ACCORDING TO ORDNANCE Survey Ireland, the middle of the island is somewhere between Athlone and Mullingar.
But last week when Leo Varadkar restated Fine Gael’s commitment to looking after ‘middle Ireland’, he probably wasn’t talking about Westmeath.
His renewed focus on the “squeezed middle” comes after junior ministers called for a “well-earned” tax break for workers – a move that sparked tension within the coalition.
In the co-written op-ed, Jennifer Carroll MacNeill, Martin Heydon and Peter Burke said that in Budget 2024, they want to see a full-time worker on €52,000 get cashback of more than €1,000.
The proposal would likely cost somewhere in the region of €1.5 billion.
Some have highlighted dissonance between Fine Gael’s championing of ‘the middle’ and the impact party policy would actually have.
What is ‘middle Ireland’?
DCU Professor of Politics Gary Murphy believes that the term is purposefully vague to try and appeal to as many voters as possible, “because anyone can consider themselves to be part of the squeezed middle”.
“I think it’s more of a political and social kind of way of thinking about it”, he says, rather than an economic approach.
It’s not scientific, but a poll on The Journal this week showed just how self-selecting the phrase can be.
The results showed that 67.2% of respondents did consider themselves to be part of ‘middle Ireland’, 21.1% did not and 11.8% said they either weren’t sure or didn’t care.
Michael Taft, a researcher with Siptu, says Fine Gael has missed the mark with the tax break as “most middle earners will not benefit”.
“The Taoiseach, Fine Gael, others, kind of construct a story about middle Ireland which is a much higher level of income,” he said.
“There is a lack of appreciation of how little so many people earn.”
What the figures say
So who is in the middle? And are they squeezed?
Barra Roantree, a researcher with the Economic and and Social Research Institute (ESRI), said that the definition of the “squeezed middle” is often “in the eye of the beholder”.
“It’s not a very clear phrase, it doesn’t have any specific meaning,” he adds.
What we do know though is the amount people earn and what the middle income is.
Figures from the CSO show that in 2021, median earnings – that of the person in the middle of the distribution – were €645 per week, or €33,540 per year.
The same statistics show only about a third earned more than €865 per week, or €45,000 per year.
This is roughly what workers need to earn to see the full benefit of the €1,000 tax cut, although marital status can affect this figure.
The latest statistics from Revenue show that there were a little over 500,000 earners out of a total of 2.5 million paying the higher rate of tax in 2018.
“It’s really somewhere between a quarter and a third probably of individuals who would benefit from the tax cut,” said Roantree.
Those who aren’t earning, such as pensioners or people on social protection, are also included in the statistics, which means households benefitting could be limited to “the top 20% or so”, he says.
“There’s very few people down the bottom income distribution who would gain. There’s some, but there’s not that many.”
Households that are middle income or slightly above, they won’t get the benefit of a lot of the monies that are going into childcare.
On the other hand, if a household has two incomes of more than €45,000 each, “that household is gaining twice”.
According to Taft, the ‘squeezed middle’ is created when wages are too low and services are means-tested, rather than universal.
“Take childcare, there’s a lot of supports for those who are at the lower, heading up towards the middle, income levels, but for a lot of households that are middle income or slightly above, they won’t get the benefit of a lot of the monies that are going into childcare,” he explained.
Taft thinks that further subsidisation of childcare and connecting social protection to pay rather than having it “flat-rated”, would be of more benefit to ‘middle Ireland’ than a once-off tax break.
‘Identity’
With a general election mooted for November 2024 and the Budget on the way, we’re likely to see party’s ramping up visibility and attempts to set themselves apart.
Looking out for middle Ireland is “part of Fine Gael’s identity”, Varadkar said.
DCU Professor of Politics Gary Murphy has long associated middle Ireland with the party – as well as its coalition colleagues Fianna Fáil.
The increase in “electoral volatility”, he says, has brought the phrase back into fashion.
“There’s a whole host of votes which would normally have went to either of the main political parties, which are now up for grabs,” he said.
The junior ministers said the tax measures were targeted at “those who work hard and feel they pay for everything”.
What does Fine Gael actually stand for? I don’t even think at this stage it knows that.
Murphy believes that Fine Gael “can’t compete on the Left” with promises of improved services, which is why the party is testing the waters on taxation.
“The Irish state do spend humongous amounts of money on health in particular,” he said.
“I haven’t seen any dramatic improvements, particularly in something like A&E.
“When it comes to the next election, Fine Gael are not going to get credit for social spending.”
This, Murphy says, explains last week’s “kite flying”.
It’s not the first time the party has pledged to help out the ‘middle’, making similar promises in 2017.
“Fine Gael has always been on the centre-right economically… they do talk a lot about giving tax breaks and the like for the squeezed middle but they don’t tend to worry much about it,” Murphy said.
“They certainly haven’t done very much about it in the last decade.”
Murphy noted that the party hasn’t followed through on its promise to abolish the Universal Social Charge either.
“I’m not sure if Fine Gael really is a ‘no tax party’,” he said.
“What does Fine Gael actually stand for? I don’t even think at this stage it knows that.”
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