SSIA Returns Reduction?

Mr E

I saw this on TV3 news this morning, but no other news media else seem to have picked up on it.

The jist of it is this - the Government aren't getting as much tax as predicted this year, so they intend to reduce the 25% returns on the SSIA scheme.

Whats more, they intend to delay the first batch of payouts for a certain period of time.

I only heard it once, so I may have missed out on some of the finer points. Has anyone got any more info on this?

- Dave.

Washout

WOuldnt surprise me in the least...

They are seriously gonna need to make up money from somewhere in the impending budget.

As long as they dont come along and say that
"ooops it was a mistake in the first place" we want our 25% back
All in all i think this is expected some are surprised it didnt happen last year

Tazz T

Can they really do this two years after the scheme started. That's ridiculous. That means, theoretically, they could turn round in another 3 years time and say we'ain't got the money so no one's getting anything and we'll have invested our hard earned cash in a broken promise for the last five years.

nahdoic

SSIA is just another example of just how stupid the government were - they had more money than sense. The only reason I set one up, was because I didn't want everyone else but me getting free money from the government.

The sensible thing to do now, is to just scrap the SSIA altogether and allow people to withdraw what they have saved already.

Sleipnir

this was on unison.ie this morning.




THE Government will consider reducing its 25pc top-up on the Special Savings Incentive Accounts (SSIAs) as ministers face up to the toughest Budget in a decade.

Ministers will begin discussing drastic pre-Budget estimates from the Department of Finance at their postponed special meeting on Wednesday.

A slow economy and falling inflation mean tax revenues may grow by less than 5pc next year, while public spending this year is due to increase by up to 8pc.

Finance Minister Charlie McCreevy's seventh Budget in a row on December 3 will be prepared against the most difficult economic backdrop yet.

Cutting the SSIA tax break from the present 25pc to, say, 10pc could add around €300m to tax revenues and might be less unpopular than scrapping the scheme altogether.

The money appears in the Government's books, not as spending but as a reduction in the tax take - and the tax break is paid into people's accounts each month.

"People know they are getting a very generous deal from this scheme. Even a reduced tax break would give them a better rate of return than they could get anywhere else, with interest rates so low," one government adviser commented.

But the move would be sorely resented, particularly by the thousands of savers who joined schemes linked to the stock market.

These are likely to show only modest gains, even at the end of the five-year period, and a cut in the tax subsidy might leave them with no profit.

There have also been reports that the payment of the next half of the benchmarking pay awards in the public sector might be postponed, but the Government would be reluctant to break a formal deal with the unions. Mr McCreevy said yesterday the Government would honour its deals with the public sector unions if they delivered on their promises.

With 25pc of the awards having already been paid, backdated to December 2001, he said, the other 75pc was "conditional" on improving work practices and the carrying through of industrial relations peace clauses. Mr McCreevy said he had had many dealings with the unions and they knew "I honour my word. If they keep their side, I will keep mine."

On the "difficult" task facing him in the Budget, Mr McCreevy said: "We can fool ourselves that we are living in some sort of a paradise, but my job is to deal with things as they are and that is what I always try to do."

He insisted, however, that - compared with other EU countries - the Irish economy was continuing to perform well. "If we can hold on to the successes we have secured in the past five years and build on that, then we will have achieved something," he added.

But he also warned people must take account of the "new reality" arising from the more difficult international circumstances.

"If I wanted to be popular and to be everybody's friend, I would say 'go ahead, lads, ignore the reality. Keep spending away.' But I am not going to do that," he said.

The problem facing Mr McCreevy is coping with much slower growth in tax revenues - a problem which may not be temporary, as global inflation falls towards zero. Forecasts from the Economic and Social Research Institute last week suggest the economy will expand by only 5pc next year - made up of 3pc growth and 2pc inflation. Other economists think growth will be even lower.

Inflation may be bad for the economy in the long run, but it helps government finances. Price rises bring in more VAT and excise revenue, while rising wages help PAYE and PRSI receipts.

The forecast is for growth of only 3pc in total wages next year. Tax revenues tend to rise in line with the economy's expansion, so the Finance Department is pencilling in a raise of 5pc or less next year. To make matters worse, tax revenues this year will be €500m behind target.

Ministers do not want to raise direct taxes such as income tax.

