Whats that coming over the hill, is it a BAILOUT?

jackal

Well the papers are full of talk of a "stimulus" package for the property market in our *not an emergency* budget.

Whats your take on it? Should the government keep out of the market? Would their past performance give you confidence that they are well suited to tinker with the property market?

Considering the deficit announced yesterday, are you happy to see the government putting more money we dont have into the hands of multi-millionaire developers in the form of First Time Buyers Grants? Who is going to pay for them?

Are you an FTB? Would, say, a 20k grant only available for a year tempt you to buy a property at current price levels?

Should our taxes be spent trying to prop up a market that is collapsing under the weight of its own excess. Why does the government want to keep prices high?

So many questions... so little confidence that this will do anything other than waste our money and saddle the country with more debt, and achieve nothing.

SkepticOne

I think it is pretty much inevitable that there's going to be some stimulus package. It won't help, of course, but it is the sort of thing that is expected and so it will be done. The effect any such measure will be to drag out the crash for an extended period and maximise the economic damage.

Far better for those holding properties (as well as buyers) would be to have a swift correction in the market. Let prices find their natural level then allow them to rise gradually when the economy eventually improves.

gurramok

So many questions jackal . That 20k 'incentive' will try to keep prices high, like a small bounce but will be shortlived as its the prices which is the root of the problem.

Agree with Skeptic, that if it goes through will make the pain harder for the economy at our(taxpayers) expense for years to come.

'Tánaiste: 'Government will kickstart the housing market' http://www.breakingnews.ie/ireland/mhqlgbcwmhid/rss2/

The Tánaiste is indicating that the Government will be taking steps in the Budget to help the ailing housing market.

The Finance Minister Brian Lenihan announced the decision to bring forward Budget 2009 to October on foot of poor exchequer figures and a rise in unemployment.

He says this will give Ireland a sound base for economic recovery.

Minister Mary Coughlan has said Minister Lenihan has met with representatives of the construction industry to discuss the issue.

"The minister spent a considerable period of time with construction people over the weekend and he will be taking into consideration many of these issues and not just for first-time buyers but for those who need to move on," she said.

You see there, the economy is screwed now even further. Relying on housebuying for a sound economy is voodoo economics.

Duckjob

SkepticOne wrote: »

I think it is pretty much inevitable that there's going to be some stimulus package. It won't help, of course, but it is the sort of thing that is expected and so it will be done. The effect any such measure will be to drag out the crash for an extended period and maximise the economic damage.

Far better for those holding properties (as well as buyers) would be to have a swift correction in the market. Let prices find their natural level then allow them to rise gradually when the economy eventually improves.

Dear Mr& Mrs Politician,

THE REASON PROPERTY ISN'T SELLING IS BECAUSE THE PRICES STILL ARE STUPIDLY F**KING HIGH !!

Please leave it the f**k alone, and prices will readjust to a reasonable level where people want to and can buy at, and then the market will be normal and healthy.

Yours,

I want to print out the capitalised bit on big boards and staple them to the foreheads of those thick f*cks in Leinster Hse.

</rant>

SimpleSam06

jackal wrote: »

Whats your take on it?

As someone who pays large amounts of tax, I am extremely angry, and considering donating equally large sums of money to whichever party will put a stop to this insanity.

meglome

I read the posts in here quite a bit but I've never posted on any of these types of threads. However this 'stimulus package' makes me very nervous indeed. It's a good idea in general if done in the right way but trying to boost property prices and/or sales when the prices are still inflated is madness.

Duckjob

meglome wrote: »

trying to boost property prices and/or sales when the prices are still inflated is madness.

Most worryingly, it proves that those jokers who are trusted with the job of running our economy have not reflected at all on the events of the 5 years leading up to where we are now, and what lessons there might be to learn from it.

bugler

This is great news. In times of economic danger, what we really need are to prop up sectors that are dying because of lack of demand for what they provide. Hopefully, the government will take other such courageous steps such as opening factories that make parts. It doesn't matter what the parts are for, what matters is that this will cut the unemployment rate which has been rising worryingly of late. The fact there is no market for these useless parts is irrelevant.

So, with the builders no one needs (and a few more quid in the developers pockets) and the machine parts that have no purpose we are all set for some sort of economic paradise - full employment included.

Anyone who can't see the wisdom of this just isn't smart enough to be in government.

jetski

I think it going to be something thats going to elongate the issue and bland out the effects of the crash...

A good idea might be to get the housing sector up and running again with regards to buy/selling and building then see can they keep prices static untill over a period of time until wages increase enough to introduce value, thats the only way i can think of it being done with minimal casualties...

mind you they knew this was comming along time ago and the best they could come up with was the ssia

ZYX

SimpleSam06 wrote: »

As someone who pays large amounts of tax,

That's the problem SimpleSam06. Think how much tax you are going to have to pay in future when government doesn't have stamp duty and VAT from house sales to rely on. That is why they want to do something. Misguided perhaps, but if prices continue to fall, other taxes are going to rise.

