What Difference Would a Left-Led Government Make to Ireland? | From taxation to climate action, what challenges would shape a government beyond Fianna Fáil and Fine Gael?

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https://www.tasc.ie/blog/2026/05/28/what-difference-would-a-leftled-government-make-to-ireland/

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As of January 2026, successive opinion polls give centre-right Fianna Fáil and Fine Gael combined less than 40% of support for the next general election. Could Ireland have a government for the first time that excludes both of these traditional parties of government? Recent polls indicate that this is possible. Whether most of the other parties plus independents could form a stable coalition is by no means certain, but it does seem plausible that sooner or later there could be a government excluding both Fianna Fáil and Fine Gael. The question asked here is whether a notionally ‘left-led’ government would really make all that much difference. This post is a quick overview of the challenges facing any future left-led government plus some suggestions.

A Century of Conservatism Since 1919, Ireland has had 49 governments or executives, over 34 Dáil terms. Seven were led by old Sinn Féin (before the split that led to Fine Gael and Fianna Fáil). Four were led by Cumann na nGaedheal and a further nine were led by its successor Fine Gael. Twenty-four governments were led by Fianna Fáil. Most recently, four governments have been led by Fine Gael and Fianna Fáil working together. All of these governments have been led by nominally ‘conservative’ parties, although both Fianna Fáil and Fine Gael have become more liberal in recent years on both social issues and the economy. In the past, both Fianna Fáil and Fine Gael favoured more interventionist economic policies. Some earlier governments had significant social policy agendas, such as expanding access to education. And several of the early Fianna Fáil governments were minority governments, where Labour and others secured concessions (such as house-building) in exchange for ‘confidence and supply’ support in the Dáil.

Ireland has never had a left-led government although the Labour Party was a coalition partner in nine governments, and both Democratic Left and Clann na Poblachta were partners in one government, which advanced some left-wing policies. Conversely, the Progressive Democrats were coalition partners in six governments, pulling them in an economically right-wing direction. The Green Party participated in five governments, making those governments more environmentally conscious and socially liberal. On paper, Ireland has had over a century of unbroken conservative rule, but changes of government have sometimes involved significant policy changes, even if the main party leading that government was right-leaning.

The Challenges Ahead The following challenges will face any future left-led government:

1. Policy inheritance
2. Looming crises
3. Competing demands for spending
4. Insufficient time
5. Narrow tax base

1. Policy Inheritance In 2026, central government will spend €133.3 billion, while employing over 414,000 people. Tax receipts from multinationals continue to provide a massive boost to the public finances. While it sounds like a new left-led government will have plenty of scope to advance its policies, the problem is that all of that money is already allocated to existing activities, and any ambitious new policies (like free-of-charge healthcare or a public childcare system) will require a lot of new money, or else large reductions in existing spending programmes.

Social policies (social protection, health, education, housing, children and disability) already account for €93.3 billion of public spending in 2026, and other departments (from justice and transport to agriculture and defence) bring gross voted spending up to €117.4 billion.

Some non-negotiable spending includes Ireland’s €4.3 billion contribution to the EU budget, €3.0 billion repayments on the national debt, €1.7 billion of other non-voted spending (such as certain EU transfers) and €293 million of protected spending on the Judiciary and Oireachtas. The remaining €6.5 billion is corporate tax revenue saved in the Future Ireland Fund and the Infrastructure, Climate and Nature Fund.

It isn’t obvious where a left-led government would begin the task of cutting spending. If they stop saving even the currently small portion of corporation tax revenue, they will be branded as reckless with the public finances. While they could reduce subsidies to enterprise, any business sector facing cuts will threaten job losses. Also, a lot of enterprise spending (such as IDA grants) secures foreign direct investment that is currently paying at least a third of all the taxes that Ireland collects.

A hidden source of lost tax revenue is tax breaks. Ireland gave back €8 billion in taxes in 2024. Some of these are schemes that attract foreign direct investment, while others subsidise higher earners to save for a pension or to pay for health insurance. Some of these tax schemes should be terminated.

