There is a non-trivial possibility that Simon Harris will shortly float the notion of a tax break for rural publicans. The Vintners’ Federation of Ireland (VFI) – which represents 3,500 mostly rural publicans has been putting its spade work in over recent months and has now broken cover looking for a €20,000 tax credit “linked to the supply cost of draught products” which presumably means the price they pay for beer. The argument they make for this taxpayer handout is exactly the type to make the Fine Gael leader and Minister for Finance’s populist antenna tingle. “A pub is more than just a business. It performs a vitally important public function as a hub of social and cultural life, connection and community identity. When a rural pub closes, a community loses more than a business – it loses a social anchor,” VFI chief executive Pat Crotty said last week. Many people would doubtless agree with Crotty and he is probably not overstating things too much when he says many pubs are operating at close to break even. Some 2,200 have closed since 2005 and more than a third of publicans are not confident about the future, according to the body. It’s a good, strong and emotive pitch and rural publicans chime nicely with the most-favoured-voter status granted by Harris to “hard-working people”. All that is required now for the Tánaiste to take the bait and run with the idea is a couple of outings by articulate publicans, rural pint drinkers and sympathetic politicians on local radio and RTÉ and, above all, social media. This will suffice as evidence of public support.The current-year cost of the VAT cut pretty much matches the overrun in the health budget for the first quarter of the year which has prompted the Health Service Executive to bring in restrictions on overtime, limits on the use of agency staff and recruitment freezesHarris is manifestly a clever politician who made a career out of sensing what people want to hear and echoing it. It’s a skill that will help you get elected, but it makes governing in a fiscally responsible manner somewhat tricky.His biggest populist fiscal chicken is about to come home to roost and is a good example of the problem. The reduction in VAT for the hospitality sector – on which he hung his and his party’s hat in the negotiations for this year’s budget – is due to come into effect at the start of next month. It will see VAT for restaurants (and hairdressers) fall from 13.5 per cent to 9 per cent at a cost to the exchequer of €232 million this year and €681 for a full year. It doesn’t apply to pubs unless they serve meals and, even then, applies only to the food. (It’s easy to see where the VFI’s idea for a tax break on beer sales comes from.) [ Special savings scheme will benefit wealthy at State’s expense, say economistsOpens in new window ]The current-year cost of the VAT cut pretty much matches the overrun in the health budget for the first quarter of the year which has prompted the Health Service Executive to bring in restrictions on overtime, limits on the use of agency staff and recruitment freezes. The ever-expanding bill for the health service is a problem, but what cannot be denied is these measures will not shorten waiting times or improve medical outcomes. Scrapping the VAT cut in order to bail out the HSE would seem a sensible but unlikely move. Politics is all about making these sorts of choices and Harris seems determined to keep making bad ones. With regard to the VAT cut he appears to have been swayed by the very effective campaign run by the hospitality industry that hinged on the closure of high-profile restaurants.Harris ignored the Department of Finance view that the underlying data about the numbers working in hospitality and the growth in prices did not indicate anything out of kilter with the very high attrition rate that is characteristic of the restaurant sector. His really big populist idea – low-tax investment accounts for the middle class – seems as equally badly grounded in fiscal and economic reality as the VAT cut. Despite being serially announced, the detail of the new accounts has yet to emerge. Even the investment industry is starting to wonder when and if Harris will put the taxpayers’ money where his mouth is. What we do know is that non-bank economists are of the view that the main beneficiaries will be the well off and it will be at the expense of the taxpayer. Industry lobby group Banking and Payments Federation Ireland estimates the funds could attract €2 billion in the first year, rising to €30 billion. Tax forgone by the exchequer would rise from €20 million a year to €900 million – assuming there is no tax on income from the funds – and there is no guarantee the money in the funds would be invested in Ireland. It’s the Government initiative that nobody asked for, but everyone will want. Like Harris himself, it is a child of the boom and should be quietly shelved in the current period of economic uncertainty. The same holds for the tax cuts “targeted at workers” the Tánaiste is still promising in the autumn.