Fine Gael Budget plan

whatawaster

http://www.finegael.ie/news/a/4489/article

Kenny & Noonan publish FG’s Budget plan

Fine Gael Leader Enda Kenny TD and Finance Spokesman Michael Noonan TD have published a far-reaching Pre-Budget Plan to create jobs, stabilise the Exchequer and get Ireland back on track over the next four years.

Deputy Kenny said Fine Gael aims to create 100,000 new jobs, achieve the 3% deficit target and the €15 billion worth of adjustments within the original four year timeframe. Job creation and fairness will be the over-riding principle, within the financial constraints.

The plan will be built around three pillars:

1. Limiting tax increases to one-quarter of the adjustment next year, and one-third of the adjustment over four years;
2. Radical public sector reform to end waste, inefficiency and duplication, starting with the political system;
3. And a jobs and stimulus plan.

Deputy Kenny said: ‘There is a better way, and a fairer way, than anything offered by the current failed Government. Fine Gael will make jobs and economic growth a precondition, not an aspiration’.

“International experience shows clearly that cuts in spending are more effective at fixing deficits and are better for growth and jobs than tax increases. Confronting waste, inefficiency, duplication and redundancy in public spending should be the focus of Ireland’s budgetary adjustment.”

Tackling the Deficit

Key proposals to tackle the deficit include:

• Protecting pensions, including contributory and non-contributory old age pensions, those for widows, the blind, people with disabilities, and carers’ allowances, while collecting some extra tax from those with generous occupational pensions;
• No income tax increases in 2011 before recovery takes hold, and limiting income tax increases to half the levels proposed by Fianna Fáil over the entire four years;
• A much greater emphasis on closing tax loopholes for the rich, including suspending property-based tax reliefs and tightening the rules for tax exiles;
• A fairer approach to Fianna Fáil's proposed annual recurring property tax on the family home;
• Cutting tax relief on schemes offering pensions greater than €60,000, while protecting pensions tax relief for middle income families;
• 18,000 more voluntary redundancies in the public sector than the Government proposes;
• Targeting the €3 billion worth of annual social welfare fraud through the establishment of a single Payments and Entitlements system.

Fine Gael recognises the need to raise more revenues from property. But a residential property tax would unfairly hit the young generation already burned by the housing bubble. So we will increase the second home tax, cut Capital Acquisitions Tax thresholds and introduce a low Capital Gains Tax on the site values of primary residences. Alongside this, we will cut stamp duty for families trading up and down, and provide greater relief for working families in mortgage distress.

Supporting jobs and growth

Deputy Noonan said: ‘We will strengthen significantly the reforms needed to cut business costs, to improve productivity, and to incentivise and facilitate people to acquire the skills needed to re-enter the workplace’:

• Replacing the minimum wage cut proposed by Government with a cut in the jobs' tax to encourage people off welfare and into work;
• Accelerating capital allowances on business software investments to support a local high-tech industry;
• A €10 million one-off marketing budget for State agencies to restore Ireland's battered business reputation across the globe;
• No change in either the standard or top rates of income tax, or the 12.5% rate of corporation tax;
• Abolish the travel tax subject to deals on re-opening routes with Ryanair and Aer Lingus;
• Abolish the lower 8.5% rate of employers’ PRSI on staff earning below €356 per week for at least three years to reduce employment costs;
• A 1.5% cut in the lower 13.5% VAT rate to re-direct consumer spending away from imports, and into labour-intensive services such as trades, restaurants, hotels and newspapers;
• Increase DIRT to 30% to encourage higher levels of household consumption;
• A pre-announcement that home insulation and other residential and commercial energy saving subsidies will terminate in 2013, leading to a bringing forward of demand in the intervening two years.

Deputy Noonan added: ‘Fine Gael’s job stimulus plan, NewERA, will use streamlined and restructured semi-State companies to invest an additional €6-7 billion, over and above current plans, in investments in “next generation” energy, broadband, forestry and water infrastructure. In discussions with the IMF, Fine Gael has confirmed that funds from the National Pension Reserve Fund and proceeds from the sale of State assets remain available, under conditions to be agreed, to finance the NewERA stimulus plan.