Curbing the SSIAs has the attraction that it adds to tax revenues and does not increase the government deficit.

bringitdown

SSIA is just another example of just how stupid the government were - they had more money than sense. The only reason I set one up, was because I didn't want everyone else but me getting free money from the government.

Sensible in the economic sense, perhaps, but the fallout I would hope and assume would devastate their chances for re-election?

I'd predict this would p*ss-off even the staunchest FF fat-men.

Cork

I think that people had to suffer a loss on their Eircom shares yet the government can get out of the SSIA deal. This would seem unfair.

The government made a deal. Good bad or indifferant - It is encouraging saving.

People had a punt on Eircom - they lost. Just because, the economy is sluggish is no excuse to alter SSIAs.

& in fairness, if the government are looking at where to cut back - they should look at benchmarking.

nahdoic

Sensible in the economic sense, perhaps, but the fallout I would hope and assume would devastate their chances for re-election?

How true and how naive of me to think that the government would act in the best interests' of the public. I guess it's one of the fundamental weaknesses of democracy.

If the goverment took a stand, and showed real leadership, and made the hard choices - cut the fluff like the SSIA - borrowed to invest in our infrastructure (not to pay people more wages) - reworked the Irish litigation system, it would be a different Ireland by the time re-election was looming.

They don't have the balls to do it, and do it right. They'll just fluff through it, don't rock the boat too much, and try to get re-elected again. Democracy is great.

Scruff

should have been putting the full allowable amount for the last year. doh!

on a side note, i know you can increase what you pay in to it twice (i think) but can you reduce what you pay in to it?

Borzoi

Given that the scheme was designed to mature just prior to the next general election, it's unlikely that FF will want to face the backlash of the enraged middle classes who've been stiffed.

Scruff, you can in fact reduce your contributions to zero after the first year, but check with your SSIA provider

Sleipnir

from rte.ie

14:33) The Taoiseach Bertie Ahern has rejected a media report that the Government will alter the conditions of the SISA savings scheme.

At the opening of a new orthodontic unit for the Northern Area Health Board, Mr Ahern said the Minister For Finance has already ruled out speculation that the Government would renege on the SISA savings scheme.

Mr Ahern has also committed the Government to honouring the Benchmarking Agreement with the unions.

nahdoic

What a suprise. But you've got to admit it's going to be a pretty funny budget. The government borrowing money in order to encourage Irish citizens to save.

hussey

from unison.ie

The Taoiseach says the Special Savings Incentive Accounts will not be touched at the next Budget. He was responding to newspaper reports, which said the 25% government top-up for the SSIA's would be cut next year. The Special Savings Incentive Accounts were introduced to encourage people to cut back on spending in order to reduce inflation.

sceptre

Originally posted by Kananga
Ministers do not want to raise direct taxes such as income tax.

Pfft. It's the only fiscal tool they're left with. I suppose they'll knock VAT rates up a little so they can swear blind they didn't raise taxes. Or just take money from pensioners or something like that. Tax rate adjustment is a tool for crying out loud - raising tax levels isn't evil when you know you have to.

LoneGunM@n

The thing about Charlie McCreevy that I don't get is that he's an accountant.

Thus, he has prepared and filed his fair share of Tax Returns in his time. As a result, you'd think he'd know that Income Tax is the greatest earner that the Government has.

IMO he should never have reduced the high rate of tax from 46% .... he should have used the bands to remove the lower earners from the tax net & taxed those who could afford it!!

To me, it looked like he was watching his own [and those of his colleagues] pockets.

I know alot of people will disagree with this, but hey, what can I say I believe that the little guy should get a chance once in a while!!

1 final point, how the fcuk do government ministers justify the huge hikes in their wages when there are people starving on the streets. :mad:

Note: I'm sorry, this rant really should be in politics!! :rolleyes:

yankinlk

up the tax on fags and alcho pops please

sceptre

Originally posted by PhatFiesta
1 final point, how the fcuk do government ministers justify the huge hikes in their wages when there are people starving on the streets. :mad:

They can't, as you probably guessed. It's part of the pay being tied to that of the civil service (trick introduced in the UK in the mid-eighties and copied here). Ironically of course they chopped the hell out of the BTEA scheme for those who actually need it in the same week as they announced their own pay rise.

