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Budget 2010

  • 13-07-2010 05:04PM
    #1
    Closed Accounts Posts: 57 ✭✭


    If we get the leadership we need --


    A property tax (range of €200,300,400,500 based on house size). Only payable by those who, on 31st December 2007, owned their homes outright; home not used as equity for mortgage. It would essentially be an asset tax, and would apply to all other assets over the value of €100,000 (e.g., second home). Active commercial property, including active agricultural land, would be exempt.

    Abolish the income levy.

    Raise income tax by 1% at lower level and 2% at the higher level. adjust bands to remove lowest paid 3-5% from taxation (min wage).

    Reduce VAT to 20% and 12%.

    Reduce the minimum wage by 15c (about 2%) down to €8.50per/hr (note: income levy removed).

    Reduce employer's PRSI by 25% for all new employees (into new positions) hired in 2011/2012.

    Reduce old-age pension by 3% and unemployment benefits by 4% inline with cost of living adjustments. This will also reduce the scale of the poverty trap and will be largely offset by VAT reductions.

    Implement McCarthy recommendation to restructure state bodies.

    Announce a substantial capital investment plan that will allow some of the on-going 'over-spend' to be redirected back into the economy in a worthwhile and mobilizing way; to stablise (\reduce) the unemployment rate and get domestic consumption and enterprise moving again. A new National Development Plan (2011-2016) will be national (some important landmark development like Metro North) and local (schools improvement project, new community centers and swimming pools -- get construction workers back into the economy).

    Lower the band where DIRT comes into effect; from €25K to €20K.

    Extend tax credits for mortgage interest relief, but at a reducing rate (to remain in place for 10 years for all first time buyers).

    Re-introduce tax on off-course betting/winnings @ 10% -- it was 3% prior to McCreevy.

    No change to: family allowance payments, family income supplements, back to work/education allowance and entitlements, and excise duty.

    Medical card system, and 'free-fees' initiative, remain unchanged in 2010, but fully reviewed next year.


    -- are you with me!?
    Tagged:


«1

Comments

  • Closed Accounts Posts: 9,364 ✭✭✭ei.sdraob


    celtanu wrote: »
    It would essentially be an asset tax

    rewarding people who engaged in debt while punishing the sensible or those who paid of debts :rolleyes:

    no

    edit: not to mention that assets can be liquidated and the money moved elsewhere in eu or father afield


  • Closed Accounts Posts: 57 ✭✭celtanu


    ei.sdraob wrote: »
    rewarding people who engaged in debt while punishing the sensible or those who paid of debts :rolleyes:

    no

    edit: not to mention that assets can be liquidated and the money moved elsewhere in eu or father afield


    I appreciate this view. However this is not the case. In particular, it is worth noting that "those who paid off their debt" were most likely to be the ones who originally purchased real-estate at much lower prices and enjoyed a high-inflation (and high-income) economy for the past 15-20 years, which quickly diminished the burden of their debt. They now own an asset. Many younger people in comparison - through no fault of their own - are now unable to even borrow money to purchase their own homes, at the moment.

    Assets "father afield" would be liable for the tax, and in this sense it will allow the wealthy (and the very wealthy) to make their proportional contribution.


  • Closed Accounts Posts: 19,968 ✭✭✭✭mikemac


    celtanu wrote: »
    A property tax (range of €200,300,400,500 based on house size). Only payable by those who, on 31st December 2007, owned their homes outright; home not used as equity for mortgage.

    person pays their mortgage off early and pays this tax
    The next person released equity to buy an apartment in sunny Spain and is exempt

    Have you though this through OP? Or maybe I misread it

    Edit: Also, an example there are many elderly farmers with houses in scenic areas worth quite a lot, but they aren't rich, they live on a pension and probably can't farm the land themselves anymore.
    Live on a pension as your only income and pay a property tax?


  • Registered Users, Registered Users 2 Posts: 7,476 ✭✭✭ardmacha


    So Motor tax should only be levied on people who own their cars, not on those who buy them on HP?
    After all that has happened why on earth should you reward people borrowing money and penalise those who are more frugal?


  • Closed Accounts Posts: 57 ✭✭celtanu


    person pays their mortgage off early and pays this tax
    The next person released equity to buy an apartment in sunny Spain and is exempt

    Have you though this through OP? Or maybe I misread it

    Edit: Also, an example there are many elderly farmers with houses in scenic areas worth quite a lot, but they aren't rich, they live on a pension and probably can't farm the land themselves anymore.
    Live on a pension as your only income and pay a property tax?