Achieving greater public sector savings & reform

Deputy Kenny said: ‘The split between spending reductions and tax increases in the Government’s four year plan moves in the right direction but there is room for additional spending savings from public sector pay of at least €900 million by 2014. This will make room for targeted initiatives to support employment and economic activity’:

• Cutting the number of national politicians by 35%;
• Cutting the threshold for application of minimum 30% effective tax rate to €250,000 from €400,000 at present (with marginal relief from €125,000);
• Reducing the size of the public sector by 10% - just over 30,000;
• Reducing the size of the core civil service working in Government Departments by a third through the establishment of shared service operations;
• Implementing at least half of the McCarthy report recommendations, and 80% of the savings recommended by the Local Government Efficiency Review;
• Close FÁS and the HSE and abolish 145 quangos.

Deputy Noonan concluded by saying: ‘Extending the period of the adjustment will only force Ireland to borrow more money and pay more back in interest, so we will aim to reach the targets within four years’.

Perspectives on Budget 2011 and the 4-Year Plan is available at:

www.finegael.ie/upload/BudgetPerspective2011.pdf

The spending spreadsheet is available at:

www.finegael.ie/upload/BudgetTargets2011.pdf

Haven't had a chance to read through it all yet, but some good proposals in there - reducing the lower rate of VAT and more public service redundancies.

And there seems to be a reassurance from the IMF that monies from the sale of state assets and the National Pension Reserve Fund CAN be used to fund a stimulus as set out in their NEW ERA document. Maybe we will get the broadband, water and energy infrastructure we need.

JohnMc1

I like the plan to cut the size of the Govt. I noticed none of them will ever volunteer a pay cut for themselves.

Pete_Cavan

whatawaster wrote: »

www.finegael.ie/upload/BudgetPerspective2011.pdf

Sounds good, I also like there NewEra plan which gives details on how they plan to create jobs, unlike most others who just give figures without any info on where the jobs will come from.

The_Conductor

So in short- they want to keep taxes low, have a stimulus programme, and not cut expenditure as quickly as we have currently signed up to do........

Thrown into the mix is a pledge to cut 30,000 public sector jobs- without any indication of where these people are supposed to go, and a commitment to roll back any cuts to our extortionate minimum wage, which IBEC reckon is a brake on increasing service sector employment.......

These guys have some good ideas- however the fact of the matter is we cannot afford their wonderful plans.

Ps- Richard Bruton seriously needs to tell Enda that his plans to decentralise more staff to Castlebar is not going to happen....... god, its so obvious that the front bench aren't even talking to each other........

On the basis of these proposals, Fine Gael are unelectable. The penny doesn't seem to have dropped that we need to get to a deficit of 3% of GDP by 2014. The only way this will happen with the Fine Gael plan- is if they can convince 1/2 the unemployed to emigrate, meanwhile upskill the rest of the unemployed so they actually have skills demanded by the economy- and somehow explain how our minimum wage is affordable, especially in light of social welfare levels (at present according to the ESRI- there simply is no financial incentive for the average employee to work, over and above claiming social welfare........)

Stimulus is all well and good- however the Fine Gael plans are a lot more expensive, and the cuts a lot more circumspect, that those we are signed up to. What does it matter if we have a 48% tax rate for those on over 100k- if these employees are also the most mobile in the economy and most willing to up sticks to London or elsewhere........

We need to be seen to be fair- these plans are pandering to the one group who haven't been hit at all yet (the pensioners), hitting the one group who aren't defending themselves (the public sector), minimising the possibility of job growth in the service sector by refusing to incentivise people to work (and simultaneously making it incredibly expensive for employers to employ new employees), copper fastening a welfare state we can't afford- and at the same time increasing those unemployed by 10%- by refusing to so much as speculate on what the 40k they propose to lay off from the public sector are going to do (as no-one is going to offer them jobs elsewhere, unless they have specific skills of interest- and if they do, they probably shouldn't be laid off in the first instance). Of course perhaps they hope they'll emigrate too?

