Tax take half a billion behind target

n97 mini

Department of Finance are getting things seriously wrong, showing themselves not fit for purpose, yet again.

They're saying on the radio we're in a worse position now than we were this time last year.

http://www.rte.ie/news/2011/1202/exchequer.html

K-9

n97 mini wrote: »

Department of Finance are getting things seriously wrong, showing themselves not fit for purpose, yet again.

They're saying on the radio we're in a worse position now than we were this time last year.

http://www.rte.ie/news/2011/1202/exchequer.html

Not surprising really, the car scrappage scheme was artificially boosting VAT receipts previously. People aren't spending as much as expected and that gets reflected in lower VAT, Income tax, employment and Corporation Tax receipts.

All of which makes Noonan's admission that they've based the new 23% VAT estimated figure on demand remaining the same, all the more unbelievable.

MagicMarker

I would have thought 1.6% below target would not be considered such a huge deal.

jack presley

If they had any sense when they do their calculations they should give out a figure lower than what they think the figure will so they don't look stupid when their estimate is wrong. And if their estimate turns out to be correct, no one wil care as we'll all be happy as we extra money in the coffers.

Alibaba

I think its turning out to be the law of diminishing returns. The more they tax the less people spend. I think they should consider REDUCING the 21% vat rate down to say 16-17% , to try and stimulate demand.

Permabear

This post has been deleted.

K-9

Permabear wrote: »

This post had been deleted.

Indeed, it would be interesting to see where the big savings have been made.

Riskymove

n97 mini wrote: »

Department of Finance are getting things seriously wrong, showing themselves not fit for purpose, yet again.

They're saying on the radio we're in a worse position now than we were this time last year.

http://www.rte.ie/news/2011/1202/exchequer.html

Expenditure is a billion less than planned though

so we are a net half a billion better off than estimated; how is this worse than last year?

as above i think being 1.6% off an estimate made a year ago is quite good; I think in most situations being 98.4% right would be considered a good thing

Riskymove

jack presley wrote: »

If they had any sense when they do their calculations they should give out a figure lower than what they think the figure will so they don't look stupid when their estimate is wrong. And if their estimate turns out to be correct, no one wil care as we'll all be happy as we extra money in the coffers.

I dont think you thought this through!

maybe they did do exactly what you suggest; how do we know?

n97 mini

Riskymove wrote: »

so we are a net half a billion better off than estimated; how is this worse than last year?

The Dept is technically €1.5 billion out.

1.6% is fine when you're not talking getting it wrong by hundreds of millions under every tax heading.

n97 mini

I see spending is down to €40bn. With social welfare at €21bn and public sector pay at around €19bn we're not spending money on much else.

Altho these are not end of year figures.

MagicMarker

n97 mini wrote: »

The Dept is technically €1.5 billion out.

1.6% is fine when you're not talking getting it wrong by hundreds of millions under every tax heading.

You'll have to explain that logic to me.

1.6% is fine so long as it's not hundreds of millions? What's the difference if it's 1.6% of one million or 1.6% of 10 trillion? It's still 1.6%.

Unfortunately, the government can't see into the future, they set a target, a margin for error is to be expected.

eire4

Well given as others have mentioned that spending was about 1b below expectations I don't see how the tax take being 500m below expectations causes a problem. Surely we actually came out at about 500m better off then expected based on those numbers.

Count Dooku

Permabear wrote: »

This post had been deleted.

Mostly because capital expenditure "accidentally" have been reduced by 11.7% more then it was expected (26.2% in comparison with last year)
http://finance.gov.ie/documents/exchequerstatements/2011/analexpendnov.pdf
The only conclusion from figures is that tax increases are not working, attempt to preserve PS pay and escape welfare cuts miserable failed

stoneill

n97 mini wrote: »

I see spending is down to €40bn. With social welfare at €21bn and public sector pay at around €19bn we're not spending money on much else.

Altho these are not end of year figures.

How does a small population generate these figures?
€40bn. That's €40,000,000,000.
Social welfare €21,000,000,000
Public sector pay €19,000,000,000.

How can a small country with only 4 million people generate these figures?
I don't understand it.
Birmingham or Manchester with similar populations don't deal with this type of expenditure.
Or am I too simplistic?

Geuze

Note that a good slice of SW exp is paid for by PRSI. Today's data refers to tax revenue, but the Govt has other revenues.