SkepticOne

When prices eventually fall to their fair value then volume will return and therefore revenue will rise from property transaction taxes. The real problem for government is that people have still have unrealistic notions about the value of their properties. These notions arise from denial. Hence you get seemingly nonsensical statements like: "Nobody is willing to pay what my property is worth" or "I can only sell at a discount" or "I can't sell at the full market value" etc.

If Cowen really wanted to improve public finances he would say to the people, "Look, the prices paid recent years were bubble prices based on collective madness. You are not going to get anywhere near those prices again. Nobody cares how much you paid. Your house is only worth what someone else is willing to pay now. Get used to it!"

Supercell

ZYX wrote: »

That's the problem SimpleSam06. Think how much tax you are going to have to pay in future when government doesn't have stamp duty and VAT from house sales to rely on. That is why they want to do something. Misguided perhaps, but if prices continue to fall, other taxes are going to rise.

ZYX, if people were not up to their eyeballs in housing debt they would spend it on other stuff like electronics, food, cars, educations etc etc...you know..stuff that is actually useful and provides jobs to the rest of us.

This idea that the falling house prices means forever falling tax revenue is utter rubbish.
Sure there will be a temporary fall in revenue..but as prices adjust to sane values home owners will have extra cash to spend on other stuff that generates tax revenue and more importantly sustainable jobs!, and maybe we can have firms springing up here that can actually sell stuff in other countries ..wouldn't that be an amazing change from selling concrete blocks to each other for ever inflated prices.

irlrobins

SkepticOne wrote: »

If Cowen really wanted to improve public finances he would say to the people, "Look, the prices paid recent years were bubble prices based on collective madness. You are not going to get anywhere near those prices again. Nobody cares how much you paid. Your house is only worth what someone else is willing to pay now. Get used to it!"

QFT.

I for one don't want to see anything that halts the decline of house prices. I'm a first time buyer, with a good professional salary and an excellent saving record but I still can't buy anything (decent). The only way people like me will be able to get on the property ladder is if prices fall further, to a realistic sound level. Any rescue package will only aid the developers and not the consumers.

travellerI

The passivity of people in accepting the inevitability of a bail-out of property developers is absolutely shocking. There are in excess of 250,000 empty properties in Ireland. Basic economics tells us that when supply exceeds demand the only way you can sell anything is by dropping the price to the level that the market will accept. For the Government to bail-out builders under the guise of providing social housing, stimulating the economy or any other excuse would be beyond belief. The dogs on the street know that property prices have a lot further to fall, well into 2010-2011.

Why should the Government spend a cent of taxpayers money now, when in 2years time they will pick up property, for social housing, at a 20/30% discount on today's prices. As far as the housing market is concerned, the Government should do ABSOLUTELY NOTHING for at least two years.

mcdonrob

OP:
Surely you meant DIGOUT or is a BAILOUT how a DIGOUT is reciprocated?

jimmycrackcorm

SimpleSam06 wrote: »

As someone who pays large amounts of tax, I am extremely angry, and considering donating equally large sums of money to whichever party will put a stop to this insanity.

It's a little premature to be getting angry seeing as no-one knows what if anything is going to be done.

One thing is for sure, the quicker the bottom of the market is reached, the quicker normal growth patterns could resume.

Senna

SkepticOne wrote: »

If Cowen really wanted to improve public finances he would say to the people, "Look, the prices paid recent years were bubble prices based on collective madness. You are not going to get anywhere near those prices again. Nobody cares how much you paid. Your house is only worth what someone else is willing to pay now. Get used to it!"

unfortunately neither cowen has the balls to stand up and say it, or the Irish public to lessen to it.

This is just going to drag out the crash further, seller with think something magical will happen in 6 weeks and their house will be inundated with 2006 level bids and buyers will still see no value. The stand off continues, i wouldn't be surprised if some seller put their price up before the budget.

Devilman

Why should the Government spend a cent of taxpayers money now, when in 2years time they will pick up property, for social housing, at a 20/30% discount on today's prices. As far as the housing market is concerned, the Government should do ABSOLUTELY NOTHING for at least two years

Unfortunately that would be a sensible solution and paring common sense with government policy is impossible.

Instead of adding stimulus to the market, just let it fall back, it'll grow at a sustainable rate then. Adding a 20k grant as has been suggested by some might only delay the current problems a year or 2.

If the government wanted to do anything at all maybe they should have looked at stamp duty long before they did, my powers of recall fail me (old age and all) but wasn't stamp duty originally for the wealthiest homeowners and isn't it wonderful how the thresholds haven't risen with prices

subway

jesus christ monkey balls.