    This might be the case. But the idea of setting in at 2007 situation is to prevent people engaging in recklessness. The sunny Spain scenario is not really going to affect this as it is a co-lateral situation .. the condition would only be for direct mortgages. It would have to be tweaked but you can see that you can easily control for these speculating outliers if needs be.

    The elderly farmer can get a goat :)


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  • Closed Accounts Posts: 57 ✭✭celtanu


    ardmacha wrote: »
    So Motor tax should only be levied on people who own their cars, not on those who buy them on HP?
    After all that has happened why on earth should you reward people borrowing money and penalise those who are more frugal?

    People who own their own motors pay VRT at purchase. Motor tax and excise is paid by all.


  • Closed Accounts Posts: 19,968 ✭✭✭✭mikemac


    I think ardmacha was drawing a comparison it was clear to me. It wasn't to do with cars

    The whole point is you are penalizing the person who pays off their mortgage early and doesn't have outstanding debt.
    If someone realy cut back on drink, eating out, holidays and maybe never spent 30k on a car as many do, they could have upped their mortgage payments by several hundred every month.

    That cuts years off a mortgage! So say it was cleared in 2007

    And now they are being penalized for not being in debt.
    What if their neighbour has 50,000 left on their mortage in 2007 . They wasted money on Mercedes cars and many holidays over the years but you see them in debt and exempt them.


  • Closed Accounts Posts: 9,364 ✭✭✭ei.sdraob


    celtanu wrote: »
    I appreciate this view. However this is not the case. In particular, it is worth noting that "those who paid off their debt" were most likely to be the ones who originally purchased real-estate at much lower prices and enjoyed a high-inflation (and high-income) economy for the past 15-20 years, which quickly diminished the burden of their debt. They now own an asset. Many younger people in comparison - through no fault of their own - are now unable to even borrow money to purchase their own homes, at the moment.

    Assets "father afield" would be liable for the tax, and in this sense it will allow the wealthy (and the very wealthy) to make their proportional contribution.

    I own a house that i bought/build with no debt based on years of hard work and savings and starting an IT business
    I didnt engage in the property game, in fact avoided it and my jobs are/were never even remotely related to property speculation

    Believe it or not there are successful people in this country who got to where they are by hard work and not getting involved in property
    Your idea would punish people like me while rewarding people who got into huge debt


  • Registered Users, Registered Users 2 Posts: 3,834 ✭✭✭Welease


    Seems to be a lot of cuts in taxation in your budget, at a time when we have a massive defecit and a falling tax revenue..


  • Closed Accounts Posts: 57 ✭✭celtanu


    I think ardmacha was drawing a comparison it was clear to me. It wasn't to do with cars

    The whole point is you are penalizing the person who pays off their mortgage early and doesn't have outstanding debt.
    If someone realy cut back on drink, eating out, holidays and maybe never spent 30k on a car as many do, they could have upped their mortgage payments by a several hundred every month.

    That cuts years off a mortgage! So say it was cleared in 2007

    And now they are being penalized for not being in debt.
    What if their neighbour has 50 thousands on their mortage. They wasted money on Mercedes cars and many holidays over the years but you see them in debt and exempt them.

    Ok. I understood ardmacha's point and I think my reply dealt with it appropriately.

    The state is not in the business of penalizing prudence - that's not the point of taxation. Taxation is required to hold the functioning of the state together. Private property rights are conferred and protected by the state. It is fair to pay a modest price for the privileges, as i see it.

    The people who "paid off their mortgages" now own real-estate -- they purchased an asset.

    People who ate in restaurants and bought new cars paid lots of VRT, VAT, and excise charges along the way and did not benefit as much from generous tax credits that were put in place to encourage prudence, and, yes, perhaps they have nothing to show for it. It's unfortunate for them. But these are the lifestyle choices people make.

    The state still needs to raise revenue to function. And the ordinary functioning of the state is even more important for those who own substantial private assets.


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  • Closed Accounts Posts: 19,968 ✭✭✭✭mikemac


    Fair enough, we'll have to revisit that post about moving assets offshore so


  • Closed Accounts Posts: 57 ✭✭celtanu


    Welease wrote: »
    Seems to be a lot of cuts in taxation in your budget, at a time when we have a massive defecit and a falling tax revenue..