But the bottom line is that many ministers in any left-led government will be asked to do more within their existing allocation. That will likely mean re-prioritising spending within existing budgets rather than spending new money. (I will return to the potential for new money in section 5). This may be an anticlimax for those hoping a left-led government will sweep away the policies of previous administrations, but as Labour and the Green Party have shown in numerous coalitions, meaningful and lasting change can be achieved by reorienting existing resources.

2. Looming crises A new government will also inherit all the crises that the previous government was dealing with (or ignoring). These include Ireland’s excessive greenhouse gas emissions, resource depletion, biodiversity loss, housing costs, lack of housing supply, high numbers of asylum seekers, a rapidly ageing population (putting pressure on health, care and pension spending), the wars in Ukraine, Palestine and Sudan (and most recently Iran), and the threat of further global conflict. Not to mention erratic US foreign, trade and defence policies under the current administration.

Ireland is not spending enough money (publicly or privately) to address climate change, to build enough houses or to look after our ageing population, and we are not remotely close to spending enough on defence should we be targeted by conventional or hybrid attacks (such as attacks on our undersea cable infrastructure, which connects Europe’s internet to the USA).

Each crisis reduces the scope for any left-led government to introduce major new areas of public spending, unless it is carefully aligned with these crises. For example, expanding public healthcare might be feasible if it also addresses the needs of older people, and building more housing could be aligned with environmental goals if they are built to the right standards, including low-carbon transport infrastructure. Investment in climate action will create green jobs and will ultimately end Ireland’s dependency on imported fossil fuels, and lead to indigenous exports of renewable electricity. Even defence spending could work as a form of industrial policy.

3. Competing demands for spending While the shell-shocked new ministers for finance and public expenditure come to terms with the realities imposed by the public finances, they will already be under siege by lobbyists seeking more spending. The trade unions may feel that their support for the election of any left-led government should be rewarded by more generous public pay deals. Various industries, such as farming, fishing or small town businesses, may also be promised support during the election and expect largesse to follow. Rural areas and less developed towns may hope to finally receive investment.

A left-led government will also be expected to pay more attention to advocacy groups for carers and disabled people, and to do more on unemployment, homelessness, addiction, mental health, rare diseases, disadvantaged communities, and much more. This will be tough terrain for a left-led government to negotiate.

There are three potential routes for a left-led government to follow here. Firstly, the traditional response of social democratic and socialist governments across Europe has been to focus on economic development. If the economy can be made to produce more, that in turn will raise wages and provide higher tax revenues for new areas of spending. In the past, investment through publicly-owned enterprises has played an important role in this approach, although Ireland’s options are weaker in this regard. Any new economic model will have to be carefully designed to align with Ireland’s climate commitments and labour market constraints, and to complement Ireland’s current reliance on multinationals. And as Ireland’s economy is already growing faster than most of the EU, with a tight labour market, there is a limit to how far any economic strategy will allow higher public spending.

Secondly, prevention is cheaper than cure, and both anti-poverty measures and early intervention to support people affected by mental health problems or rare diseases are all likely to reduce pressure on the public finances at a later stage. Significant investment in Ireland’s least prosperous regions is likely to have a greater growth multiplier than pouring money into wealthier areas, but may take longer to show results.

The challenge with both of these strategies is that the return on investment may take longer than a typical five-year term of government. This point is expanded in section 4. The third option is for a left-led government to broaden Ireland’s overall tax take, which is addressed in section 5.

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4. Insufficient time Governments who hesitate will lose future elections. Governments who are too hasty will also lose future elections. As in many walks of life, time management will be crucial to any left-led government.