So annual tax revenue may be about 35bn, but total Govt revenues are more like 50bn.

Exchequer returns do not tell the full picture.

Geuze

The UK govt spend as much as IRL, as a % of income, so, yes, Manchester or somewhere in Britain with 4.6m people would have similar figures.

n97 mini

MagicMarker wrote: »

Unfortunately, the government can't see into the future, they set a target, a margin for error is to be expected.

The Dept has been criticised in the past for having a "margin of error" that was conspicuously large.

NIMAN

Because we have some of the best paid people in the world, be it the public servants or the unemployed.

Our wage costs are too high as money was handed over in pay increases hand over fist during the 'good times'.

ardmacha

The tax take is the result of multiple individual decisions and so is difficult to estimate precisely. In this year, the continuing news of Euro "crisis" is affecting public confidence and has reduced inflation, both of which reduce VAT intake. These are rather unprecedented times internationally, not easy for economic forecasters. The government has also reduced expenditure by €1bn, which in itself would lead to loss of revenue of almost €0.5bn.

Because we have some of the best paid people in the world, be it the public servants or the unemployed.

I think you forgot to say private, public and unemployed there.
This may be true, but this does not explain the reduction in VAT.

dev100

It's impossible to predict potential end of year revenue in a spiralling down turning economy. Shower of over paid dummies as far as I'm concerned. Vat revenue down for this year and they want to hike up vat next year. It's insane hiking up vat. . A typical Irish solution. I for one will using the net more often in the new year ...

Red Actor

stoneill wrote: »

How does a small population generate these figures?
€40bn. That's €40,000,000,000.
Social welfare €21,000,000,000
Public sector pay €19,000,000,000.

How can a small country with only 4 million people generate these figures?
I don't understand it.
Birmingham or Manchester with similar populations don't deal with this type of expenditure.
Or am I too simplistic?

The Manchester comparison is too simplistic as the spread of the Irish population makes it less efficient in delivering services. Manchester does not need 800km of motorway, 300km of railway, 8 centres of excellence for cancer (which still leaves half of the country not near the services) and the list goes on.

I wonder if the other €1bn was spent would it have generated a good chunk of the "missing €500m in tax?

I think that getting without a couple of percent is pretty good forecasting given the turmoil we're living through. The tax figures are lower than forecast they are not lower than last year - they didn't increase by as much as predicted.

dev100

ardmacha wrote: »

I think you forgot to say private, public and unemployed there.
This may be true, but this does not explain the reduction in VAT.

Depends what sector you work in. Anyway no point in being highly paid when your being highly taxed

WalterMitty

The one billion less spent is on capital expenditure . Hardly an ideal way to cut expenditure. Current spending has not fallen since start of crisis.
Constantin Gurdgiev wrote;
Government capital expenditure is also contracting. In 2010, Voted Capital Expenditure by the Irish Government declined to €5.9 billion. This year, based on 10 months through October data, it is on track to fall even further to €4 billion – below the target of €4.35 billion and more than 53% below the peak. In fact, the entire adjustment in public expenditure to-date can be attributed to the capital spending cuts, as current expenditure actually rose over the years of crisis. Since 2008, current expenditure by the state is up 1.9% or €775 million this year, based on the data through October. Thus in 2008, Irish Government spent 17.4% of its total voted expenditure on capital investment. This year the figure is likely to be under 8.8%.

ardmacha

Anyway no point in being highly paid when your being highly taxed

Irish people are not highly taxed. But even if they were, I'd rather have twice my salary and pay two and half times as much tax as I'd still come out well ahead.

Good loser

Thank God for the bank guarantee - it generated €947 m for the Govt in the first nine months of 2011.

K-9

WalterMitty wrote: »

The one billion less spent is on capital expenditure . Hardly an ideal way to cut expenditure. Current spending has not fallen since start of crisis.
Constantin Gurdgiev wrote;
Government capital expenditure is also contracting. In 2010, Voted Capital Expenditure by the Irish Government declined to €5.9 billion. This year, based on 10 months through October data, it is on track to fall even further to €4 billion – below the target of €4.35 billion and more than 53% below the peak. In fact, the entire adjustment in public expenditure to-date can be attributed to the capital spending cuts, as current expenditure actually rose over the years of crisis. Since 2008, current expenditure by the state is up 1.9% or €775 million this year, based on the data through October. Thus in 2008, Irish Government spent 17.4% of its total voted expenditure on capital investment. This year the figure is likely to be under 8.8%.