Now as people have probably gathered I'm not the most FF-friendly person in the world, partly because of the corruption in the past decade, partly because of the 2002 election repeating the 1977 election and partly because as a general rule they're self-promoting power-hungry idiots whose primary aim is to retain power in some mafiosa-style way rather than do any kind of self-sacrifice (in the vote sense) to actually promote the welfare of anyone. Meanwhile the PDs seem to be stuck in pre-1976 monetarist Friedman economics (without recognising that increasing government spending when it should be decreasing when inflation is increasing is automatically going to negate their core economic belief). Leaving that aside though, the lining of their own pockets while taking money from others is going too far.

LoneGunM@n

Originally posted by sceptre
Now as people have probably gathered I'm not the most FF-friendly person in the world

In my case, that would be an understatement .... I come from a family of anti FF, so it's probably in my genes by now .... But on a more serious note, how can they keep getting into power, when the blindest person [in the political sense] can see the damage that they have done to our economy!!

They took a booming economy and did nothing to stop it going down the toilet & people keep voting them in!!

Back on topic though .... As was said before, I can't see them scrapping the SSIA, because the SSIA a/cs will mature just before the next election, so they [FF] are summising that the electorate will be cash rich(er) because of them [FF] & will vote them in again!!

Cork

Originally posted by PhatFiesta
In my case, that would be an understatement .... I come from a family of anti FF, so it's probably in my genes by now .... But on a more serious note, how can they keep getting into power, when the blindest person [in the political sense] can see the damage that they have done to our economy!!

FF & the PDs are the Best Pro Business Parties by a long shot.

Parties of the left are traditionally tax & spend.

Charlie McCreevy's SSIAs were an instruement to encourage saving. They suceeded.

But as an economy in the EU - we have proforming quiet well.

Victor

Originally posted by PhatFiesta
IMO he should never have reduced the high rate of tax from 46% .... he should have used the bands to remove the lower earners from the tax net & taxed those who could afford it!!

But Michael O'Leary wouldn't like him then

Remember tax is communism

Cork

IMO he should never have reduced the high rate of tax from 46% .... he should have used the bands to remove the lower earners from the tax net & taxed those who could afford it!!

He did bring many low earners out of the tax net. He reduced both tax rates and he did standardise the tax benefit of tax refiefs etc - whether you were paying tax at the lower of higher rate.

He cut the rate of capital gains tax in half & in the process more revenue was generated.

PDs & FF also brought in the mimimum wage. A measure that was long over due.

Victor

Originally posted by Cork
He did bring many low earners out of the tax net.

The point is they could have taken more people out of the tax net (e.g. those on the minimum wage) if they didn't reduce the 46% rate.

Originally posted by Cork
and he did standardise the tax benefit of tax refiefs etc - whether you were paying tax at the lower of higher rate.

But increased those reliefs so as to benefit higher earners more. Tell me why the property bubble was supported by tax credits and double (in some cases possibly treble) reliefs?

Originally posted by Cork
He cut the rate of capital gains tax in half & in the process more revenue was generated.

Why is work taxed more than investment?

Originally posted by Cork
PDs & FF also brought in the mimimum wage. A measure that was long over due.

But still tax it.

Cork

In Budget 2002, 90% of the minimum wage became exempt from tax and after Budget 2003 this position is maintained even though the minimum wage was increased in October 2002 and now stands at €6.35 (£5.00) per hour. Budget 2003 removes a further 37,400 taxpayers from the tax net bringing the total of income earners outside the tax net to 681,000

This is not a bad situation when you consider the situation that existed under previous administrations.link

The point regarding capital gains you made was interesting. But there is no need of having high tax rates when the revenue generated is less than if you halve the said tax rate.

A property tax was introduced a few years ago in this country bty a FF led government. It was opposed by manysectors including many in the media. Why should property be not taxed and labour taxed??

There are many questions that every political party in Ireland need to ask themselves.

gandalf

Well the sensible and prudent thing would be to scrap the scheme. Personally I would have no problem with this as times are hard and the money needs to come from somewhere.

However I doubt that this government will do this as the maturing SSIA's will give them a boost just before the next election which given their performance so far will be strongly needed.