There are four rookie errors that any left-led government should avoid:

• Not agreeing a clear programme for government
• Failing to do unpopular things early
• Trying to do too much
• Restructuring departments and agencies

It would be a mistake for the various left-leaning parties to assume that they can just cobble together a programme for government after the next general election. It would be a bigger mistake for the larger parties to assume that smaller partners will row in behind all of their red line issues. Instead, now is the time for parties to begin sketching out a shared agenda for change, including an economic strategy, identifying the available fiscal space, and prioritising actions to deliver meaningful change to the people who have been let down by Fianna Fáil and Fine Gael.

As long as a left-led government has a fairly stable majority in the Dáil, they should press ahead with all the necessary but unpopular measures in the first six to twelve months of their administration. This requires a pre-election agreement among the main parties to stick to some solemn pledges, such as raising certain taxes or cutting certain spending or tax breaks. On average, people tend to vote for continuity rather than change, but once they have voted for change, the new government better deliver it quickly, as people’s appetite for change is quickly exhausted.

History shows us a graveyard of over-ambitious ministers who got caught up in complex change processes that attracted resistance from multiple stakeholder groups. Ministers aiming for success should come into office knowing what existing policies they are going to live with, so that they can take aim at the two or three areas (at most) where they want to make substantial change. And a sure sign that egos are being massaged is when ministers busy themselves renaming their departments or moving functions from one department to another. This causes major delays in getting any real work done, as hundreds of civil servants move to new offices or reorganise into new teams. A new government should, as much as possible, work with the structures and agencies that are in place. Six months of restructuring represents 10% or more of a government’s time in office, and setting up a new agency could take a year or more. There is rarely a pressing need that justifies such a loss of time.

There are many major policies that left-leaning parties should immediately work towards:

• Universal healthcare (as Ireland is the only Western European country where people pay out-of-pocket to visit a GP) (WHO LINK)
• Fair education (as Ireland is one of few countries in the world where the taxpayer pays the salaries of teachers in fee-paying secondary schools, while students from those schools dominate higher-paid professions) (Irish Times LINK)
• Cheaper third level education (as Ireland has the highest fees for third level in the EU, whereas many Nordic countries don’t charge fees at all) (OECD LINK)
• Higher pensions (as pensions in Ireland have among lowest income replacement rates in the OECD) (OECD LINK)
• Higher welfare and other supports to reduce poverty (as 17.1% of people in Ireland are still at risk of poverty and social exclusion) (Eurostat LINK)
• Higher subsidies for childcare or a public childcare system (as Ireland has the third highest childcare costs in the OECD and the most expensive in Europe) (OECD LINK)

These are all expensive policies that would take time to implement, not least because many of them will face a surprisingly high level of resistance. Five years in government is not a lot of time to implement major policies, and don’t forget climate action, housing and the other major crises. Any left-led government will have to carefully choose which policies to address and which ones to live with, at least for their first term of office. They will have to carefully balance long-term investments with the need to demonstrate achievements within four years to have a chance at re-election.

5. Narrow tax base Ireland’s tax revenue has grown from €7.1 billion in 1985 (€17.8 billion in today’s money) to €107.4 billion in 2025. In the last ten years, gross voted public spending has more than doubled; up from €56 billion in 2016 to €117 billion in 2026. By any calculation, there has been a bonanza of public spending based on this increase of tax revenue.

Observers could be forgiven for thinking that Ireland has finally found the gold at the end of the rainbow, as foreign multinationals now provide so much tax money. In 1985, corporation tax receipts were 3.9% of all tax revenue, but they were ten times higher in 2025, when corporation tax provided 32.3% of all tax revenue. If you factor in VAT and income taxes paid by the large multinationals, more than half of all tax revenue could be coming from a few foreign-owned global firms, mostly American.

As the Irish Fiscal Advisory Council (IFAC) and many others have warned, Fianna Fáil and Fine Gael are engaging in highly risky behaviour by basing permanent spending commitments on this potentially volatile source of taxes. Optimists argue that the money keeps on rolling in, so there isn’t a problem. But rational analysis warns that a decision in US headquarters (or by the US administration) is all it will take for profits currently declared in Ireland to be declared elsewhere. That doesn’t mean the withdrawal of multinationals from Ireland, but simply a decision to change the terms of exchange between Irish subsidiaries and their parent companies. If anything goes wrong (including a potential AI bubble bursting), the next government may find itself facing billions of euro of spending commitments it can’t fund, and that’s before any new policies are advanced.

