The Budget 2101 Three-Five Billion Euro Rationalisation Mystery...

MrDarcy

Just reading the Sunday papers here and in the Business Post, the point has been made that given the current realities as we know them:

(1) As per Croke Park deal, PS pay is untouchable, this side of a further collapse in government revenue

(2) We have been told a property tax is not on the cards this year

(3) The same has been said for a water tax.

Now 3 billion was the figure this time last year before the cost of servicing the national debt rose substantially, and the ECB have also come out over the last few weeks and said that the 3 billion in cuts may have to be deeper, so what was 3 billion, seems to now be cuts required in the region of 3-5 billion, given that the cuts of the last budget have been largely negated by the substantially increased cost of borrowing for running the state...

So the question has to be asked, in the context of no further cuts in PS pay, and no new tax headings being introduced like property and water taxes, and a reluctance to increase PAYE/PRSI rates for fear of damaging what is a very questionable let alone a delicate economic recovery: where are we going to find 3-5 billion in cuts that we are told are going to be put upon us???

I'm starting to suspect some kind of a smash and grab on savings or something along those lines, it is difficult to see what else can be done, as everywhere that cuts can be made seem to have been declared off limits, same can be said for tax increases, except for maybe taking people on low pay into the tax net, something I think should have been done long ago, same can be said for closing off tax loopholes for the wealthy, many of whom seem to pay no tax, however you cannot generate the bulk of the 3-5 billion that is required from those two congregatations.

amacca

MrDarcy wrote: »

J
I'm starting to suspect some kind of a smash and grab on savings or something along those lines,

I've been thinking our government would make it increasingly unattractive for those with savings to keep them on deposit for a while now too (increase in Dirt etc)

in my mind this would have benefit of direct increase in the tax take (for a short while anyway) and might get a bit more money moving in the country.


however...they need to keep the banks capitalised...just how much of whats on deposit in irish banks do they want to encourage to leave the banks...possibly for foreign destinations, seems to be a bit of a balancing act...in my limited understanding at least.

MrDarcy wrote: »

Jit is difficult to see what else can be done, as everywhere that cuts can be made seem to have been declared off limits, same can be said for tax increases, except for maybe taking people on low pay into the tax net, something I think should have been done long ago, same can be said for closing off tax loopholes for the wealthy, many of whom seem to pay no tax, however you cannot generate the bulk of the 3-5 billion that is required from those two congregatations.

I'm not so sure whats being declared off limits really is off limits....I think some of whats been declared off limits will be on the table too!


I think that while closing loopholes for the wealthy might not garner that much, its necessary and it might be surprising how much could be gained......its necessary in any event..if even just for the "optics" of the situation.

Taking people on low pay into the tax net seems to be only one (to my mind at least) that could contribute significantly to the proposed cuts. a small contribution from many would add up to much more than a large contribution from smaller numbers of the Wealthy (not that the wealthy shouldn't pay their fair share either)

sure somebody will come up with some figures/graphs for this one soon

Scarab80

MrDarcy wrote: »

Now 3 billion was the figure this time last year before the cost of servicing the national debt rose substantially, and the ECB have also come out over the last few weeks and said that the 3 billion in cuts may have to be deeper, so what was 3 billion, seems to now be cuts required in the region of 3-5 billion, given that the cuts of the last budget have been largely negated by the substantially increased cost of borrowing for running the state...

I think you are overestimated the additional costs of borrowing. The average yield on borrowings in 2009 was 3.99% - to date in 2010 the yield is 4.32% (note that this is for all types of bonds, not just 10-years).

We have borrowed about 18bn this year, if projections were based on last years average yield of 4% the projections would only be out by 59 million.

Idbatterim

bring anyone working into the tax net, also close off loopholes for the rich. Cut social welfare and all benefits, its already more attractive for alot of people here to choose a career in getting welfare from the state than to work. The cost of living needs to be slashed, then the govement could justify cutting welfare rates, PS pay etc, much more easily. We are faced with an easy decision, determine our own faith and get our house in order, or let the EU or germans do it and possibly lose control over probably our biggest draw here i.e corporation tax.

jimmycrackcorm

The croke park agreement is not untouchable as it was agreed on the basis of economic circumstances. If these are shown to be worse then all bets are off.

Sleepy

Cutting welfare by an average of 61.77 per recipient per week would make up half the saving...

1.5 billion / 466,923 (Live Register for August 2010 - source: CSO) / 52 Weeks

Lowering Rent Allowance Limits could contribute heavily but would need to be done with measures that force landlords to take the hit rather than the tennnants.

Further non-salary related cost-cutting in P.S.

MrDarcy

I was in a public library the other day, I was amazed at the facilities there, free internet access, state of the art PC's and then a lot of people like myself with their own laptops all hooked up to free broadband.

A lot of those in the library (it was packed), seemed to be younger people, students, young people working in town, etc. I imagine a lot of them by virtue of their age would be in minimum wage jobs.

It made me wonder, with such state of the art public facilities available to citizens, why it is right that someone can earn the minimum wage, be outside the tax net, yet at the same time have the use of what are really expensive public facilties.