    I know. However, I think it's a fair budget for the year ahead.

    Increases in Income taxes and Asset taxes would generate about 2 bn. The capital investment plan (and other stimulus costs) would cost 1bn. So net saving of 1bn. but i suspect it would generate more economic activity, and over the year reduce the number of people on benefits. The net effect is about 1.5bn, half what we need.

    what else would you suggest?


  • Registered Users, Registered Users 2 Posts: 3,834 ✭✭✭Welease


    celtanu wrote: »
    If we get the leadership we need --


    A property tax (range of €200,300,400,500 based on house size). Only payable by those who, on 31st December 2007, owned their homes outright; home not used as equity for mortgage. It would essentially be an asset tax, and would apply to all other assets over the value of €100,000 (e.g., second home). Active commercial property, including active agricultural land, would be exempt.

    I would also think that the vast majority of people in Ireland, don't in fact own their own homes (they still have mortgages), and those that do would likely be retired or close to retiring age (and most likely would be exempt from these payment)..

    How much exactly do you think this would raise?


  • Closed Accounts Posts: 57 ✭✭celtanu


    Fair enough, we'll have to revisit that post about moving assets offshore so

    You would have to move yourself offshore to avoid my asset tax. :)


  • Closed Accounts Posts: 9,364 ✭✭✭ei.sdraob


    celtanu wrote: »
    You would have to move yourself offshore to avoid my asset tax. :)

    Not a problem, ill take my business with me while i am at it :rolleyes: reducing your other tax income


  • Closed Accounts Posts: 57 ✭✭celtanu


    Welease wrote: »
    I would also think that the vast majority of people in Ireland, don't in fact own their own homes (they still have mortgages), and those that do would likely be retired or close to retiring age (and most likely would be exempt from these payment)..

    How much exactly do you think this would raise?

    Almost half the country own their own homes outright, from what I can find on this.

    Retired people would not be exempt? why would they? Note that the average payment would be about €300, as I imagine it.

    I estimate that it could raise about €1bn per year, if it includes all assets owned over the value of €100,000.


  • Registered Users, Registered Users 2 Posts: 3,834 ✭✭✭Welease


    celtanu wrote: »
    I know. However, I think it's a fair budget for the year ahead.

    Increases in Income taxes and Asset taxes would generate about 2 bn. The capital investment plan (and other stimulus costs) would cost 1bn. So net saving of 1bn. but i suspect it would generate more economic activity, and over the year reduce the number of people on benefits. The net effect is about 1.5bn, half what we need.

    what else would you suggest?

    Sorry, but where are you getting these figures from?

    There is no way the Asset tax would raise that much (given the amount of people who don't have mortgages and are not pensionable age would be tiny)..

    You remove the income levy 2%, 4% and 6% depending on income, and add 1% and 2% to tax rates and then remove 3-5% of low paid people from the tax net.. that looks like less tax revenue

    You drop VAT.. less revenue again

    All I can see if less tax intake in your budget and higher expenditure via capital projects...


  • Closed Accounts Posts: 57 ✭✭celtanu


    ei.sdraob wrote: »
    Not a problem, ill take my business with me while i am at it :rolleyes: reducing your other tax income

    I get you some how!! :pac:

    what suggestions do you have for this silly little island we call home..


  • Registered Users, Registered Users 2 Posts: 3,834 ✭✭✭Welease


    celtanu wrote: »
    Almost half the country own their own homes outright, from what I can find on this.

    Retired people would not be exempt? why would they? Note that the average payment would be about €300, as I imagine it.

    I estimate that it could raise about €1bn per year, if it includes all assets owned over the value of €100,000.

    Do you have a source for the 50% ownership? I would be amazed to find that out to be true..

    Why would the be exempt? They (like social welfare claimants) are exempt from most things.. why would this be any different?


  • Closed Accounts Posts: 9,364 ✭✭✭ei.sdraob


    celtanu wrote: »
    I get you some how!! :pac:

    what suggestions do you have for this silly little island we call home..

    1. cut the extraordinary waste in public services and welfare, while our income has fallen to 2004 levels our expenditure keeps rising, with a reduction in the cost of living and all ...

