Fine Gael budget kite flight is probably just the start of the Coalition wrangles

There is supposed to be tension in the cord when you fly a kite or else it will just fall limply to the ground. Three junior ministers who this week floated the idea of income tax cuts worth €1,000 to average earners, certainly retained plenty of tension.

This particular budget kite is more likely to fall foul of the old warning about electrocution when kites get stuck on nearby high-voltage wires.

Big income tax cuts for middle earners aren’t what upset Fianna Fáil the most. The party may be talking about Fine Gael undermining the budgetary process, or not repeating past mistakes of spending too much money on current spending, but the plan isn’t all that much out of kilter with what is contained in the Programme for Government.

The real problem was the fact the three junior ministers wrote in a national newspaper about what they and their party leader – the Taoiseach – would like to see in the next budget.

Fringe backbenchers, if they could land the column inches, would have been be OK. But three ministers of state, with the backing of the Taoiseach? That looks like a strategy.

It has created expectations among the electorate, which in turn can create disappointments if the measures are not delivered.

It also lays down a firm marker as to what Fine Gael says it would like, but was blocked by those “more miserable” coalition partners, one of whom happens to be finance minister.

Sweep aside all the political role-playing and posturing and the bigger question is whether this is the right thing to do.

Leo Varadkar said there was a clear commitment in the Programme for Government to index tax bands and raise tax credits “should we be able to afford to do so.” He says we can afford it.

The Programme for Government didn’t say anything about fuelling inflation when it looks like staying persistently high.

Neither did it say anything about the latest Bank of Ireland savings survey which found 74pc of 1,000 household respondents are saving regularly. This was up from 68pc in November.

Nearly three quarters of households are managing to put money away and the number has grown.

Last year’s budget delivered several changes on income tax, including changing bands and credits which were worth around €800 per year to those on the higher income tax rate.

The economy and the Exchequer have continued to perform very strongly since last year and this is reflected in a higher income tax and corporate tax take.

However, we have to be careful here. Around 30pc of workers don’t pay any income tax at all.This is because we have a fairer , more progressive tax system than many other countries but it leaves our income tax base a bit narrow.

The €30.7bn in income tax taken in last year by the Exchequer was paid by around 1.8 million workers. However, of the €22.6bn in corporation tax taken in, around €12.5bn of it came from just 10 large multinationals.

This is great while it lasts but surely the narrowness of that tax base should set off alarm bells. Nobody knows for sure how long those extra billions in corporate tax will keep rolling in.

During the cost-of-living spike, the Government was in a position to cut excise on fuel to help ease the financial pain for motorists.

This is due to climb back up to previous levels between now and October. It starts with a 6c per litre increase on petrol and 5c on diesel from June 1.

It is a lot easier for the Government to cut and then re-instate something like fuel excise than it is to mess around with income tax bands and credits worth €1,000 per average worker.

We have to bear in mind that while inflation has eroded disposable income and buying power for some time now, the Government delivered a €1.3bn income tax package last year.

The cut-off point for earning the top rate of tax has gone from €35,500 in 2019 to €40,000 now. Fixing the housing problem would be better than a “let them eat cake” tax slashing policy.

It seems the political narrative around not using windfall corporate tax gains to fuel day-to-day spending or reduce day-to-day tax receipts, hasn’t lasted very long.

This particular kite is up there now and it does create a new level of expectation on Fianna Fáil to deliver a very substantial tax package on budget day – whether we can afford it or not.

Is Meta too big to fine?

The situation that unfolded around this week’s €1.2bn Meta fine for data transfer breaches was quite bizarre.

The company denies it broke rules while also suggesting it was being singled out.

The Irish Data Protection Commissioner issued the fine but didn’t initially recommend that there be a fine at all. Whatever about the technicalities of the case and whether a new agreement coming soon between the EU and US will solve some of the issues, surely a fine was in order.

Break the rules and you’re fined. The Irish Data Protection Commissioner reportedly said the imposition of an administrative fine, along with an order directing the suspension of data transfers, “would not be effective, proportionate and dissuasive”.

But surely where you have a company as big as Meta, the fines should not only be there but they should be substantial too.

Perhaps the other regulators in Europe who wanted a fine, believed it would make better headlines and the public impact of that alone would be helpful.

This is a strong argument and difficult to refute. Surely the effectiveness of the ruling is partially derived from the level of stink that can be created around the findings of the investigation.

With annual revenues last year of $117bn (€109bn) and net income of $21.4bn, a fine of $1.2bn is proportionate as it will get noticed but won’t break the bank.

Barryroe’s decades long oil adventure but with no oil

Has billionaire beef processor Larry Goodman been taking a short-term punt on Barryroe shares, or taking a long-term punt on its oil and gas finds off the Irish coast?

It is most likely that when the beef baron bought into the stock and provided an underwriting facility of €40m he wasn’t necessarily thinking of becoming an oil baron as well.

He has made several very successful arbitrage-type share investments around corporate takeovers in the past.

But this punt on oil and gas has been scuppered by Environment Minister Eamon Ryan’s department.

Department officials shot down the company’s application for a licence, not on the grounds that it goes against government exploration policy but that it didn’t meet criteria around value of assets on its balance sheet.

It is supposed to have net tangible assets of three and a half times the cost of planned work. These 2019 rules look prohibitive as nobody could finance exploration on that basis.

Rules aimed at preventing just anybody from rocking up and getting a licence will now ensure nobody rocks up and gets a licence.

What started out with Tony O’Reilly in the 1980s through Atlantic Resources may finish with Larry Goodman and some court challenges. But no oil.

Get ahead of the day with the morning headlines at 7.30am and Fionnán Sheahan’s exclusive take on the day’s news every afternoon, with our free daily newsletter.