FTB, good salary (well above average), reasonable savings - still nop hope of buying a ****ing house in this ****hole country.

if the governemnt thinks that they can prop up this cluster**** of a property market they have another thing coming.
brian cowen himself could stroll up to my front door today with a novelty 50k cheque to buy a house at todays asking prices and i would chase him away with a novelty mallet.

there is no value in property today, you can rent cheaper and earn more money in interest in the bank, plus your money wont devalue at massive rates.

if any measures are introuduced to give even a cent of tax payer money to developers, whose greed caused them to rip each other off, i will either get the first boat out of this country or vote for someone with half a brain.
oh wait, this is ireland, better get that ferry ticket in

SimpleSam06

travellerI wrote: »

Why should the Government spend a cent of taxpayers money now, when in 2years time they will pick up property, for social housing, at a 20/30% discount on today's prices.

Even funnier, if they leave it a few more years, they won't need to spend much money at all on social and affordable housing because housing will be much more generally affordable. Of course they don't figure that into their taxation requirements, which is a pity when such a large percentage of local authority budgets are eaten up by social and affordable housing.

ZYX wrote: »

Think how much tax you are going to have to pay in future when government doesn't have stamp duty and VAT from house sales to rely on. That is why they want to do something. Misguided perhaps, but if prices continue to fall, other taxes are going to rise.

To be honest, the mismanagement of the boom finances is the main reason that there might be tax rises (vastly increased public sector and wages thereof). To their credit, the government is trying to cut it back as quickly as possible, but its very hard to close that pandora's box once opened, courtesy of the unions.

Paying a lump sum towards FTB purchases is a bit of a catch 22, in that the sum comes from the same coffers that the taxes get paid into, so the government is playing a numbers game, in that they are hoping they will revive sentiment to the extent that the income will exceed expenditure. This kind of gambling is not just illogical but also quite likely to fail, which leads us to the inevitable conclusion that it is irrelevant to the government if it succeeds or not, only that their major campaign contributors from the construction industry get what they paid for.

Also your comment seems to indicate that there are no other avenues of growth for the Irish economy, which is basically incorrect, as there are many other economies that get by just fine without super-inflated property prices.

And of course, trying to re-inflate the boom, even if mildly successful is only going to increase our already staggering private debt, leaving us ultimately deeper in the hole than before. In short, its a stopgap policy to help a very few at tremendous expense to the many.

Calina

Such a lump sum is not in FTB's interest in the ladder scenario which is still required because of where asking prices and bank lending schemes are at the moment. If a trade up is required before prices recover (which in DUblin is fairly certain), then the loss of FTB stamp duty exemption will probably exceed the benefit of the lump sum unless it's used as a deposit.

If it happens.

mrgaa1

Given that the governments VAT returns are extremely poor due to no new houses being sold - instead of charging 13.5% they could reduce it to 5%. The house price would then drop.

E.g. if a new house was on sale at 400,000 the VAT amount payable on this property would be 47577.1. You divide the house price by 113.5 and then multiply by 100. You then take this figure away ( 352,422.9) from the sale price and you have the VAT.
So if the house price included 5% then the price would be 370,000 or so - An immediate drop of 7.5% of the house price.

They could also reduce stamp duty right down to somewhere between 3 & 5% for the next 1 year only. Again another saving.

If the government are not taking in money then services that are in a bad way anyway will receive less money. So its best if they take in some money rather than none at all. This will help not only FTB's but anyone looking to move house.

Also I think that if anyone who is buying a energy efficient house ( built under SEI guidance or independently certified to be of a certain standard ) should pay NO stamp duty and no VAT within the sale of the house. This would encourage people to look more at the environment and the government has an obligation to cut emissions under the Kyoto agreement. If they done't they are fined which in turn means we are all fined.


Another reason for high house prices is the land which the property sits under. The government could give some sort of rebate which would have to be passed on by the developer to the sale of the house. The cost of building a house in Donegal, Dublin, Cork, Galway does not change by much. Its the land it sits on, how much the developer has for profit and bank costs. The developer now has no or very little profit in it so the land costs are still there plus the banks interest costs. So if the house has 100,000 on it for the land cost and somehow some rebate was worked out that this cost was reduced then the house could be sold for less.
House prices will not drop much more for these very reasons - Anyone looking to sell a few houses severely discounted within a development is purely paying off bank interest or something similar. The bank will not take the houses as they can't sell them as they'd have to write a part of it off meaning their bottom line is affected - which ultimately weakens their share price. So banks are trying to help.

Also peoples expectations for what they want have to be looked at. There is no way a 4 bed house at 2000 sqft is going to be available at 150k. We are where we are. The house price in Ireland is key to the future of the country - a severe crash an emmigration will soar at unseen and unheard rates which will leave a trail of destruction behind. The banks & the goverment have a lot to answer for but yet the banks are asking for repayments on loans they should never have given out.

