Two out of every five Euro...

Duke Leonal Felmet

Is borrowed to keep the lights on, or so I keep hearing. So, as a thought experiment, does anyone here think it possible to simply cut spending/raise taxes until we are balanced? I don't mean over four years, let's say ASAP.

Would this lead to a deflationary spiral? Chaos and looting on the streets? Do you think it would work?

Discuss.

Permabear

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raymann

Duke Leonal Felmet wrote: »

Is borrowed to keep the lights on, or so I keep hearing. So, as a thought experiment, does anyone here think it possible to simply cut spending/raise taxes until we are balanced? I don't mean over four years, let's say ASAP.

Would this lead to a deflationary spiral? Chaos and looting on the streets? Do you think it would work?

Discuss.

you must be new here.

ei.sdraob

Permabear wrote: »

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Well said, i have an empty spot in my signature which needs a good quote

Duke Leonal Felmet

Permabear wrote: »

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Great, so we should just cut the 40% now, then. Or do you mean something else?

Duke Leonal Felmet

raymann wrote: »

you must be new here.

Well, there is a join date attached to my name, so there is no need for speculation. Let me know if you need help with anything else.

Permabear

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Duke Leonal Felmet

I would like to agree, but I would fear what a large cut would do to any economy, let alone our state. Forty percent is a lot to remove at once, be it through cuts or tax increases.

RDM_83 again

Permabear, if your going to compare Ireland with France compare it with France for everything, if your going to compare it to the UK compare it to the UK, its pointless doing it any other way*. You live in Donegal right, take a trip accross the border and look at derry, there's a massive black economy and everybody is claiming Disabled Living Allowance

http://www.tribune.ie/article/2009/apr/05/irelands-unemployment-benefits-less-than-mainland-/

Another point is French wages are much lower, I used to work in a company with a bunch of French high end financial analysis people, and they all said wages were much better here even if you took into account the comparitive lack of holidays, but no body goes on about that?



*and ps I do think Irish teachers are really over paid.

Scofflaw

There's an interesting post here: http://economic-incentives.blogspot.com/2010/10/low-tax-economy.html

That suggests that Ireland is actually two economies - a low-tax economy for multinationals themselves (US multinationals here pay an average effective corporation tax rate of 7.7%), and a moderate-tax economy for the rest of us.

He has the total Irish tax take as larger than the Exchequer tax take of €33bn, because that only includes these:

* Income Tax (€11.8 billion)
* Value Added Tax (€10.7 billion)
* Excise Duty (€4.7 billion)
* Corporation Tax (€3.9 billion)
* Stamp Duty (€0.9 billion)
* Capital Gains Tax (€0.5 billion)
* Capital Acquisitions Tax (€0.3 billion)
* Customs Duty (€0.2 billion)

whereas the total tax take should really include:

* PRSI Contributions (€8.9 billion)
* Rates (€1.4 billion)
* Motor Tax (€1.1 billion)
* Broadcasting Licence Fee (€24 million)

So Ireland's total tax take is €54.4bn. As a percentage of GDP, that's 34.1% - very much low-tax compared to an EU average of 44.9%.

However, if you compare the tax figure to GNP, you get a different result - 41%, which is moderate tax.

(Of course, you should strip out the multinational contribution before you do tax/GNP - c. 75% of corporation tax in a good year, about 10% of VAT and excise. Maybe €5bn all told. Do that, and you get somewhere in the middle - 37.3%.)

cordially,
Scofflaw

donegal11

^^^^ where did the 54.4bn come from should it not be 44.4bn?

Scofflaw

donegal11 wrote: »

^^^^ where did the 54.4bn come from should it not be 44.4bn?

Good question - Coffey has it that PRSI etc are only some of the extra forms of State revenue beyond what the Exchequer returns show.

Looking at the sources he cites, I can only make government revenue come to €44.6bn rather than €54.4. It seems he has it back-calculated from the Eurostat figures, which have Ireland's tax take as 34.1% of a GDP of €159.6bn.

cordially,
Scofflaw

paul71

But what % of the PAYE tax take is due to the multi-national presense here?

Latchy

Permabear wrote: »

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Post of the day .

Scofflaw

paul71 wrote: »

But what % of the PAYE tax take is due to the multi-national presense here?

Depends how you calculate it. There's an interesting paper called "The Economic and Fiscal Contribution of US Investment in Ireland" by a Revenue guy which has the contribution of US companies to PAYE in Ireland as 7%.

cordially,
Scofflaw

RDM_83 again

Latchy wrote: »

Post of the day .

European norm is NOT the UK style rates
Read this article people should at least get their facts straight
http://www.tribune.ie/article/2009/apr/05/irelands-unemployment-benefits-less-than-mainland-/

Idbatterim

the counties with the high rates have to base what you get out on what you have paid in? Im sure this is the case with Germany! they should do exactly the same here. If you have never contributed anything, you should be down to absolute subsistence!

RDM_83 again

Possibly,
but when I hear the phrase "highest social welfare payments" I don't see any differentiation between JSA and JSB by the poster so its still factually incorrect!

In addition in the present economic climate there's going to be a lot of people who were never unemployed for more than few weeks running out of their contributions soon. Should somebody that worked for 15 years drop straight to nothing if they haven't had work for a year because of the incomptence of this government?

Idbatterim

what happens when they run out of contributions? does the welfare stop? how are there so many wasters on it then who have never worked and can live off it for years?

zig

Permabear wrote: »

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you cant just make a blanket statement like that is if it were black and white, there are completely different costs in every country, why do you think we called ourselves rip off Ireland for so long? Why do think tourism slowed down? It got too expensive. We were at one stage probably one of the most expensive countries in the world http://newsroom.pricerunner.co.uk/82/news/ireland-fourth-most-expensive-country-in-the-world/
Im sure we are still not far off in that rank.

What about the fact that UK recipients are entitled to discretionary housing payment on top housing benefit(our rent allowance) if they are strugglings, not to mention low paid workers are entitled to housing benefit.

While I agree with you that we do have massive inefficiencies and over spending in the PS AND areas of social welfare, I dont think its the equivalent to what you are implying, you cant just compare like with like, prices are far cheaper in some parts of Europe(and im not talking about Poland).

Permabear

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CDfm

Scofflaw wrote: »

However, if you compare the tax figure to GNP, you get a different result - 41%, which is moderate tax.


cordially,
Scofflaw

Great point as it does highlight the level at which we rely on foreign investment for jobs.

Sea Sharp

I think they should make the cuts a gradual process as opposed to noticeable cuts once a year.

Take 1euro off the SW every week and we'd have our spending under control within 2 years.

zig

Sea Sharp wrote: »

I think they should make the cuts a gradual process as opposed to noticeable cuts once a year.

Take 1euro off the SW every week and we'd have our spending under control within 2 years.

Its actually not a bad idea because it would force people to slowly adjust (lets face it, alot of people dont adjust until they really have to).
But NO politician would dare do something as extreme as the 1 euro a week suggestion, the public and moreso the opposition would see right through it and just call it a 52euro cut.

CDfm

Sea Sharp wrote: »

I think they should make the cuts a gradual process as opposed to noticeable cuts once a year.

Take 1euro off the SW every week and we'd have our spending under control within 2 years.

You might like this guy

http://www.ronanlyons.com/2010/11/02/where-should-ireland-cut-its-public-spending-thoughts-for-budget-2011-ii/