Surely there is a case to be made for taking 10 or 20 quid a month off those on low pay, to recognise the provision of these type and many many other public services that are available to all citizens???

Go up the Dublin Mountains any day, beautiful parks and walks up there, again maintained by the state, available for one and all to use, but why should those on low pay not now be expected to make a contribution towards the provision of these amenities, services, from public libraries to country walks, etc???

Count Dooku

MrDarcy wrote: »

(1) As per Croke Park deal, PS pay is untouchable, this side of a further collapse in government revenue

" subject to no currently unforeseen budgetary deterioration"

Head The Wall

Obviously every extra billion we have to pump into Anglo or INBS will be hammering our budget. The CP deal should be scrapped

Banned Account

Meh, I'll be dead in 2101 - not my problem.

Tora Bora

Head The Wall wrote: »

Obviously every extra billion we have to pump into Anglo or INBS will be hammering our budget. The CP deal should be scrapped

Suppose we will have the Aviva Stadium deal next time round. John Delaney, and Philip Brown, could do with the business:P

Économiste Monétaire

The cost to the Exchequer, vis-à-vis interest on the national debt, isn't a great deal more than last year. You can find this figure here, on page 4. January to (end) August '09: €1.964 billion; January to (end) August '10: €2.216 billion. A rise of about 12.8%, but €252 million is small when juxtaposed with the cost of Anglo. Every little helps, though, and I think the y-o-y increase will jump when the October Exchequer figures are released.

feicim

Sleepy wrote: »

Cutting welfare by an average of 61.77 per recipient per week would make up half the saving...

1.5 billion / 466,923 (Live Register for August 2010 - source: CSO) / 52 Weeks

Lowering Rent Allowance Limits could contribute heavily but would need to be done with measures that force landlords to take the hit rather than the tennnants.

Further non-salary related cost-cutting in P.S.

Annual income tax take for 2009 was about 12.9 billion.

Increase this by 10% = 1.3 billion

Split over the 1.8 million workers in ireland = ~ 680 eur per year

or 13 per week per worker.

But no, no, no - better to chop 61.77 (a little over 30%) per week of the dole MUCH fairer! Penalise those who lost their jobs even more. And then make them pick up litter and scrub graffiti off walls.

If the plan is to force people to emigrate, its a good idea. Hopefully they will keep paying their negative equity mortgages when they leave (although somehow I don't think this will happen). Then roll on bank bail out # 2.

Idbatterim

regarding the "get out" clause, you would wonder whether the total unforseen cost by Lenihan and his mates, would qualify as "unforseen deterioration in circumstances", this was proably meant as a shortfall in goverment income, but turns out to be an expenditure problem (due to the bank recapitalisation).

maninasia

The plan is probably leave the hard stuff to the next government.

Mister men

Cut off social welfare for all those under 21 years of age.

Cut social welfare by 30% across the board.

Tell the public service unions that the Croke park deal is no longer workable and hit the average high paided civil servent hard.

Slash rent allowance across the board.

20 cigs 20 euro

1 euro on the price of a pint.

Shut down one major hospital.

TD's salary cut by 40%

It's going to be bad folks real bad.

Craven99

Anyone else disappointed that this was not a thread from the future?

feicim

Mister men wrote: »

Cut off social welfare for all those under 21 years of age.

Cut social welfare by 30% across the board.

Tell the public service unions that the Croke park deal is no longer workable and hit the average high paided civil servent hard.

Slash rent allowance across the board.

20 cigs 20 euro

1 euro on the price of a pint.

Shut down one major hospital.

TD's salary cut by 40%

It's going to be bad folks real bad.

It doesn't sound that bad actually. No tax increases for workers. Let the bank bailout cost be borne by the unemployed, drinkers and smokers. Genius.

The_Honeybadger

Idbatterim wrote: »

regarding the "get out" clause, you would wonder whether the total unforseen cost by Lenihan and his mates, would qualify as "unforseen deterioration in circumstances", this was proably meant as a shortfall in goverment income, but turns out to be an expenditure problem (due to the bank recapitalisation).

I think being shut out from the bond markets and having to go cap in hand to the ECB will qualify as "unforseen circumstances" when it eventually happens. Does anybody actually think the CP deal will run its full duration? We need a major correction in the public finances and it will come one way or the other.

@ Sleepy not all the 455,000 people on the live register are on the full rate, for example the 70,000 odd signing for a 3 day week get about 90 euro, do you propose to take 67 euro off them too? Not disagreeing with you entirely, a cut like that is probably necessary, but it won't happen under any circumstances, the government would be out on their ear the day after the budget and they know it if they tried to impose a brutal cut like that.

maninasia

Seemingly the ECB is already buying bonds, they buy them in the 2nd hand market. Maybe everybody should quit the charade and they should start buying directly now so Ireland could get a lower yield. It's going to happen soon anyway, it's clear they are in charge the way Brian Lenihan said he had to wait for their 'confirmation' about Anglo.

Head The Wall

mickeyk wrote: »

Does anybody actually think the CP deal will run its full duration? We need a major correction in the public finances and it will come one way or the other.