I remember watching a piece on the News before the Special Olympics where one of the disabled charities stated that one months worth of SSIA top ups from the Government would be enough to allow them to fund all the projects they would like to impliement in a year. Just think about that.

BTW Cork I love the way you never answer a question directly ever. And as for calling FF/PD Pro Business they are not they are Pro-Rip off and Pro Quick Buck for the cronies.

Gandalf.

Victor

Originally posted by Cork
It was opposed by manysectors including many in the media. Why should property be not taxed and labour taxed??

Probably because a lot of media types own expensive properties. Indeed, many people (mostly-FF supporters) have availed of many double tax reliefs on property.

http://www.boards.ie/vbulletin/showthread.php?postid=951898#post951898

Cork

BTW Cork I love the way you never answer a question directly ever. And as for calling FF/PD Pro Business they are not they are Pro-Rip off and Pro Quick Buck for the cronies.

Gandalf. [/B]

Both the PDs and FF have put more back into peoples pockets by way to tax reductions since being elected. The SSIAs are an incentive for people to save. The government will get a cut on interest earned by way of Dirt tax.

The capital gains rate was cut and even more revenue was raised. Health spending was 3 billion in 1997. It is now 10 billion. Of course – this money has got to be spent more effectively. Throwing money at health is not a solution.

This government has put money back into people’s pockets. Other political partys have not come up with any solutions with regards health. Throwing money at health will solve nothing.

The SSIAs have been taken up by many. Are these 10,000's of people wrong to open SSIAs?

As being a pro business party - Pat Rabbitts Cobh speech was a good start. He has come a lot way since his Democratic Left days.

FF & PDs are pro business. They believe in low taxes. I think their record on this speaks for itself.

But getting back to the SSIAs - Do you think scapping the SSIAs would make a material differance to services in other areas?

It probably would not.

What should be scapped is benchmarking. Yet, our unions would probably oppose this while crying our for increased public expenditure.

gandalf

More waffle and hot air from you again Cork. You've said in one breath that the FF/PD are good for business and that benchmarking is bad. FF/PD introduced benchmarking. They have provided extremely weak leadership and we (the taxpayers) will be paying a heavy price for it in the future.

As for putting money back in peoples pockets what utter boulderdash. I have taken a pay cut because of the current economic situation as have many others. Prices are rising faster than ever before with no action from the Government to curb it beyond the odd spun press release (of course the government are responsible for a quiet a few increases themselves this year). A few years ago I could have afforded to purchase a house by myself now I don't stand a chance. When you come down from cloud cuckoo land Cork and smell the reality then I will engage in discussion with you but from now on I am ignoring you.

The SSIA's should be scrapped end of story the country cannot afford them. Put it this way we will pay for them one way or another either by direct or indirect tax.

Gandalf.

Victor

Originally posted by Cork
Health spending was 3 billion in 1997. It is now 10 billion.
This government has put money back into people’s pockets.

Surely you mean some peoples pockets.

Originally posted by Cork
FF & PDs are pro business. They believe in low taxes. I think their record on this speaks for itself.

And there I thought they were pro-work, certainly thats one of their headline claims anyway.

Cork

The SSIA's should be scrapped end of story the country cannot afford them. Put it this way we will pay for them one way or another either by direct or indirect tax.

Gandalf. [/B]

I agree with you on a lot of your posting. I agree that housing is a problem. he government did back track on the Bacon report.

I think that in hindsight benchmarking was a mistake. I also believe that the government could have used tax revenues more wisely and more effectively in the last number of years.

I too believe prices are far too high. I am renting at the minute. I don't have a house & I don't have a half decent job. I am lucky I had a temporary job for the last 14 months. I am in with a chance of a "permnanent" job with the same company. But I am been messed around a little by the company.

I don't see things thru FF/Pd tinted glasses - but I don't see any other party with any alternative policies.

I think the SSIAs are good to encourage saving. As such they are a good instruement. I have one. I don't contribute a lot. But I probably would save less - if there were not there.

sceptre

Originally posted by Cork to gandalf
I agree with you on a lot of your posting.

83% of his last post consisted of:

Originally posted by gandalf
More waffle and hot air from you again Cork. You've said in one breath that the FF/PD are good for business and that benchmarking is bad. FF/PD introduced benchmarking. They have provided extremely weak leadership and we (the taxpayers) will be paying a heavy price for it in the future.