ZYX

SimpleSam06 wrote: »

To their credit, the government is trying to cut it back as quickly as possible, but its very hard to close that pandora's box once opened, courtesy of the unions.

Couldn't disagree more. The government are doing very little and way too late. They are trying to cut a few million here and there but the shortfall in revenue is in the billions. Also costs of social welfare are rising rapidly. They also acted way too late. Until the ESRI report that we may be in a period of negative growth, the government were doing nothing.

SimpleSam06 wrote: »

Also your comment seems to indicate that there are no other avenues of growth for the Irish economy, which is basically incorrect, as there are many other economies that get by just fine without super-inflated property prices.
.

Of course. But they have higher taxes which was the point I was making. I do not agree with the way the economy was run. I am saying for the last 5 years especially, a relatively small number of property buyers (100,000 a year or so) helped support the economy with stamp duty and VAT on properties, and without them another way has to be found to raise the money.

SimpleSam06

ZYX wrote: »

Couldn't disagree more. The government are doing very little and way too late. They are trying to cut a few million here and there but the shortfall in revenue is in the billions. Also costs of social welfare are rising rapidly. They also acted way too late. Until the ESRI report that we may be in a period of negative growth, the government were doing nothing.

Actually there is a very mixed picture emerging of the government response to this, its coming down to what you want to call "the government".

In today's Independent, the story is that a group of senior civil servants tried to do an end run around the government by contacting the OECD directly, even going so far as to use phones outside of the office. Their idea was to cut 8000 people from the public sector in short order, paring off the dead wood and those whose jobs no longer have meaning, an idea which I thoroughly agree with.

However they were stymied by the fact that the report was first run through the public sector top brass, without their knowledge, who chopped it down to a worthless and bland document that recommended no particular changes. All their efforts were to no avail.

I had a look at some of the results of the new report, it contains at times outright lies. Its like the Bacon report and benchmarking all over again.

Certain influential groups in the public sector do realise how bad it has gotten, its just that inertia from above seems to have stopped them dead.

ZYX wrote: »

Of course. But they have higher taxes which was the point I was making.

Ireland doesn't have the lowest taxes on earth, you know.

ZYX wrote: »

I am saying for the last 5 years especially, a relatively small number of property buyers (100,000 a year or so) helped support the economy with stamp duty and VAT on properties, and without them another way has to be found to raise the money.

Said buyers only bought because they thought they would make out like bandits, not out of some altruistic desire to support the government. They are owed nothing, full stop, especially not a bailout that will transfer the debt from private to public hands, in particular because Ireland is constrained to keep borrowing to a certain level in order to be compliant with EU standards.

Also you need to look at where the taxes are being spent. If social and affordable housing is to a great extent no longer needed, because houses have become cheaper all by themselves, that takes a huge strain off the system. If the public sector gets chopped down to size, another huge strain is gone. You don't need to replace taxation sources if your expenses reduce by measurable amounts.

Finally, if the government was to focus on export based industries in Ireland, we could more than make up for whatever damage the construction folly has done to the country. Odds of them having the foresight to do that however?

subway

mrgaa1 wrote: »

The government could give some sort of rebate which would have to be passed on by the developer to the sale of the house.
The house price in Ireland is key to the future of the country
The banks & the goverment have a lot to answer for but yet the banks are asking for repayments on loans they should never have given out.

the government should stay out of it.
the developers got greedy and risked it all.
they traded land at ridiculous prices.
a private citizen calling on the governemtn to hand their money to a millionaire/billionaire because they lost on their gamble to get richer is, imho, insane.

no country can build success on huge amounts of debt.
we are in huge amounts of debt and we are uncompetive and we are falling to pieces.
too many irish people have sold the next 40 years of their life to help a developer / land owner get rich.
the idea that we should sell more peoples lives to the bank to keep the rich developers rich is unthinkable to me.

and finally, this poor mouth, of the bank shouldnt have loaned me the money is crap. you play with fire you get burned. what about all the 20 somethings in negative equity and the 50 somehtings on IO mortgages for the next 20 years. their all in the same boat but you dont hear calls to help them out, only calls to get more people on the boat and help the poor millionaire developers. not that the governement should help them out. they made thier bed, they get to lie in it.

jmayo

mrgaa1 wrote: »

Given that the governments VAT returns are extremely poor due to no new houses being sold - instead of charging 13.5% they could reduce it to 5%. The house price would then drop.

E.g. if a new house was on sale at 400,000 the VAT amount payable on this property would be 47577.1. You divide the house price by 113.5 and then multiply by 100. You then take this figure away ( 352,422.9) from the sale price and you have the VAT.
So if the house price included 5% then the price would be 370,000 or so - An immediate drop of 7.5% of the house price.