In 2024, Ireland’s tax take was 21.7% of GDP of €563 billion. This was equivalent to 38% of GNI* of €321 billion (LINK). Even measured as %GNI*, our tax take is lower than most EU countries, especially those with stronger welfare states. No one is suggesting radical tax increases, but Ireland has a capacity for higher taxation that is under-explored by left-leaning political parties. In addition to the corporation tax regime, which allows so much economic activity to be lightly taxed, differences between Ireland’s tax system and European norms include the high level of tax credits that form part of personal taxes, the relatively high use of tax breaks for companies as well as households, and the widespread use of zero VAT rates and other tax exemptions.

If a left-led government wants to introduce social democratic policies like universal healthcare or free third level education, it needs to look at how everyone pays something towards those goals. In the Nordic countries, people pay a lot more taxation (often local taxes) in exchange for high quality, high value public services. It is a fantasy that Nordic public services can be delivered by taxing someone other than the beneficiaries of those services. As I’ve argued in more depth elsewhere, tax systems in social democratic countries are largely transactional; people pay collectively in exchange for high value services.

One argument for lower taxes, and zero VAT on food and other essentials, is that people need more cash to afford the cost of living. But that argument fails to take account of pricing power. Irish people have more after-tax cash than most Europeans, but they also pay higher prices for food, energy and housing, as well as paying for things like GP services, which are free-of-charge across Western Europe. Ireland has zero VAT on children’s shoes, but are they really more affordable than in France or Germany? It seems that retailers are not passing on most of the benefit of the zero VAT rate, not just for children’s shoes but for basic foodstuffs and other goods. Ireland might be better off charging full rate VAT on all of these, and using the extra revenue to fund higher household incomes.

There are obvious gaps in the tax system. Employers’ social insurance is among the lowest in the EU, and local property tax is also low. The belated introduction of land taxes to recoup the value added by rezoning or planning permission is another possibility. And water charges would not only bring in revenue, but they would finally push private landowners to fix their leaky pipes. However, many left-leaning parties have set themselves against some of these taxes and generally seek to reduce taxes rather than to offer the Irish people higher value services in exchange for taxation.

Conclusion Any future left-led government needs to get three things right if it wants to successfully and sustainably change public policy in a progressive direction.

First, it needs to prioritise its targets and agree (as a coalition) that delivering on a few key policies, while dealing with existing crises competently, is a lot better than promising a lot but failing to deliver.

Secondly, it needs to have a long, hard look at Ireland’s tax system, and put in place measures to broaden and deepen the tax base based on the logic of a social democratic transaction.

Thirdly, it needs to have a strategy to sustain and achieve economic development, consistent with climate commitments and working with the available pool of workers.

I look forward to reading the manifestos.

[u/ThrowawayWriterGuy2 → u/padraigd]

This is actually a very well thought out piece.

The author deeply underestimates how unpopular the proposals would be though. The left’s core vote will not accept an increase in the amount of tax they pay, and reduction in the tax allowance for pensions and an increase in property tax with both become major flags around which the right can gather to win back power. Property taxes almost brought down a right wing government when the country was bankrupt, a left wing government introducing it during good times may see civil disobedience or riots.

Most likely it looks like left governments will look a lot like Labour in the UK do. They continue with the current status quo but unlike UK labour they will go with a more socially liberal policy than FF/FG. Current building strategy will continue but it will be rebranded under a quango of a state building company. 

Hard to see what other changes they can even make. As the piece points out, in order to keep power FF/FG have massively increased spending and massively cut taxes. The left likely won’t have the political power and public support to reverse one of those levers and instead will just end up being continuity FF/FG