As for putting money back in peoples pockets what utter boulderdash. I have taken a pay cut because of the current economic situation as have many others. Prices are rising faster than ever before with no action from the Government to curb it beyond the odd spun press release (of course the government are responsible for a quiet a few increases themselves this year). A few years ago I could have afforded to purchase a house by myself now I don't stand a chance. When you come down from cloud cuckoo land Cork and smell the reality then I will engage in discussion with you but from now on I am ignoring you.

Did you really agree with that?:D

Cork

I do in fact agree with a lot of it. I agree that

1. Bench Marking was a mistake
2. Ireland is Overpriced
3. The Bacon Report should have been implemented re housing
4. House Prices are out of reach of many (including myself)
   

But I also see positives - that Michael Martin is changing the way the health system is organised. I feel that opposition partys do not have any alternative policies - they seemed to support benchmarking & are don't seem to have any alternative policies regarding prices, housing or our economy.

Andy Mc

In the budget the govemment should give people the option to pull out of the scheme at any time and not lose their 25% bonus.
The benifits of this are as follows:

- For the government they will save the 25% bonus for the remaining 3-4 yrs on the people who pull out of the scheme.

- For the savers who may need the funds it gives them the option to withdraw from the scheme and not lose their 25% bonus gained so far.

- For the economy it will help stabilise inflation as people gradually withdraw from the scheme over a period of 0-3 yrs. Can you imagine the situation as it stands at the moment with every man and his having €20,000 to spend at the same time. What will this do to car prices, house prices and inflation rates. Ther eis no way this can be allowed to happen.

A phased optional withdrawel therfore makes sense.

Andy Mc

davej

A phased optional withdrawel therfore makes sense.

Yeah I guess this makes sense, but all subscribers will not receive the benefits at the same time - it will be spread out throughout 2006 / 2007. Although admittedly something like 40% of all SSIA's were taken out in the last month it was available which could lead to a glut of money in the summer of 2007.

Also while a big spending spree could be bad for consumers it wouldn't necessarily be bad for the economy; depending on the conditions at the time.

davej

De Rebel

I heard that a preliminary estimate is that 20% will take the sum accumulated at the end of the 5 years and "use it wisely" - mainly investing it further, putting it aside for children’s education or loading it into pensions.

It is also estimated that if the government make “wise use” attractive in some way, this figure may be pushed out to 30%.

The rest apparently split 50/50 between (a) do one big bricks and mortar type thing e.g. house extensions, thereby fuelling another bad value bubble for the construction trade and (b) holiday of a lifetime, new car etc etc thereby fuelling inflation.

Oh and the only certainty is that whatever relaxation might happen, it will run until the next election.

Victor

Originally posted by Andy Mc
In the budget the govemment should give people the option to pull out of the scheme at any time and not lose their 25% bonus.

They would have to make the 25% dependant on the time the money spent in the system.

parsi

Originally posted by Cork


FF & PDs are pro business. They believe in low taxes.

Low tax economies are pro-business. However low taxes lead to low taxation income which leads to poorer public services whic leads to the expansion of privately provided services to fill these gaps.

So you may be paying less in txes but you are paying out other monies to private companies to provide the services that used be paid by your taxes eg health, refuse colelction, childrens facilities etc.

The PDs seem to have a mantra that tax is bad. They believe no-one should pay taxes. Thats grand for the rich set who have always paid for private services and don't want to contribute to public services. Its not so good for those who relied on the spreding of income through taxation to provide public services.

This country seems to be witnessing an erosion of the ethos of all taxpayers paying into the same pot and getting out the services they needed. Now it seems to be the eblieve that "I can afford private healthcare so why should I pay taxes to health ?"

Cork

The PDs seem to have a mantra that tax is bad. They believe no-one should pay taxes.

I think we need to get value for our taxes. I think we need efficency in our public services.

But too much tax on labour is a bad thing. I think that public services need to be improved. For instance - secondary school teachers getting 3 months paid holidays. Why?

Because kids were traditionally needed to help with the harvest?

Any changes to this will be opposed by teachers trade unions.

Are we getting good producivity from say teachers?

Yet many people in the public services are working a 9 to 5 on temporary contracts.