Wonderfully wishy-washy stuff- I'm embarassed for Richard Bruton, I would have hoped he'd have come up with something a bit more convincing that this......

For the record, I am one of the floating voters with no particular allegiances- I will vote according to whoever makes most sense. I'm dreading to see what nonsense Labour come up with.........

At this rate we really would be better off accepting that we're incapable of governing ourselves and offer Olli Rehn and some of his staff a stipend to spend some more time here.........

We have no politicians who are genuinely willing to consider what is best for the country as a whole- instead we have the usual pandering to special interest groups, and most probably given statements from Enda et al, we'll have a wholesale continuation of parochial politics and bringing the bacon home to every little rural constituency, if they manage to get in.........

If this is the best Fine Gael can come up with, I surrender, we are screwed.

whatawaster

smccarrick wrote: »

We need to be seen to be fair- these plans are pandering to the one group who haven't been hit at all yet (the pensioners), hitting the one group who aren't defending themselves (the public sector), minimising the possibility of job growth in the service sector by refusing to incentivise people to work (and simultaneously making it incredibly expensive for employers to employ new employees), copper fastening a welfare state we can't afford- and at the same time increasing those unemployed by 10%- by refusing to so much as speculate on what the 40k they propose to lay off from the public sector are going to do (as no-one is going to offer them jobs elsewhere, unless they have specific skills of interest- and if they do, they probably shouldn't be laid off in the first instance). Of course perhaps they hope they'll emigrate too?

Wonderfully wishy-washy stuff- I'm embarassed for Richard Bruton, I would have hoped he'd have come up with something a bit more convincing that this......

Instead of cutting the minimum wage (which i was in favour of) they are going to abolish the 8.5% PRSI charge employers have to pay on low earners. This will make it a good bit cheaper to hire workers, particularly at the lower levels.

Public Service "the one group who aren't defending themselves? Please - they don't need to. They have Begg and O'Connor and their cronies doing it for them. They are one of the most protected groups in Irish society. We simply can't sustain all these people in employment when a lot of them don't contribute much to the provision of important public services.

JacksonHeightsOwn

whatawaster wrote: »

Instead of cutting the minimum wage (which i was in favour of) they are going to abolish the 8.5% PRSI charge employers have to pay on low earners. This will make it a good bit cheaper to hire workers, particularly at the lower levels.

Public Service "the one group who aren't defending themselves? Please - they don't need to. They have Begg and O'Connor and their cronies doing it for them. They are one of the most protected groups in Irish society. We simply can't sustain all these people in employment when a lot of them don't contribute much to the provision of important public services.

that one there is a fantastic idea

i work for my dad(barely at the minute), and the PRSI really is a hidden killer

there's little or no incentives for small employers in Ireland at the minute, i hope Fine Gael get a chance to implement this one soon!

MagicMarker

Labour have their own policy up on their site but the PDF is blank. :rolleyes:

MagicMarker

MagicMarker wrote: »

Labour have their own policy up on their site but the PDF is blank. :rolleyes:

Not sure what you're getting at - 34 pages are pretty visible for me?

TheReverend

MagicMarker wrote: »

Labour have their own policy up on their site but the PDF is blank. :rolleyes:

34 pages, hardly blank

Mister men

MagicMarker wrote: »

Labour have their own policy up on their site but the PDF is blank. :rolleyes:

No it's not

ArtSmart

FG also intend to implement at least 50% of McCarty's recommendations and sell off some state assets. plus 're-brand' FAS and HSE (one can't abolish job creation mechanism or health care so really it's ;make more efficient)
Haven't looked at labour (cos nothing was there earlier)

the one difference between FG and FF is that FG want to balance the monetarism approach of FF with traditional Keynesian stimulus approach - sort of have your cake and eat it - which is ok in my book. but the difference between lab and FG are still not clear enough - in real terms - as supposed to rhetoric.