They could also reduce stamp duty right down to somewhere between 3 & 5% for the next 1 year only. Again another saving.

If the government are not taking in money then services that are in a bad way anyway will receive less money. So its best if they take in some money rather than none at all. This will help not only FTB's but anyone looking to move house.

Also I think that if anyone who is buying a energy efficient house ( built under SEI guidance or independently certified to be of a certain standard ) should pay NO stamp duty and no VAT within the sale of the house. This would encourage people to look more at the environment and the government has an obligation to cut emissions under the Kyoto agreement. If they done't they are fined which in turn means we are all fined.


Another reason for high house prices is the land which the property sits under. The government could give some sort of rebate which would have to be passed on by the developer to the sale of the house. The cost of building a house in Donegal, Dublin, Cork, Galway does not change by much. Its the land it sits on, how much the developer has for profit and bank costs. The developer now has no or very little profit in it so the land costs are still there plus the banks interest costs. So if the house has 100,000 on it for the land cost and somehow some rebate was worked out that this cost was reduced then the house could be sold for less.
House prices will not drop much more for these very reasons - Anyone looking to sell a few houses severely discounted within a development is purely paying off bank interest or something similar. The bank will not take the houses as they can't sell them as they'd have to write a part of it off meaning their bottom line is affected - which ultimately weakens their share price. So banks are trying to help.

Also peoples expectations for what they want have to be looked at. There is no way a 4 bed house at 2000 sqft is going to be available at 150k. We are where we are. The house price in Ireland is key to the future of the country - a severe crash an emmigration will soar at unseen and unheard rates which will leave a trail of destruction behind. The banks & the goverment have a lot to answer for but yet the banks are asking for repayments on loans they should never have given out.

Tom is that you ? At last CIF HQ have hooked up the internet
I will not post what I would like to say to you about the poor developers who have been caught becuase of their greed.
We should all bend over backwards to ensure their profits.
F*** them and all their buddies is all I say. They had it cushy enough for long enough screwing as much money out of buyers as possible for often substandard builds.
The smart ones got out, but the greedy ones kept investing in yet more land and pushing the prices even higher.
They have been caught and now they want the taxpayer to bail them out using the cr** about how much VAT and stamp duty is tied up.

House prices will drop down until they become affordable. You know that term we used to have before houses were upto 20 times higher than the average salary and banks were handing out 100% mortgages and people were signing away 40 odd years of their lives.
No, the house price in Ireland is not the key to our future, it might be the key to your and your friends future, but not to all of us.

The key to our fuiture is having a smaller public sector pay bill, having value for money public services and having sustainable industry, not a mickey mouse non lasting industry of house building and retailing based on credit cards.

faceman

Supercell wrote: »

ZYX, if people were not up to their eyeballs in housing debt they would spend it on other stuff like electronics, food, cars, educations etc etc...you know..stuff that is actually useful and provides jobs to the rest of us.

This idea that the falling house prices means forever falling tax revenue is utter rubbish.
Sure there will be a temporary fall in revenue..but as prices adjust to sane values home owners will have extra cash to spend on other stuff that generates tax revenue and more importantly sustainable jobs!, and maybe we can have firms springing up here that can actually sell stuff in other countries ..wouldn't that be an amazing change from selling concrete blocks to each other for ever inflated prices.

I dont think thats a fair comment. Whether people are buying houses or buying electronics goods, it is all generated revenue for the government. However the economic gain of buying a house is larger than buying say a new car. After all, buying a house doesnt just involving pay builders. It involves a number of different companies and industries, from bathroom suppliers, to waste disposal, crane hire, etc etc etc. Most if not all of these companies/suppliers are based in Ireland and create employment.

Buying a car doesnt obviously have the same effect and the profits are repatriated to another country. You only have to look at the economy to see the big picture impact of the fall in the housing sector. aside from the builders on teh dole queue, we're seeing 3rd party suppliers going into liquidation. Bathroom showrooms closing. Even woodies and atlantic homecare revised their forecasts.

Regarding the stimulus, i dont really know what the government can do that wont do further damage in the long term and everything is speculative at this point. Perhaps they will try soften the downturn in their eyes? Who knows. The how is another question altogether. Maybe there will be a bigger focus on state and corporate construction? Probably not though.

