. For instance the TV license is reported as income by RTE, and not expenditure (subsidy) by the government on broadcasting/culture.
The same would apply many other fees. In fact the Exchequer statements, as a result, represent only a part of the states real income and expenditure.
The government has in fact increased current expenditure substanially since the crises began. Capital expenditure of course , which is easier to cut, (and the definition of what is capital is also a bit suspect), is down massively.
The issue is this: the government states that 2/3 of the adjustment will be expenditure cuts, and 1/3 tax increases, but given what has been “suggested” it looks more like 80% tax increases/20% cuts.