Anyway, it's irrelevant. any change is to be welcomed, whatever the make-up. and in five years, another shake up.
complacency is the enemy of good politics.

Pete_Cavan

smccarrick wrote: »

The penny doesn't seem to have dropped that we need to get to a deficit of 3% of GDP by 2014. The only way this will happen with the Fine Gael plan- is if they can convince 1/2 the unemployed to emigrate, meanwhile upskill the rest of the unemployed so they actually have skills demanded by the economy- and somehow explain how our minimum wage is affordable, especially in light of social welfare levels (at present according to the ESRI- there simply is no financial incentive for the average employee to work, over and above claiming social welfare........)

Do you actually read the plan? They plan to cut the deficit to 3%, mainly through savings in government expenditure rather than increased taxation. They plan to sell off semi-state assets, eliminate 145 quangos, implement a least half of the proposals outlined in the An Bord Snip Nua report and reduce the cost of the public service.

smccarrick wrote: »

Stimulus is all well and good- however the Fine Gael plans are a lot more expensive, and the cuts a lot more circumspect, that those we are signed up to. What does it matter if we have a 48% tax rate for those on over 100k- if these employees are also the most mobile in the economy and most willing to up sticks to London or elsewhere........

Their stimulus plan will focus on providing the infrastructure we need to progress the economy, i.e. energy, broadband and water. This creates jobs for those building the infrastructure and indirect employment from those workers spending their earnings in the wider economy. It will also reduce the cost of energy and good quality broadband which will help small businesses, make easier to start up new businesses and make Ireland more attractive for MNCs.

smccarrick wrote: »

We need to be seen to be fair- these plans are pandering to the one group who haven't been hit at all yet (the pensioners),

FG want to reduce tax exemptions for the elderly so that those over 65 are taxed on a more similar basis to those under 65.

smccarrick wrote: »

hitting the one group who aren't defending themselves (the public sector),

Not defending themselves, the public sector! Please, they threaten strike at the drop of a hat, they even opposed removing the half hour a week PS workers get to cash their pay cheques despite the fact that most of them no longer get paid by cheque and then there is the finger print scanning issue. The public sector defend themselves even when they dont have a leg to stand on. They are a huge cost to the state and it most be reduced.

smccarrick wrote: »

minimising the possibility of job growth in the service sector by refusing to incentivise people to work (and simultaneously making it incredibly expensive for employers to employ new employees),

Abolishing employers PRSI for the next three years makes it cheaper for employers to employ new employees.

smccarrick wrote: »

copper fastening a welfare state we can't afford- and at the same time increasing those unemployed by 10%-

Citation needed for how you came to the conclusion that FGs plans will increase unemployed by 10%. They are not copper fastening the welfare state, they plan to introduce identity cards to reduce social welfare fraud, amalgamate the 8 agencies providing various types of benefits into a "one stop shop" thus reducing administration costs. They also want to introduce harsher penalties for those who fraudulently claim state benefits and introduce new powers to withdraw or reduce benefit for people convicted twice of a benefit offence.

smccarrick wrote: »

by refusing to so much as speculate on what the 40k they propose to lay off from the public sector are going to do (as no-one is going to offer them jobs elsewhere, unless they have specific skills of interest- and if they do, they probably shouldn't be laid off in the first instance).

The plan is to get them out of the public sector and off the state payroll. It is not up to the government to find jobs for them after they have left the public sector, if it was there would be no point in letting them go.

smccarrick wrote: »

For the record, I am one of the floating voters with no particular allegiances- I will vote according to whoever makes most sense. I'm dreading to see what nonsense Labour come up with.........

Are you actually going to read Labour proposals or are you just going to assume you know whats in it because you clearly did not read any of FGs proposals. You sound like the kind of person who will vote for FF (again) because you think the other parties will just do the same as them anyway.