jetski

Thursday September 04 2008

THE Government will announce a range of new measures to help first-time homebuyers in a Budget being dramatically brought forward by nearly two months.
The targeting of first-time buyers is an attempt to kick-start the flagging property market.
It will be part of a range of "stimulation packages" aimed at various sectors of the economy to reverse the deepening downturn, the Irish Independent learned last night.
The plan is to get first-time buyers back into the market through a range of incentives, and the provision of assistance in getting a mortgage.
The measures will be formally outlined on Budget Day, which has been brought forward by almost two months following an unprecedented Government announcement yesterday.
Finance Minister Brian Lenihan said Budget 2009 had been moved forward to Tuesday, October 14, to "ensure stability in the public finances".
He said the move would "give clarity and confidence to investors and taxpayers alike and provide a sound base for economic recovery".
The decision was welcomed by business organisations and financial market economists, who said the economy was facing recession and badly needed a fiscal boost.
Mr Lenihan also fired a warning shot at unions and public sector workers, in particular, warning that they needed to face up to "realities" in their wage demands.
The minister also admitted for the first time that the Government will probably exceed European borrowing limits both in 2008 and 2009.
The Irish Independent understands the Government was anxious to present the Budget ahead of October 31, the deadline for tax returns from the self-employed.
These are expected to result in a further serious deterioration in the public finances.
The dramatic move to bring forward the Budget, which has never happened before, came as new figures confirmed the biggest annual jump in unemployment since records began.
It also comes on top of Exchequer results which revealed a massive €8.4bn black hole in the Government's finances for the first eight months of the year.
The Government has already breached the 3pc borrowing guideline contained in the EU Stability and Growth Pact -- a huge embarrassment for the former Celtic Tiger economy.
Mr Lenihan accepted that the final year shortfall would be "at least €5bn", bringing total Exchequer borrowing to over €10bn for the year.
EU rules would allow us to borrow a maximum of around €9bn in order to comply with regulations aimed at supporting the value of the euro.
Mr Lenihan said the €5bn shortfall in the tax take meant the Government was "likely" to exceed the borrowing limit.
One reason for bringing forward the Budget date may be to seek an urgent decision from the EU Commission, in the form of EU approval for borrowing to cover what is expected to be an even bigger deficit next year.
The Minister said the Government faced its toughest economic test in 20 years -- since Ray McSharry was Minister for Finance. "The circumstances are different but I would accept the challenge is similar," he said.
Fine Gael finance spokesman Richard Bruton said the Government had finally woken up to the scale of the crisis, but had "squandered valuable time and sabotaged Ireland's ability to weather the downturn".
Labour Party finance spokesperson Joan Burton called for the Dail to return next week so ministers could be quizzed about spending.
"We now need a National Recovery Programme that sets out a road map for recovery, including committing to essential long-term investment in infrastructure," she said.
Turlough O'Sullivan, the director general of the main employers' body, IBEC, said: "The Government needs to [encourage] the social partners to revive the national partnership negotiations and to put in place a moderate agreement."
Small-companies group ISME, a fierce Government critic, said: "At last, the Government has seen the light." It urged maintenance of the National Development Plan and a public pay freeze.
Rossa White, economist at Davy Research, described the move as "positive."
Taxes
"Cutbacks are inevitable, but we do not expect any increase in taxes," he said. "We presume the Government will negotiate as much leeway above the 3pc (EU borrowing) limit as possible to provide a fiscal injection."
Dermot O'Leary, chief economist at Goodbody Stockbrokers, said the spending-focused thrust of the plan was evidence that the Government hadn't "abandoned its ambitions for a tax culture that will encourage both work and enterprise".
The Minister said any tax changes would not come into effect until January 2009 -- although Budget Day changes in the price of alcohol, fuel or cigarettes would be immediate.
The reference to "environmental challenges" was viewed as a possible sign the Government is going to introduce a carbon tax in this Budget.
- Fionnan Sheahan and Brendan Keenan

http://www.independent.ie/business/irish/cowens-early-budget-to-boost-firsttime-buyers-1468913.html

gurramok

The free market will sort out house prices mrgaa1 and it takes no prisoners.

bill_ashmount

SimpleSam06 wrote: »

In today's Independent, the story is that a group of senior civil servants tried to do an end run around the government by contacting the OECD directly, even going so far as to use phones outside of the office. Their idea was to cut 8000 people from the public sector in short order, paring off the dead wood and those whose jobs no longer have meaning, an idea which I thoroughly agree with.

This would be fantastic if someone had the guts to follow it through and implement it.

Snickers Man

Suck it up.

What have first time buyers got to fear? Left to its own devices, their first time purchase will only get cheaper in the short term.

What do those of us who have houses bought more than ten years ago and currently in huge positive equity have to fear? A slight reduction in our potential cash-in value but a corresponding reduction in the price of the next property we may buy.

What about those poor feckers who bought in the last two or three years and have seen the value of their investment decline by as much as 20%, never mind the additional investments in refurbishment, decoration and furniture they may have had to make in the interim?

Well it's tough luck on them but there's the breaks. Other generations had wars to fight at their ages, or famines to endure. So they have to scrimp and save for a few years, so what?

I sympathise, really I do. But not enough to want to exarcebate the problem down the line by treating a temporary symptom.

