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Taxpayers face Budget tax hike of €200 a month

  • 01-04-2009 7:57am
    #1
    Closed Accounts Posts: 39


    http://www.independent.ie/business/personal-finance/latest-news/taxpayers-face---budget-tax-hike-of-8364200-a-month-1691997.html
    TAXPAYERS will end up paying an additional €200 a month in higher taxes as a result of next week's crisis Budget.

    Taoiseach Brian Cowen said at the weekend that people's living standards would fall by 10pc this year. This implies that each taxpayer will have to pay an average of €2,000 a year more to the taxman, according to the Institute of Chartered Accountants.

    However, the tax hit is set to be even higher for those on bigger incomes, taxation experts said yesterday.

    Mr Cowen summed up the scale of the country's economic difficulties by saying that our living standards are based on revenue we had six years ago.

    The Government needs to find €4bn in additional revenue this year.

    If that was to come from the taxes and levies it will mean an additional contribution of €2,000 from each taxpayer, according to the director of taxation with the Institute of Chartered Accountants, Brian Keegan.

    Mr Keegan said this was based on the fact that there are two million taxpayers.

    Levy

    So the Government would have to levy an additional €2,000 a year per taxpayer to bring in another €4bn in revenue, if it decides to generate the extra income it needs from the tax take.

    The Taoiseach said taxpayers would find themselves back at standards of living that prevailed in 2002/2003.

    At that time a married couple could earn just around €16,000 before they hit the higher rate of tax.

    A succession of cuts in tax rates since 2002 has meant that the same married couple can now earn €45,400 before being taxed at the 41pc rate.

    Other accountants said the take-home pay of those still lucky enough to be in a job could be hit even harder.

    The expectation is that the income levy will be doubled in next Tuesday's crisis Budget.

    The Government is likely to signal that it is raising the tax rates, with a third tax rate a strong possibility.

    But it takes at least two months to alter tax rates, so Finance Minister Brian Lenihan is likely to hike the income levy in the meantime.


Comments

  • Registered Users, Registered Users 2 Posts: 5,153 ✭✭✭Rented Mule


    Can someone explain to me which services will improve after my taxes are raised by €2000 per year


  • Registered Users, Registered Users 2 Posts: 728 ✭✭✭Sam the Sham


    Can someone explain to me which services will improve after my taxes are raised by €2000 per year

    Sure. Service on the debt will improve. Any other questions?

    You might also ask which services will improve after the salaries of those delivering them have all been cut.


  • Registered Users, Registered Users 2 Posts: 14,005 ✭✭✭✭AlekSmart


    Well,Political Representation as a service must surely improve as a direct result of a few less working lunches..?


    Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.

    Charles Mackay (1812-1889)



  • Registered Users, Registered Users 2 Posts: 14,378 ✭✭✭✭jimmycrackcorm


    You might also ask which services will improve after the salaries of those delivering them have all been cut.
    About the same as if their salaries were increased if you go by benchmarking


  • Moderators, Entertainment Moderators, Politics Moderators Posts: 14,550 Mod ✭✭✭✭johnnyskeleton


    Ludicrous. Standard of living will fall by 10% is somehow turned into monetary terms, divided by an approximate number of taxpayers (which I would imagine is PAYE tax payers, and doesn't include coporation tax, VAT, CGT etc) and then the figure is divided by 12 (incorrectly, €2k p.a. is €166.66 p.m.).

    One thing I don't fully understand about the new budget is that if they increase the tax rates or the tax bands, where does this leave self employed people? If you're self employed, you might be better off paying yourself the full salary now and then paying yourself nothing until next Jan, thus avoiding any tax increase. You can probably even get your accountant to work it out so that you are only paying yourself the notional amount now and the actual cash will come at a later date.