BTW I have not been a FG support until now and reading their 4 Year Plan and NewEra has convinced me they are the only option we have for a decent government (even if Enda is a donkey). I dont care if Enda stays on as party leader (although it will loss them votes in the election) but Bruton or even Noonan should become Taoiseach.

smccarrick wrote: »

We have no politicians who are genuinely willing to consider what is best for the country as a whole- instead we have the usual pandering to special interest groups, and most probably given statements from Enda et al, we'll have a wholesale continuation of parochial politics and bringing the bacon home to every little rural constituency, if they manage to get in.........

I agree with that but it is a feature of your electoral system, that will not change until we until we tackle the real problem and introduce a party list system.

MagicMarker

Dónal wrote: »

Not sure what you're getting at - 34 pages are pretty visible for me?

TheReverend wrote: »

34 pages, hardly blank

Mister men wrote: »

No it's not

Must be my browser or something because it's blank for me.

Samba

Interesting points.

I did have a quick glance at Labours proposals again some were very positive signs but then you read things like...

Labour is proposing a third rate of tax at 48% on joint incomes over €200,000 (single incomes over €100,000)

An effective 50% tax rate on over 100k single earners is a complete joke and would only achieve a very short term exchequer increase, soon everyone on the low end of 100k would probably negotiate to have their wages reduced on paper and to be paid the extra in benefits.

The top end of their proposed third rate bracket would very soon leave the Irish work force for lower tax bracket shores, especially single earners.

On that basis alone I would estimate that any figures they have hammered out would be skewed and unrealistic.

I'll have to sit down and read both proposals properly and simply weigh pros against cons.

At the least it's encouraging to see some positive steps in the right direction from both opposition parties, unfortunately the Irish nation needs to, and wants to see leaps not steps moving forward in economic and political reform.

swampgas

Samba wrote: »

Interesting points.
Labour is proposing a third rate of tax at 48% on joint incomes over €200,000 (single incomes over €100,000)

An effective 50% tax rate on over 100k single earners is a complete joke and would only achieve a very short term exchequer increase, soon everyone on the low end of 100k would probably negotiate to have their wages reduced on paper and to be paid the extra in benefits.

The top end of their proposed third rate bracket would very soon leave the Irish work force for lower tax bracket shores, especially single earners.

I keep hearing this and wonder how true it is. If you are single, maybe you would move, but I imagine that many of our highly paid (>100k) people are over thirty, married, with kids, living in a nice house that they can't sell easily. And possibly running their own companies that cannot easily move.

Also, many other countries are not exactly "low tax". Where exactly are these people going to go?

Is this just a scare tactic by the best paid - "tax us and we will leave"?

Maybe we should call their bluff on this one and see what happens.

Samba

swampgas wrote: »

I keep hearing this and wonder how true it is. If you are single, maybe you would move, but I imagine that many of our highly paid (>100k) people are over thirty, married, with kids, living in a nice house that they can't sell easily. And possibly running their own companies that cannot easily move.

Also, many other countries are not exactly "low tax". Where exactly are these people going to go?

Is this just a scare tactic by the best paid - "tax us and we will leave"?

Maybe we should call their bluff on this one and see what happens.

I don't disagree, my points were mainly in relation to single earners and those who are just within the 100k bracket, if their proposals were introduced you could potentially see a sudden change in the % of people within that bracket and I just wonder if their calculations have taken this possible variable into account.

amacca

swampgas wrote: »

I keep hearing this and wonder how true it is. If you are single, maybe you would move, but I imagine that many of our highly paid (>100k) people are over thirty, married, with kids, living in a nice house that they can't sell easily. And possibly running their own companies that cannot easily move.

Also, many other countries are not exactly "low tax". Where exactly are these people going to go?

Is this just a scare tactic by the best paid - "tax us and we will leave"?

Maybe we should call their bluff on this one and see what happens.