I present to you Exhibit A

deise blue wrote: »

You are simply deluding yourself , the Croke Park deal is in situ.

No pay cuts or pension reform discussions until 2014.

Savings to be made via direct/indirect taxation and spending cuts.

You may console yourself that the C P deal can still facilitate pay cuts and pension reform prior to 2014 but every Irish economist worth his salt gas already conceded that this simply won't happen .

I look forward to resuming this discussion in mid 2014

deise blue wrote: »

What this Government craves is a prolonged period of industrial relations stability.

To achieve this they will adhere to the C P agreement and will achieve budgetary targets by spending cuts and direct/indirect taxation.

deise blue wrote: »

Yes - no compulsory redundancies.

Again another academic debate , pay cuts will not be back on the table until 2014.

With an election due in 2012 ( at the the latest ) the current Government will surely be tempted to part reverse pay cuts to those earning the least in the Public Sector.

The_Honeybadger

Head The Wall wrote: »

I present to you Exhibit A

LOL ! Good luck to him, but I just can't see there being any way the deal can be held up when our situation is getting worse with every passing day. FF will limp on until there is an election, could be early next year or 2012, and the new FG / Labour coalition will be taking on one hell of a poisened chalice. Peter Matthews reckons AIB/BOI will be coming cap in hand to the taxpayer for 17bn before all this is over, as if the problem at Anglo wasn't enough to deal with. Without a miracle we will be going to the ECB ala Greece and then all bets are off with regards PS pay and the CP deal.

EDIT: Somedody at the bottom of that article linked this gem, it's a piece from PrimeTime from 2008 just after the guarantee was given, Morgan Kelly attempts in vain to explain the severity of the crisis facing our banks to Brendan Keenan and some guy from Bloxham. Even Kelly vastly underestimates the problem at 20-25bn in losses across the banking sector. It really shows how much the banks have lied to us from day 1 of this crisis.

Head The Wall

He stated explicitly that he would get back to me about this in 2014

skearon

Sleepy wrote: »

Cutting welfare by an average of 61.77 per recipient per week would make up half the saving...

1.5 billion / 466,923 (Live Register for August 2010 - source: CSO) / 52 Weeks

Lowering Rent Allowance Limits could contribute heavily but would need to be done with measures that force landlords to take the hit rather than the tennnants.

Further non-salary related cost-cutting in P.S.

Remember not everyone on Live Register is receiving full welfare, many are part time, 3 day week etc

CSO measures unemployment at approx 277k

johnnyskeleton

Économiste Monétaire wrote: »

The cost to the Exchequer, vis-à-vis interest on the national debt, isn't a great deal more than last year. You can find this figure here, on page 4. January to (end) August '09: €1.964 billion; January to (end) August '10: €2.216 billion. A rise of about 12.8%, but €252 million is small when juxtaposed with the cost of Anglo. Every little helps, though, and I think the y-o-y increase will jump when the October Exchequer figures are released.

If that's €252m on c. €20bn additional borrowings, then they are paying c. 1.25% on average for that.

That suggests to me that they are borrowing short and will have to renew those amounts later this year or early next year. Which, given the deterioration in rates offered for Irish bonds, could lead to a spike in interest next year i.e. that 252m could double when renewed.

johnnyskeleton

MrDarcy wrote: »

I was in a public library the other day, I was amazed at the facilities there, free internet access, state of the art PC's and then a lot of people like myself with their own laptops all hooked up to free broadband.

A lot of those in the library (it was packed), seemed to be younger people, students, young people working in town, etc. I imagine a lot of them by virtue of their age would be in minimum wage jobs.

It made me wonder, with such state of the art public facilities available to citizens, why it is right that someone can earn the minimum wage, be outside the tax net, yet at the same time have the use of what are really expensive public facilties.

Surely there is a case to be made for taking 10 or 20 quid a month off those on low pay, to recognise the provision of these type and many many other public services that are available to all citizens???

Go up the Dublin Mountains any day, beautiful parks and walks up there, again maintained by the state, available for one and all to use, but why should those on low pay not now be expected to make a contribution towards the provision of these amenities, services, from public libraries to country walks, etc???

Parks and libraries are relatively cheap. Some of them are funded by private trusts e.g. Marlay park in Rathfarnham and I think some of the older public libraries were donated by dead rich guys in the 18th and 19th centuries. Education and health on the other hand are not that cheap and these are available to all. Perhaps the minimum amount would be attributable to health and education, and anyone who can demonstrate that they did not benefit from any state education or health service in their entire life, nor will they ever benefit from them, should pay the money. Something specific like that might be more attractive than a generalised amenity levy.

WalterMitty

Colm Mccarthy is todays indo saying 7 real tough budgets to come. Maybe FF know that cutting Public sector a lot is inevitable but want to move that to last few years of the 7 when FG/Labour will be in power and told its essential by Europe. FF having not done the public sector cutting before next election retain enough seats to keep the party comfortably sized for future elections as they know they have lost next one or two but party survivial long term is now the goal.