Ah, sure at least we got our Christmas bonus...

“Ah sure at least we got our Christmas bonus.”

That’s been the reaction to the Budget from some pensioners and welfare recipients to the Budget.

Finance Minister Pascal Donohoe knew he was onto a winner by using two of our favourite words: bonus….and Christmas.

Yet this "feelgood factor” is being used, year after year, to distract us from the fact that there is been no core increases in welfare, pension or tax credits and allowances to take account of inflation.

The minister is handing out his “Christmas bonus” - while at the same time undermining pensioner’s long term entitlements.

The Christmas bonus is meant to be a once-off gesture of generosity that makes the giver seem like an all-round good guy. 

It’s a bit like a boss throwing a lavish Christmas party and getting clapped on the back for giving everyone a festive bonus – even as his staff slip further into poverty because he denies them a much more significant increase in wages to keep pace with the rising cost of living.

Increases in core welfare and pensions are much more important than Christmas bonuses because once given they are automatically built in - and built upon - every year.

If pensioners had been given a €3.50 increase last year to account for inflation, the contributory pension would be €251.80 today and instead of €248.30.

And every year for the rest of their lives, pensioners would get that extra €182, which would add up to €3640 over twenty years.

It would also be used as a baseline for the following year’s increase.

But  pensioners don’t get an automatic cost-of-living increase that leaves them no better or no worse off. Instead the minister makes a fuss of awarding a ‘Christmas bonus’ every year.

I know we are living in extraordinary times and the Christmas bonus of €248 does work out at slightly more per year than the inflationary increase at the moment. 

But the same thing happened last year - and even in good years, the finance minister gets away with pretending to give more than he really does by ignoring inflation across the board. 

The issue is about how the wool is pulled over our eyes as much as it is about money.

A bonus and especially a Christmas bonus, should be additional to, not instead of  routine cost-of-living increases to which pensioners should be entitled.

This sleight of hand routine typifies a budget system that’s designed by politicians to be dishonest and dysfunctional – and the pension example is just the tip of the iceberg.

They should make no fuss about drawing up an annual budget – just as a company doesn’t make a big drama about making a plan to pay its annual expenses.

The sum allotted to cover the coming year’s expenses is the same as last year with a bit added on for inflation. What’s the big deal about that?

But politicians lap up the massive media coverage where they take credit for splashing more than they really do.

So they pretend inflation doesn't exist, refuse to increase many things to keep pace with it, while doling out more money in certain areas where political attention is focused.

 It’s the most nefarius tendency in politics:  the way money is filched out of our pockets through stealth taxes.

 Why raise headline taxes and cause a furore when he can pile on charges, levies, welfare cuts and tax increases that either go unnoticed or are blamed on someone else?

These are the most unjust - but effective - forms of taxation.  Why raise taxes to fund renewable energy? Instead,  slap a “levy” on energy bills. 

Your electricity bill will show a deduction (it’s on the reverse of mine) of around €14.80 per two-month bill for the Public Service Obligation (PSO) levy.

Even better, Paschal, you can keep increasing such levies, sometimes extortionately, without people even noticing. 

From October 1, the PSO levy went up by a whopping 129%. Yet there wasn’t a peep of protest.

We pay hundreds a year in levies on electricity (€89 a year), plastic bags, prescriptions, health insurance (C€400 a year), life assurance (€100), non-life insurance (€50), to name a few.

A spate of levies on credit unions fund what  they say is excessive regulation by the Central Bank.

And so the bill is passed on to us in less favourable interest rates on our savings and loans so credit unions take the blame as the minister would have if he had raised taxes to fund these measures.

Why raise taxes to properly fund schools and hospitals? There’s another favourite wheeze of his….deliberately underfund these vital services and  force them to pass the buck on to parents and patients.

Since a ministerial order in 2014, underfunded hospitals have had to chase distressed patients to sign waiver forms that leads to a bill of thousands for their health insurers. 

That bill is in turn passed on to us in increased health insurance costs. And health insurers are blamed – not the minister.

Minister Donohoe’s biggest trick is pretending to ignore inflation. He doesn’t increase allocations as he should to account for the fact that everything will cost more next year.

He made a fuss about giving away €250 to university students but didn’t increase the woefully inadequate sum he gives for running our schools.

That’s because he knows schools will have to chase parents for ‘voluntary contributions’ to make up the shortfall - another stealth tax.

The minister gained political kudos for 'awarding’ a Christmas ‘bonus’ - but he didn’t increase core welfare rates in line with inflation.

 This insidious way to cut welfare and pensions is widespread. 

An ESRI report exposed how income limits for the medical card, for example, was left untouched for 13 years - and wage inflation meant the number of people who qualified for it  plummeted as their incomes crept up.

We also have to pay around €250 in extra tax every year because our bands, allowances and credits are not increased in line with inflation and therefore decline in real value every year as our wages rise.

 In many countries, politicos wouldn’t get away with this cheap inflation trick. 

Pensions are index linked in most EU countries and the UK.

Welfare benefits automatically go up in line with inflation in Denmark, Sweden, Finland, Australia and New Zealand.

The UK and US  tax systems are linked to inflation and German ministers must regularly report to parliament to prove they are not pulling the old inflation stunt to push up taxation.

The Irish Mail on Sunday and the ESRI call the Government out on all this every year.

Last year, it brought out a report pointing out how we end up paying more taxes and more “social welfare recipients fall behind” when inflation isn’t taken into account.

It noted that at last there is more discussion among policy-makers about automatically linking pensions and social welfare benefits to inflation, which it welcomed.

Even the ministers who are actually doing it admit that it is wrong. 

Former Social Welfare minister Regina Doherty said benefits should be index-linked – and Paschal Donohoe pledged to do the same to our tax system.

But this has all been shelved, understandably, due to the Covid 19 crisis. 

The trouble is…when is there not going to be a crisis?