Agreed....and even if they did leave one would presume there would be many talented driven people willing to fill the void not necessarily expecting to get paid 100k for the same work

dsmythy

amacca wrote: »

Agreed....and even if they did leave one would presume there would be many talented driven people willing to fill the void not necessarily expecting to get paid 100k for the same work

And should they earn less than the 100k and are happy to do so they fall out of the new top rate of tax. The figures are still skewed.

swampgas

dsmythy wrote: »

And should they earn less than the 100k and are happy to do so they fall out of the new top rate of tax. The figures are still skewed.

I guess the issue is how long it takes for pay rates to adjust once such a tax rate is introduced. If we get a lot of extra tax now but it starts to decline slowly, then I say it is still worth pursuing, adjustments can be made in future budgets.

Also - even if it is bad for gross tax revenue - having downward pressure on these (over-inflated?) salaries might not be a bad thing.

hmmm

We've already tried penal rates of tax in the 1980s and the economy tanked. It was only when costs were cut and taxes also cut that the economy started to motor ahead. Whatever about making new mistakes, the least we could do as a country is not repeat the same mistakes we've already made.

swampgas

hmmm wrote: »

We've already tried penal rates of tax in the 1980s and the economy tanked. It was only when costs were cut and taxes also cut that the economy started to motor ahead. Whatever about making new mistakes, the least we could do as a country is not repeat the same mistakes we've already made.

Just found this article:
Tom O'Connor (Jul 2010), ‘The structural failure of Irish economic development and employment policy’. IJPP, vol. 2010, no. 1, http://publish.ucc.ie/ijpp/2010/01/tomoconnor/03/en/

Many parallels with the eighties - the country being broke being one of them.

However, surely a high tax on income OVER 100k is not quite the same as a punitive tax rate at much lower thresholds (which is how I seem to remember the 80s) ?

scoobyjack

I think another issue with the 100k tax bracket is that there actually aren't that many people it will affect - the revenue gained will be in the order of low tens of millions, and fairly insignificant.

It's an election move - you can't lose voters with any kind of "tax the rich" suggestion.

swampgas

scoobyjack wrote: »

I think another issue with the 100k tax bracket is that there actually aren't that many people it will affect - the revenue gained will be in the order of low tens of millions, and fairly insignificant.

It's an election move - you can't lose voters with any kind of "tax the rich" suggestion.

It will directly affect TDs, ministers and senior civil servants too.

scoobyjack

swampgas wrote: »

It will directly affect TDs, ministers and senior civil servants too.

Note that Labour can put forward all kinds of fantastic proposals anyway, and the "re-negotiate" with Fine Gael when it comes to forming a government. This is real "have your cake and eat it" stuff.

amacca

scoobyjack wrote: »

I think another issue with the 100k tax bracket is that there actually aren't that many people it will affect - the revenue gained will be in the order of low tens of millions, and fairly insignificant.

It's an election move - you can't lose voters with any kind of "tax the rich" suggestion.

would like to see a breakdown

my own feeling (probably informed by begrudgery:D) is that there may be more of these earners than you think

I would hazard a guess that the revenue earned by imposing extra tax on those above 100k would be much more than the order of "low tens of millions"

Though its entirely possible the number of people earning more than 100k p/a will have reduced down drastically at the end of this four years of austerity for many reasons

Idbatterim

scrapping the travel tax, if aer lingus and ryanair agree to reverse route cuts or similar, is a good idea... Labour have what, a 1 year plan? and are already shying away from cutting what needs to be cut!

scoobyjack

amacca wrote: »

I would hazard a guess that the revenue earned by imposing extra tax on those above 100k would be much more than the order of "low tens of millions"

It was an analyst on Prime Time who mentioned it, and I reacted the same for a minute, then thought about it a bit...

Remember those people are already paying, what is it, 41% on those earnings... so someone earning 150k will increase their tax burden by €3,500 with a 48% tax. Someone on 110k will increase their tax by €700. These aren't huge numbers.

Also remember that a lot of people with that kind of wealth get their income indirectly to avoid income tax, e.g. share options and the like. You'd probably earn a lot more by playing with capital gains tax for these people.