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  • Closed Accounts Posts: 1,013 ✭✭✭leitrim lad


    as you may know i am self employed , sole trader and several limited companies, and it is crippling us, really up sh2t creek, struggling to keep employees in work ,afraid to tell people who have young families and houses to keep that they may have no job next month, solicitor has to speak to bank ( not in any trouble) but the bank just ignores small companies, not entitled to any socail if the thing turns sour, and an increase in any taxes will, not alone bankrupt us but every sme in the country


  • Closed Accounts Posts: 23 funky.monkey


    Raising taxes now will be like pouring wet cement into the irish economy. Its crazy. I despair for the future of this country now. The only hope is that the international lending community see this and stop lending to Ireland, and somehow this will force the government into actually cutting the waste, buracracy and inefficiencies that all the taxes are paying for (tribuneral barristers fees, Business class airfares, ministers hair-dos etc etc).


  • Registered Users, Registered Users 2 Posts: 6,441 ✭✭✭jhegarty


    TAXPAYERS will end up paying an additional €200 a month in higher taxes as a result of next week's crisis Budget.

    Taoiseach Brian Cowen said at the weekend that people's living standards would fall by 10pc this year. This implies that each taxpayer will have to pay an average of €2,000 a year more to the taxman, according to the Institute of Chartered Accountants.



    Anyone want to listen to accountants that think that €2000 / 12 = €200


  • Closed Accounts Posts: 14,483 ✭✭✭✭daveirl


    This post has been deleted.


  • Closed Accounts Posts: 23,316 ✭✭✭✭amacachi


    Maybe because they can stay within allowed deficits. Or in some cases go above them but not really care since they're not as reliant as us on the EU, e.g. Britain. Also as far as I know not many countries have the kind of percentage shortfall we have.

    Spending money we didn't have is what got the world to this point, and now the europeans and americans are stepping it up another level.


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  • Registered Users, Registered Users 2 Posts: 8,452 ✭✭✭Time Magazine


    This budget isn't about stopping the recession, it's about fixing the deficit. Politically, raising taxes are much easier than making cuts. Yes, it's likely to make the recession worse in the short-term, but it is absolutely necessary in the long-term.


  • Closed Accounts Posts: 23,316 ✭✭✭✭amacachi


    This budget isn't about stopping the recession, it's about fixing the deficit. Politically, raising taxes are much easier than making cuts. Yes, it's likely to make the recession worse in the short-term, but it is absolutely necessary in the long-term.

    Thank **** someone said it.


  • Banned (with Prison Access) Posts: 32,865 ✭✭✭✭MagicMarker


    jhegarty wrote: »
    Anyone want to listen to accountants that think that €2000 / 12 = €200
    Maybe the €200 a month is before tax?

    Oh....wait...


  • Moderators, Entertainment Moderators, Politics Moderators Posts: 14,550 Mod ✭✭✭✭johnnyskeleton


    This budget isn't about stopping the recession, it's about fixing the deficit. Politically, raising taxes are much easier than making cuts. Yes, it's likely to make the recession worse in the short-term, but it is absolutely necessary in the long-term.

    But only insofar as it has regard to the laffer curve. The politically popular thing to do would be to tax the bejasus out of the rich, but this could come back to bite us in the long term. Since the uber rich often don't pay any tax anyway (although I'm all in favour of putting an end to this) the high earners who will be targeted most are IMO the most sensitive to change.

    I think the main way of closing the gap should be spending cuts. Taxes have to increase, but for the times that are in it the government have to forget about being popular and being fair and should look instead to what tax system will provide the biggest increase in the total tax take.


  • Closed Accounts Posts: 14,483 ✭✭✭✭daveirl


    This post has been deleted.


  • Registered Users, Registered Users 2 Posts: 8,452 ✭✭✭Time Magazine


    But only insofar as it has regard to the laffer curve.
    The Laffer curve is exaggerated in its importance. We're nowhere near the maximum point, at least in the short-term. Additionally, I strongly suspect the Laffer tilts right in times of recession because of (i) social solidarity, and (ii) the tight labour market.
    daveirl wrote: »
    This post has been deleted.
    I disagree with the analysis. Roughly speaking, I think it's the second-best option. Best option would be cut expenditure, though that is perhaps not possible because we don't live in a dictatorship and David Begg wields far too much power. Second best is to address this problem with taxation. Third option is to do nothing, which may have good long-term effects as we are forced to change our ways, but given the IMF's history at destroying the "social fabric" of society, as fiscally-conservative as I am I don't want to risk that.


  • Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    The Laffer curve is exaggerated in its importance. We're nowhere near the maximum point, at least in the short-term. Additionally, I strongly suspect the Laffer tilts right in times of recession because of (i) social solidarity, and (ii) the tight labour market.
    Very little social solidarity in Ireland at present though.


  • Registered Users, Registered Users 2 Posts: 8,452 ✭✭✭Time Magazine


    I'm not suggesting it should be over-stated in importance, but I do think the somewhat-accepted view that "Okay, we're in a mess and we should all take a hit" will mean people will be less likely to substitute leisure for labour (should that be the other way round? I mean taking time off, regardless.) in the face of higher taxation.


  • Registered Users, Registered Users 2 Posts: 18,854 ✭✭✭✭silverharp


    I'm not suggesting it should be over-stated in importance, but I do think the somewhat-accepted view that "Okay, we're in a mess and we should all take a hit" will mean people will be less likely to substitute leisure for labour (should that be the other way round? I mean taking time off, regardless.) in the face of higher taxation.


    it will affect spending although the uncertainty is worse. If the budget is going to cost me 3K say , then I'll be looking to spend 3K less , I'll be starting with the wife's Westwood membership. lol

    A belief in gender identity involves a level of faith as there is nothing tangible to prove its existence which, as something divorced from the physical body, is similar to the idea of a soul. - Colette Colfer



  • Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    I'm not suggesting it should be over-stated in importance, but I do think the somewhat-accepted view that "Okay, we're in a mess and we should all take a hit" will mean people will be less likely to substitute leisure for labour (should that be the other way round? I mean taking time off, regardless.) in the face of higher taxation.
    I think most people will see the tax hike not as a means of boosting the economy but as a failure of the government to get necessary cuts past the unions. For this reason I think a property tax may prove attractive.


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  • Moderators, Entertainment Moderators, Politics Moderators Posts: 14,550 Mod ✭✭✭✭johnnyskeleton


    The Laffer curve is exaggerated in its importance. We're nowhere near the maximum point, at least in the short-term. Additionally, I strongly suspect the Laffer tilts right in times of recession because of (i) social solidarity, and (ii) the tight labour market.

    Whether that holds true generally is one thing, but I think there is little social solidarity at the moment and the labour market is so tight it is being squeezed to near breaking.

    The laffer curve is more of a medium term measure than a short term measure, but people will turn to the black economy, seek out more tax breaks, be more willing to accept reduced overtime/bonuses, look into moving abroad (don't forget that while there might be no prospects for unskilled workers to emigrate, the higher earners can earn just as much anywhere else) and at the same time the massive job losses means pressure to reduce wages, even at the top end (think solicitors, accountants, architects etc). It also means that there is less incentive to try to better yourself and get a higher paying job.

    I think that the tipping point is when net deductions from your income exceed 50%. We are already near that level for some people (e.g. 41% higher tax, c. 5% PRSI, 2/3% income levy). There was talk of a 48% new higher rate, so add to that 5% PRSI and the 6% income levy, you're talking nearly 60% tax. That would discourage a lot of high earners.

    So what we'll find is that people who are earning €500k p.a. will be finding as many ways to reduce their tax liability as possible - far more so than before, and the total tax take will decrease.

    This is often talked about in terms of "They earn €500k p.a. they're rich they gotta pay", but I don't care so much for that type of thinking. I'm more concerned with how we extract the maximum amount of tax euros, and I'm concerned that more taxes at the higher rate will not help in that regard.


  • Registered Users, Registered Users 2 Posts: 3,981 ✭✭✭Diarmuid


    Since the uber rich often don't pay any tax anyway (although I'm all in favour of putting an end to this) the high earners who will be targeted most are IMO the most sensitive to change.
    Who are these Irish resident uber rich (whatever that is) and under what tax laws do they not need to pay tax?