    2. expand the taxnet, we are in a situation where half the workforce effectively dont pay anything anymore, this would require a reduction in welfare so as to not make that option anymore attractive than it already is

    3. stop with all tax subsidies (horses, property, younameit)

    4. legalise weed :D and tax it

    5. scrap FAS and EA, waste of money and space they are

    6. maybe sell some of the semistates to raise money, the employees in these are too cozy and unproductive (first hand experience)


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  • Closed Accounts Posts: 57 ✭✭celtanu


    Welease wrote: »
    Sorry, but where are you getting these figures from?

    There is no way the Asset tax would raise that much (given the amount of people who don't have mortgages and are not pensionable age would be tiny)..

    You remove the income levy 2%, 4% and 6% depending on income, and add 1% and 2% to tax rates and then remove 3-5% of low paid people from the tax net.. that looks like less tax revenue

    You drop VAT.. less revenue again

    All I can see if less tax intake in your budget and higher expenditure via capital projects...

    Income levy is 1% and 2% as far as I know. there are no higher amounts - you might be thinking of public sector pension levy. The overall effect of my measure would be neutral to slightly positive.

    Dropping VAT could increase VAT revenue -- things will be cheaper, people will buy more - so it depends! I would say positive effect, as there might be a lot of pent up buying out there. (people always hold off during recession, even those with lots of money - as prices will be cheaper next month). You could signal that VAT would increase next year, at the same time, to encourage consumption now, for example.

    Pensioners would not be excluded.


  • Registered Users, Registered Users 2 Posts: 3,834 ✭✭✭Welease


    celtanu wrote: »
    Income levy is 1% and 2% as far as I know. there are no higher amounts - you might be thinking of public sector pension levy. The overall effect of my measure would be neutral to slightly positive.

    Dropping VAT could increase VAT revenue -- things will be cheaper, people will buy more - so it depends! I would say positive effect, as there might be a lot of pent up buying out there. (people always hold off during recession, even those with lots of money - as prices will be cheaper next month). You could signal that VAT would increase next year, at the same time, to encourage consumption now, for example.

    Pensioners would not be excluded.

    Levies


    1. Income Levy
    This Income Levy is payable on gross income from all sources before any tax reliefs, capital allowances, losses or pension contributions. The 2009 annual rates and thresholds of the income levy are as follows:
    1.67% Income up to €75,036 per annum
    3% Income between €75,037 and €100,100 per annum
    3.33% Income between €100,101 and €174,980 per annum
    4.67% Income between €174,981 and €250,120 per annum
    5% Income in excess of €250,120 per annum
    Rates and thresholds: 1 January 2009 to 30 April 2009
    Income up to €100,100 per annum 1%
    Income between €100,101 to €250,120 per annum 2%
    Income in excess of €250,120 per annum 3%
    Rates and thresholds: from 1 May 2009
    Income up to €75,036 per annum 2%
    Income from between €75,037 to €174,980 per annum 4%
    Income above in excess of €174,980 per annum 6%
    The levy does not apply:
    • Where an individual's income for a year does not exceed €15,028 per annum.
    • For individuals aged 65 or over where their annual income does not exceed €20,000 per annum
    • For Full Medical card holders
    • To Social Welfare payments
    http://www.taxireland.ie/taxadvice/IncomeTaxPRSI.aspx


  • Closed Accounts Posts: 57 ✭✭celtanu


    Welease wrote: »
    Do you have a source for the 50% ownership? I would be amazed to find that out to be true..

    Why would the be exempt? They (like social welfare claimants) are exempt from most things.. why would this be any different?

    Nah, that's nonsense. they're all loaded. I'm sure you could have exclusion criteria for people who would be in hardship if they had to pay €300 to the state.


    50% well its ball park -- based on own demographic and some assumptions. I would put money on that i'm close. But I cannot find this figure anywhere. Open to correction, if you can.


  • Registered Users, Registered Users 2 Posts: 3,834 ✭✭✭Welease


    celtanu wrote: »
    Nah, that's nonsense. they're all loaded. I'm sure you could have exclusion criteria for people who would be in hardship if they had to pay €300 to the state.


    50% well its ball park -- based on own demographic and some assumptions. I would put money on that i'm close. But I cannot find this figure anywhere. Open to correction, if you can.

    I can't find a figure and thats my point..