ZYX

faceman wrote: »

I dont think thats a fair comment. Whether people are buying houses or buying electronics goods, it is all generated revenue for the government. However the economic gain of buying a house is larger than buying say a new car. After all, buying a house doesnt just involving pay builders. It involves a number of different companies and industries, from bathroom suppliers, to waste disposal, crane hire, etc etc etc. Most if not all of these companies/suppliers are based in Ireland and create employment.

Also tax on housing is higher than on other products. You have to pay VAT and Stamp Duty. Then Stamp Duty again every time house is resold. Imagine if you had to pay stamp duty when you bought a second hand car!

ZYX

SimpleSam06 wrote: »

Said buyers only bought because they thought they would make out like bandits, not out of some altruistic desire to support the government. They are owed nothing, full stop, especially not a bailout that will transfer the debt from private to public hands, in particular because Ireland is constrained to keep borrowing to a certain level in order to be compliant with EU standards.

Also you need to look at where the taxes are being spent. If social and affordable housing is to a great extent no longer needed, because houses have become cheaper all by themselves, that takes a huge strain off the system. If the public sector gets chopped down to size, another huge strain is gone. You don't need to replace taxation sources if your expenses reduce by measurable amounts.

Finally, if the government was to focus on export based industries in Ireland, we could more than make up for whatever damage the construction folly has done to the country. Odds of them having the foresight to do that however?

I think you missed my point. I am not saying relying on a property boom is a good thing to do. However that is the situation we are in. We are not going to trade our way out, or get by with cutbacks, unless government gets really serious which they won't. Taxes are going to be raised.

SimpleSam06

faceman wrote: »

I dont think thats a fair comment. Whether people are buying houses or buying electronics goods, it is all generated revenue for the government. However the economic gain of buying a house is larger than buying say a new car. After all, buying a house doesnt just involving pay builders. It involves a number of different companies and industries, from bathroom suppliers, to waste disposal, crane hire, etc etc etc. Most if not all of these companies/suppliers are based in Ireland and create employment.

Look up the "broken window fallacy" there, like a good man.

SimpleSam06

ZYX wrote: »

We are not going to trade our way out, or get by with cutbacks, unless government gets really serious which they won't. Taxes are going to be raised.

You must give me the number of your psychic, I wish I had that much certainty about the future. In any case, what are you trying to say, we'll rue the day the property developers went under? They were raping the population as a whole to line their own pockets, ultimately leaving us in an untenable situation. May they never return.

ZYX

SimpleSam06 wrote: »

You must give me the number of your psychic, I wish I had that much certainty about the future.

We are facing a large budget deficit. Costs are rising rapidly. Income is falling even more rapidly. I don't need to see the future. I see the present. We need income now, or certainly in next 12 months. There is no possible way our trade can increase enough in the next 12 months to make up the shortfall. It is simply not going to happen.

SimpleSam06 wrote: »

In any case, what are you trying to say, we'll rue the day the property developers went under? They were raping the population as a whole to line their own pockets, ultimately leaving us in an untenable situation. May they never return.

Well for the third time I am saying taxes are going to go up. I never said anything about supporting property developers

faceman

SimpleSam06 wrote: »

Look up the "broken window fallacy" there, like a good man.

Makes sense Sam, make sense! We're not talking about bakers and spoilt buns dude!

DonJose

I think the government should cease collecting stamp duty and introduce a annual property tax of 1% for principal place of residence properties and 1.5%for investment property. Those who paid stamp duty could claim relief, for example if you bought a property last year and paid €30k stamp duty and your annual property tax is €3k, then you would be exempt from paying property tax for 10 years.

mathie

subway wrote: »

you can earn more money in interest in the bank, plus your money wont devalue at massive rates.

That is until the Government increases DIRT to 40%

ast

DonJose wrote: »

I think the government should cease collecting stamp duty and introduce a annual property tax of 1% for principal place of residence properties and 1.5%for investment property.

There is no way the government will do that, it’s far to radical, besides it’s better to "hide" the tax in the price of a house and then people can spread the payments over 40 years.

bangersandmash

DonJose wrote: »

I think the government should cease collecting stamp duty and introduce a annual property tax of 1% for principal place of residence properties and 1.5%for investment property. .

And suddenly you punish the cash-poor elderly people who didn't choose to cash in on their family homes during the boom, and may be entirely unable to sell now. Should those people suffer to make life easier for FTBs? Tax on investment properties is one thing, but tax on a PPR has much wider ramifications.

ast

I think the good people that run the country know full well that any FTB grant will easily be covered by the tax take on the sale of the property (this is especially true if the FTB allows others to trade up). I think that’s all they know; I doubt there is any consideration to anything else.

Sounds a bit like the SSIA where rather than just lower taxes the government "gave" us "free" money.