  • Closed Accounts Posts: 6,609 ✭✭✭Flamed Diving


    Let's wait until the budget actually comes out, shall we?


  • Moderators, Entertainment Moderators, Politics Moderators Posts: 14,550 Mod ✭✭✭✭johnnyskeleton


    Diarmuid wrote: »
    Who are these Irish resident uber rich (whatever that is) and under what tax laws do they not need to pay tax?

    First of all you added the qualification "resident" so you are obviously aware of the Cinderella rule and other off shore ways of avoiding tax (e.g. U2 basing their business in Holland).

    Then there are also numerus property related tax incentives such as s.23, s.50 etc (these are under the Planning Acts), there are also tax breaks for investing in Hotels, there is the loophole that allows developers to avoid paying stamp duty on land acquisitions etc, sending your wife to Italy and putting through the transfers of your business in her name, etc etc.

    Mostly, the tax law under which they can avoid tax is the Taxes Consolidation Act, 1997 as amended, and European wide taxation systems. But you are looking at it the wrong way round. The point is that the legislation is not always there to make sure that they do pay it, rather than there being a specific law which allows them to avoid tax.

    So don't pretend like you are unaware of the benefits of having a good accountant if you are very wealthy. Avoiding tax is perfectly legal, and can massively reduce a person's tax liability.


  • Registered Users, Registered Users 2 Posts: 3,981 ✭✭✭Diarmuid


    First of all you added the qualification "resident" so you are obviously aware of the Cinderella rule and other off shore ways of avoiding tax (e.g. U2 basing their business in Holland).
    Oh you mean people who live and pay taxes in another country? Yes what evil scheming cheaters.
    Then there are also numerus property related tax incentives such as s.23, s.50 etc (these are under the Planning Acts), there are also tax breaks for investing in Hotels, there is the loophole that allows developers to avoid paying stamp duty on land acquisitions etc, sending your wife to Italy and putting through the transfers of your business in her name, etc etc.
    .
    You are still not putting an figures on any of this. Are you saying property developers resident in Ireland are earning millions/year and not paying tax on all of it? Then you throw in the nugget of one loophole which a handful of people used to avoid paying cgt on an asset. There are 30000 millionaires in Ireland, two that we know if used this loophole.
    So don't pretend like you are unaware of the benefits of having a good accountant if you are very wealthy. Avoiding tax is perfectly legal, and can massively reduce a person's tax liability.
    I totally agree, but your original quote was the tabloidesque and totally inaccurate "Since the uber rich often don't pay any tax anyway" . I asked you to back that statement up, all of it. Maybe you'd prefer to retract it?


  • Moderators, Entertainment Moderators, Politics Moderators Posts: 14,550 Mod ✭✭✭✭johnnyskeleton


    Diarmuid wrote: »
    Oh you mean people who live and pay taxes in another country? Yes what evil scheming cheaters.

    No I don't and you know it so stop with the straw man argument. Irish people who earn their money in Ireland but who do the minimum necessary to qualify as living in a more favourable tax regime.

    Diarmuid wrote: »
    You are still not putting an figures on any of this. Are you saying property developers resident in Ireland are earning millions/year and not paying tax on all of it? Then you throw in the nugget of one loophole which a handful of people used to avoid paying cgt on an asset. There are 30000 millionaires in Ireland, two that we know if used this loophole.

    You never asked me to put numbers on it and you are exposing the conceit of your earlier post in that you seem to be patently aware of the possibilities for avoiding tax.


    Diarmuid wrote: »
    I totally agree, but your original quote was the tabloidesque and totally inaccurate "Since the uber rich often don't pay any tax anyway" . I asked you to back that statement up, all of it. Maybe you'd prefer to retract it?

    From that tabloid, the Sunday Business Post:

    http://archives.tcm.ie/businesspost/2009/03/08/story40112.asp
    In summary, it appears - though it is impossible to prove conclusively - that there is a significant group of higher earners in the PAYE sector who pay a large percentage of income tax and generally avail only of normal tax reliefs, such as those on pensions.
    ix.e?ir&s=7912896&n=?479406

    Some, no doubt, also benefit from rental income relief on property, as they would own investment homes, but most are clearly not engaged in higher level tax planning, given the large amounts of tax they pay.