    If you are going to claim 2 billion (or whatever income) based on gving people tax cuts via your removal of the income levy, and an asset tax based on a figure you or I have no idea if it's even close.. then in fairness, do you expect people to think it's a decent budget? :)


  • Closed Accounts Posts: 57 ✭✭celtanu


    Welease wrote: »
    Levies


    1. Income Levy
    This Income Levy is payable on gross income from all sources before any tax reliefs, capital allowances, losses or pension contributions. The 2009 annual rates and thresholds of the income levy are as follows:
    1.67% Income up to €75,036 per annum
    3% Income between €75,037 and €100,100 per annum
    3.33% Income between €100,101 and €174,980 per annum
    4.67% Income between €174,981 and €250,120 per annum
    5% Income in excess of €250,120 per annum
    Rates and thresholds: 1 January 2009 to 30 April 2009
    Income up to €100,100 per annum 1%
    Income between €100,101 to €250,120 per annum 2%
    Income in excess of €250,120 per annum 3%
    Rates and thresholds: from 1 May 2009
    Income up to €75,036 per annum 2%
    Income from between €75,037 to €174,980 per annum 4%
    Income above in excess of €174,980 per annum 6%
    The levy does not apply:
    • Where an individual's income for a year does not exceed €15,028 per annum.
    • For individuals aged 65 or over where their annual income does not exceed €20,000 per annum
    • For Full Medical card holders
    • To Social Welfare payments
    http://www.taxireland.ie/taxadvice/IncomeTaxPRSI.aspx



    Point taken. So the rates are 2,4, and 6. I would still get rid of it. Levies make a lot less sense than regular tax. If regular tax is collected fairly - a la the 'principles of taxation'. So, I would still raise the income levels 1% at lower band, and then 3% at higher band. This would be a negative adjustment, but you could alter tax credit entitlement -- as per Comm. Tax Report


  • Closed Accounts Posts: 57 ✭✭celtanu


    Welease wrote: »
    I can't find a figure and thats my point..

    If you are going to claim 2 billion (or whatever income) based on gving people tax cuts via your removal of the income levy, and an asset tax based on a figure you or I have no idea if it's even close.. then in fairness, do you expect people to think it's a decent budget? :)



    Fair enough, I agree. If I had a few underused econ graduates to hand, I could have it revised, with full costings, by tomorrow morning.


  • Closed Accounts Posts: 57 ✭✭celtanu


    ei.sdraob wrote: »
    1. cut the extraordinary waste in public services and welfare, while our income has fallen to 2004 levels our expenditure keeps rising, with a reduction in the cost of living and all ...

    2. expand the taxnet, we are in a situation where half the workforce effectively dont pay anything anymore, this would require a reduction in welfare so as to not make that option anymore attractive than it already is

    3. stop with all tax subsidies (horses, property, younameit)

    4. legalise weed :D and tax it

    5. scrap FAS and EA, waste of money and space they are

    6. maybe sell some of the semistates to raise money, the employees in these are too cozy and unproductive (first hand experience)

    2,3,4,5,6 all sound good and relatively easy to me!

    Not sure about 1. How would you do that? we already made the fatal mistake of letting the govt./public sector get too big.


  • Registered Users, Registered Users 2 Posts: 3,834 ✭✭✭Welease


    celtanu wrote: »
    Fair enough, I agree. If I had a few underused econ graduates to hand, I could have it revised, with full costings, by tomorrow morning.

    I'm not having a go btw :) .. I'm just saying, like most things in life it does look easy to sort out the finances of a country from 50,000 ft, but upon closer inspection it actually can take a lot more than simple suggestions to fix the issues (and we havent even gotten into getting the unions to agree to the cuts suggested in the McCarthy report when the Croke Park agreement means lots of those can't/won't happen :)).


  • Closed Accounts Posts: 9,364 ✭✭✭ei.sdraob


    celtanu wrote: »
    Not sure about 1. How would you do that?

    2dhcznm.jpg

    jokes aside keep and eye at how the new UK govt is undertaking cuts


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  • Registered Users, Registered Users 2 Posts: 4,235 ✭✭✭The_Honeybadger


    ei.sdraob wrote: »
    6. maybe sell some of the semistates to raise money, the employees in these are too cozy and unproductive (first hand experience)
    Those cozy and unproductive staff would all have to be bought off through an ESOP or some other mechanism, they'd enjoy a big windfall and probably only those already close to retirement would lose their jobs through a very generous redundancy. I certainly wouldn't be in favour of selling state assets to punish the staff in any way, I'm sure many of them would love it.


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