Calina

faceman wrote: »

I dont think thats a fair comment. Whether people are buying houses or buying electronics goods, it is all generated revenue for the government. However the economic gain of buying a house is larger than buying say a new car. After all, buying a house doesnt just involving pay builders. It involves a number of different companies and industries, from bathroom suppliers, to waste disposal, crane hire, etc etc etc. Most if not all of these companies/suppliers are based in Ireland and create employment.

Sorry. You've lost me. Are you suggesting that I should pay an overinflated price for my house because you think it's better economically for the country? What about my interests? I get screwed over on a daily basis because the tax I am paying pays my idiot local reps 100K a year to do sweet shagall about providing me with a functional public service, transport system, school, water supply and you expect me to feed even more money into that when I'd prefer to be spending less money on a badly manufactured breadbox of an apartment and more money on the nice things in life like people in other countries can do?

In other words, I resent the implication that it would be patriotic of me to lie down and have my ass whipped financially in buying a house. We are screwing over the working people in this country by implying that spending excess money on houses we can't afford is somehow good.

DonJose wrote: »

I think the government should cease collecting stamp duty and introduce a annual property tax of 1% for principal place of residence properties and 1.5%for investment property. Those who paid stamp duty could claim relief, for example if you bought a property last year and paid €30k stamp duty and your annual property tax is €3k, then you would be exempt from paying property tax for 10 years.

I strongly disagree. I believe stamp duty should be flatrated and there should be a punitive tax on unused second properties but because valuations, sale prices and all that are the stuff of Stephen King novels in this country I want no annual taxes on primary residences. We will get ripped off.

Supercell

Indeed if the government wants to do whats right for the vast majority of people and raise tax income - tax non PPR's.
End result - more revenue, houses become cheaper..the economy gets back on its feet and the pigs at the developer trough get a little leaner.

subway

Supercell wrote: »

Indeed if the government wants to do whats right for the vast majority of people and raise tax income - tax non PPR's.
End result - more revenue, houses become cheaper..the economy gets back on its feet and the pigs at the developer trough get a little leaner.

but as calina pointed out, before that happens we absolutely need transparency in house sale prices.
without that we cant "value" anything.

Supercell

subway wrote: »

but as calina pointed out, before that happens we absolutely need transparency in house sale prices.
without that we cant "value" anything.

Yep we definitely need that as well, without transparency all that happens is this gets dragged out and out as people are deluded into thinking that houses in their neighbourhood are "worth" more than they are actually selling for in reality.
Just look at the crash in the North compared to the south. Similar houses with similar people to us yet house prices are plummeting there and they'll be back on their feet way before our long long drawn out crash finally unwinds.

Will it happen?, not while FF or FG are at the helm..in other words forget it.

gamer

They should provide extra tax allownces for landlords who rent,to single people,students and people on disability allowance,subject to strict criteria ,each unit should be energy effecient ,and be at least a certain size.This might stimulate the building industry.

faceman

Calina wrote: »

Sorry. You've lost me. Are you suggesting that I should pay an overinflated price for my house because you think it's better economically for the country? What about my interests? I get screwed over on a daily basis because the tax I am paying pays my idiot local reps 100K a year to do sweet shagall about providing me with a functional public service, transport system, school, water supply and you expect me to feed even more money into that when I'd prefer to be spending less money on a badly manufactured breadbox of an apartment and more money on the nice things in life like people in other countries can do?

Jaysus Calina, now where in my post did i say that people should do that? I pointed out a incorrect comment made by a previous punter.

SimpleSam06

ZYX wrote: »

We are facing a large budget deficit. Costs are rising rapidly. Income is falling even more rapidly. I don't need to see the future. I see the present. We need income now, or certainly in next 12 months. There is no possible way our trade can increase enough in the next 12 months to make up the shortfall. It is simply not going to happen.

True enough, I've said it myself in the past, taxes most likely are going to go up, mostly due to ongoing costs set up during the boom. So basically, taxes will probably be going up because of the boom, yet another thing to lay at the feet of those responsible. Although with that said, the government is seeking an urgent meeting with the EU to expand the amount Ireland is allowed to borrow (exceeded by a billion this year and even more next year). If those mitigating steps are taken, the damage might not be as bad.

faceman wrote: »

Makes sense Sam, make sense! We're not talking about bakers and spoilt buns dude!

Funnily enough, neither is the broken window fallacy. Ease back on the oul' speed reading, ha?

SimpleSam06

gamer wrote: »

They should provide extra tax allownces for landlords who rent,to single people,students and people on disability allowance,subject to strict criteria ,each unit should be energy effecient ,and be at least a certain size.This might stimulate the building industry.

Why? With the tragic rental returns available in most of the country, you'd would be insane to buy a property for rental in this environment, regardless of tax shenanigans.

faceman

SimpleSam06 wrote: »

Funnily enough, neither is the broken window fallacy. Ease back on the oul' speed reading, ha?

I know what the Broken Window analogy is, but i just dont think its fits correctly with the property market at present.