    Then there is another group of self-employed or very high earners who, through corporate structures or the aggressive use of reliefs, have managed to reduce their income tax bills substantially. Some have even taken the ultimate step of becoming tax exiles.
    Some pay no tax through tax incentives, others become tax exiles. Some sit on their wealth or channel it through different countries. I made no comment as to the amount of them, nor of the percentage of them who engaged in such practices. Other than insofar as I think we should try to obtain more tax from such individuals, I made no comment as to the morality of them doing same (FWIW, individuals are perfectly entitled to optimise their taxes). I am further hampered in that I like every other citizen do not have access to firm data from the Revenue Commissioners. So I can't point to specific individuals (although I do have a fair idea of who some of them are), but the point is that if you read all of what I said rather than just selectively quote so that you can set up a straw man argument, the people most hit by the "tax the rich" type of income tax increases are not necessarily the extraordinarily wealthy, but rather those with fairly large incomes, and those latter are IMO fairly sensitive to changes in income tax levels.


  • Moderators, Entertainment Moderators, Politics Moderators Posts: 14,550 Mod ✭✭✭✭johnnyskeleton


    Considering that you felt perfectly free to infer your own view of what was being said in a Sunday Times article without basing that on anything specific in the piece (hysteria and vibe were the phrases I think you used), I find it hard to accept that you need everything to be backed up with evidence. However, if you want me to back my statements up, hmmm, let's see....do you want evidence that the country is in trouble or that my pessimism is contrary to public sentiment? How about for starters the latest news on the budget, which looks to be disappointingly weak. Or the drop in GDP in Q408 (approx 7.5% - that annualises to a c. 20% drop in GDP)? Or the unemployment perhaps? From looking at these factors, and using that all too fallible economic predictor (a best guess) it seems to me that the government is on course to lead this country to a slow painful death. The proposed increases in taxes will not increase the overall tax take IMO, and the unwillingness to cut spending in any meaningful way means that the budget current deficit will continue to grow over the next few years. Constantin Gurdgiev had a good article at the weekend in which he argues that no amount of tax increases will bring our budget under control, but the government seem either blissfully unaware of this, or else they are trying to get as much out of the country as they can before it can no longer raise funds on international markets and is forced into soverign default and/or EU/IMF intervention.


  • Closed Accounts Posts: 6,609 ✭✭✭Flamed Diving


    Just reading/listening to the news. It would appear that the Govt are leaning towards the increase tax option.

    Tbh, I can't come to a conclusion about which is worse; slashing spending or increasing taxes. Both will have a big negative effect on the economy. Anyway, 'tis still speculation at this point. I really can't wait to get my mitts on it!

    :)


  • Moderators, Entertainment Moderators, Politics Moderators Posts: 14,550 Mod ✭✭✭✭johnnyskeleton


    Just reading/listening to the news. It would appear that the Govt are leaning towards the increase tax option.

    Tbh, I can't come to a conclusion about which is worse; slashing spending or increasing taxes. Both will have a big negative effect on the economy. Anyway, 'tis still speculation at this point. I really can't wait to get my mitts on it!

    Which is worse? Well for a start you can control the effects of spending cuts much more easily than the effects of tax increases, for another there is a lot of waste in the public sector that can be trimmed with little consequence.

    But of course why should we deal with either when our government can just borrow its way out of debt?


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  • Closed Accounts Posts: 6,609 ✭✭✭Flamed Diving


    Considering that you felt perfectly free to infer your own view of what was being said in a Sunday Times article without basing that on anything specific in the piece (hysteria and vibe were the phrases I think you used), I find it hard to accept that you need everything to be backed up with evidence.

    Indeed, I was referring to the tone of the article. Which is a matter of interpretation, I guess. How am I supposed to convince you of this with 'evidence'? Anyway, I left that thread because we were simply going around in circles, I'm not returning to that.
    However, if you want me to back my statements up, hmmm, let's see....do you want evidence that the country is in trouble or that my pessimism is contrary to public sentiment?

    Interesting you should mention that:

    Consumer Sentiment stabilises in March

    http://www.esri.ie/irish_economy/consumer_sentiment/latest_consumer_sentiment/
    How about for starters the latest news on the budget, which looks to be disappointingly weak.

    Hmm, the lack of plan for the financial system may appear to be worrying, but at least they are not rushing it. It is also disappointing that they are not making significant cuts on their own doorstep.
    Or the drop in GDP in Q408 (approx 7.5% - that annualises to a c. 20% drop in GDP)?

    So GDP fell 20% in 2008? How did you calculate that?
    Or the unemployment perhaps?

    Yup, our economic situation is pretty bad. I wouldn't call it a death sentence just yet, we still have room to get out of it, on our own terms. How about this metaphor? We are still on trial, and our defence is still making its case? Like that one?
    From looking at these factors, and using that all too fallible economic predictor (a best guess) it seems to me that the government is on course to lead this country to a slow painful death.

    Just felt the need to whip the highlighter out there.
    The proposed increases in taxes will not increase the overall tax take IMO, and the unwillingness to cut spending in any meaningful way means that the budget current deficit will continue to grow over the next few years. Constantin Gurdgiev had a good article at the weekend in which he argues that no amount of tax increases will bring our budget under control, but the government seem either blissfully unaware of this, or else they are trying to get as much out of the country as they can before it can no longer raise funds on international markets and is forced into soverign default and/or EU/IMF intervention.

    If the government treds an overly-zealous tax policy, then yes, I think that default is possible in 2-3 years. It would appear that the government may be pursuing the tax route, for now. Perhaps they feel that there was still room for tax increases, afterwhich they can look at spending cuts.

    Either way, it's going to be a tough budget, with very little to cheer about.


  • Closed Accounts Posts: 6,609 ✭✭✭Flamed Diving


    Transcript of a Press Briefing by David Hawley,
    Senior Advisor, External Relations Department, International Monetary Fund.

    Washington, D.C., Thursday, February 12, 2009
    QUESTIONER: You saw yesterday that the Irish government recapitalized the banks. Do you have anything for us on that? And I just want to ask directly, is the IMF in talks with Ireland at the moment?

    MR. HAWLEY: I've got nothing for you specifically on the banking developments that occurred yesterday. But, on Ireland more generally, I would say that Ireland faces a difficult economic situation and will need to take steps to manage the financial sector and fiscal risks. However, we do not envisage that IMF financing will be needed to deal with these problems.

    http://www.imf.org/external/np/tr/2009/tr021209.htm


  • Registered Users, Registered Users 2 Posts: 1,245 ✭✭✭Fat_Fingers


    I think i can refer to myself as ordinary Joe Soap and i have to admit i have no real indept understanding of economics on scale you guys talk in this forum. All the names and models mentioned here went way over my head.

    So to bring it a bit down to the real world...Will government taking extra 200 euro our of my pocket suggestively stabilize deficit? I don't know.... In the meantime when comes to shopping its good bye Ireland and hello North.Everything else is irrelevant when you have to pay the bills and feed the family.


  • Closed Accounts Posts: 6,609 ✭✭✭Flamed Diving


    I think i can refer to myself as ordinary Joe Soap and i have to admit i have no real indept understanding of economics on scale you guys talk in this forum. All the names and models mentioned here went way over my head.

    So to bring it a bit down to the real world...Will government taking extra 200 euro our of my pocket suggestively stabilize deficit? I don't know.... In the meantime when comes to shopping its good bye Ireland and hello North.Everything else is irrelevant when you have to pay the bills and feed the family.

    That's exactly the problem. For every Euro they take out of peoples pocket, they actually change peoples behaviour with that income they have remaining. Meaning people will spend even less, meaning less tax intake for the government through VAT, etc. But then again, cutting back on public spending has a similar, multiplicative effect.

    It's really picking the least worst option, and it seems the Gov are going for the tax route, for now.

    Interesting times.


  • Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    It's a learning process the country has to go through. We need to learn that taking the politically easiest option - raising taxes in this case - is not always the best one.


  • Registered Users, Registered Users 2 Posts: 8,452 ✭✭✭Time Magazine


    Thread cleaned up with a machete. Let's all be friends and leave discussion of where we want this forum to go to the other thread. I deleted posts that contained some good points so if you want them saved please PM me. Otherwise, let's move on...


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  • Moderators, Entertainment Moderators, Politics Moderators Posts: 14,550 Mod ✭✭✭✭johnnyskeleton


    Interesting you should mention that:

    Consumer Sentiment stabilises in March

    http://www.esri.ie/irish_economy/consumer_sentiment/latest_consumer_sentiment/

    I'm concerned that this is a false dawn and that we are about to see a lot of misplaced optimism (bull trap) particularly in house prices, but also in stocks.
    Hmm, the lack of plan for the financial system may appear to be worrying, but at least they are not rushing it. It is also disappointing that they are not making significant cuts on their own doorstep.

    It seems to me that they sit on their hands, then rush a budget, then sit on their hands, then rush a budget, then sit on their hands....

    I am also concerned about the lack of cuts, but at the figures in the Irish Times today (expenditure €65bn, income €34bn) disappointment does not begin to describe it. I'm horrified that they are not cutting down on government expenditure.

    http://www.irishtimes.com/newspaper/breaking/2009/0406/breaking21.htm
    So GDP fell 20% in 2008? How did you calculate that?

    Annually is for a full year. Annualised is a monthly or quarterly figure extrapolated to a yearly figure. It shows that if the economy performs as it did in Q4 2008 for the next 3 quarters, we could be looking at annual GDP drops of 20% or more. It remains to be seen what the drop is for Q109 which will give a clearer view as to whether the Q4 result was an abberation (perhaps due to the tricle down of the collapse and near collapse of financials etc).
    Will government taking extra 200 euro our of my pocket suggestively stabilize deficit? I don't know

    The way it is looking, they won't take 200 out of everyone's pockets - it would go something more like this: €500 of out one persons, €300 out of another's, €150 from the third, €50 from the fourth and nothing from the fifth.

    Will it go towards plugging the hole in government finances? Well, if the Irish times is saying the gap is €31bn, and we don't yet know what effect the tax hikes will have (nor do we know how much we are going to have to spend on social welfare payments to the unemployed), I can't honestly see it having anything other than a marginal effect. The government really are waiting to see what will happen in the hope that something will pop up between now and the next budget day.


  • Closed Accounts Posts: 6,609 ✭✭✭Flamed Diving


    I'm concerned that this is a false dawn and that we are about to see a lot of misplaced optimism (bull trap) particularly in house prices, but also in stocks.

    Well, it shows that public sentiment isn't as bad as people think.

    (That's a really odd statement, when you think about it)


    It seems to me that they sit on their hands, then rush a budget, then sit on their hands, then rush a budget, then sit on their hands....

    Politicians, eh?
    I am also concerned about the lack of cuts, but at the figures in the Irish Times today (expenditure €65bn, income €34bn) disappointment does not begin to describe it. I'm horrified that they are not cutting down on government expenditure.

    http://www.irishtimes.com/newspaper/breaking/2009/0406/breaking21.htm

    Ok, perhaps they are not doing enough, but if they got too excited and started brandishing TE's forum machete on the public finances they would end up making things much, much worse. There are countless examples of this from the Asian and Latin crises. Making 50% cuts will not magically solve the problem, despite the IMF's insistence.
    Annually is for a full year. Annualised is a monthly or quarterly figure extrapolated to a yearly figure. It shows that if the economy performs as it did in Q4 2008 for the next 3 quarters, we could be looking at annual GDP drops of 20% or more. It remains to be seen what the drop is for Q109 which will give a clearer view as to whether the Q4 result was an abberation (perhaps due to the tricle down of the collapse and near collapse of financials etc).

    Ok, so you are taking a single quarterly figure, and you are using that to forecast an entire years growth? I suppose the trend would indicate further drops, we will just have to see!


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