It mostly is down to cuts to capital expenditure but that ignores there have been cuts to current expenditure, PS pay in particular, but increases in SW due to increased unemployment and interest costs obviously mask the savings.

What that means is the soft option of cutting capital is over, the next couple of budgets are really going to eat into people's incomes, water rates, property taxes, cuts to SW etc.

THis will then effect the tax revenue side. This year has included a couple of accountancy tricks, USC is now classified as a tax revenue and the initial boost from that seems to have gone. Also Corporation tax dates were changed and previously they where ahead of target, now behind as that trick is gone.

woodoo

PS pay is around 15 billion and PS pensions is 2.5 billion

http://www.finance.gov.ie/documents/publications/reports/2010/payanal0510.pdf

K-9

Indeed, there is a hell of a lot of misreporting and singling out of PS pay in the media and on sites like this, good piece on it here:

http://www.irisheconomy.ie/index.php/2011/11/27/shares-of-public-expenditure/

People read stuff like that and swallow it.

PS pay and pensions account for about 25% of expenditure.

http://www.irisheconomy.ie/index.php/2011/09/11/public-pay-and-the-sindo/

Many around here seem to think we could half PS pay and pensions and that's 12% of Govt. expenditure saved, our deficit solved in one fell swoop, after banking bail outs.

Nope, a PS worker earning above 36k pays a marginal rate of 62% state deductions, so on that portion above 36k, the state only saves 38%. Hard one for the "PS workers don't really pay taxes" brigade to comprehend

Plus lower paid workers, while paying less tax so a better percentage saving, many would qualify for FIS, thus eating into any saving.

When you value the cuts to PS pay by Net pay and really that's what matters with PS pay, what exactly do Public Servants cost us?:

http://economic-incentives.blogspot.com/2011/11/this-is-old-ground-but-somehow-we-keep.html



Net pay is back to 06 levels and €2.35 Billion has been saved since 08, about a 18% saving, made up of less numbers and increased deductions.

Count Dooku

dev100 wrote: »

Depends what sector you work in. Anyway no point in being highly paid when your being highly taxed

unless you are working in public sector, where pension depends from gross and you about to retire soon

n97 mini

K-9 wrote: »

Indeed, there is a hell of a lot of misreporting and singling out of PS pay in the media and on sites like this, good piece on it here:

Thread isn't about PS pay. Please leave it out.

Alibaba

Years ago Politicians used to always say that ''You can't tax your way out of a recession'' , and now, unsurprisingly what do they do, tax, tax, tax.

It just won't work.

Red Actor

K-9 wrote: »

It mostly is down to cuts to capital expenditure but that ignores there have been cuts to current expenditure, PS pay in particular, but increases in SW due to increased unemployment and interest costs obviously mask the savings.

What that means is the soft option of cutting capital is over, the next couple of budgets are really going to eat into people's incomes, water rates, property taxes, cuts to SW etc.

THis will then effect the tax revenue side. This year has included a couple of accountancy tricks, USC is now classified as a tax revenue and the initial boost from that seems to have gone. Also Corporation tax dates were changed and previously they where ahead of target, now behind as that trick is gone.

A part of the reason why there's a big drop in capital expenditure is that the motorway network is finished.

The health levies which are now shown in the revenue figures as USC does give a distorting impression of overall tax take. The same can be said on the expenditure side where the health levy went directly to the department so it now looks like current expenditure has increased. The VAT reductions in the "jobs budget" would also have reduced the VAT take from the forecat figure.

Gumbo

n97 mini wrote: »

Thread isn't about PS pay. Please leave it out.

It has never stopped you before :rolleyes:

Congratulations on the promotion to mod

K-9

Red Actor wrote: »

A part of the reason why there's a big drop in capital expenditure is that the motorway network is finished.

True, many capital projects under the development plans will never go ahead, well for years anyway. Still, capital budget cuts are an easy option for Governments, the hard stuff is cuts to current expenditure as we are finding out and another 2 similar budgets ahead.

The health levies which are now shown in the revenue figures as USC does give a distorting impression of overall tax take. The same can be said on the expenditure side where the health levy went directly to the department so it now looks like current expenditure has increased. The VAT reductions in the "jobs budget" would also have reduced the VAT take from the forecat figure.

True, it isn't a big surprise payroll and self employed taxes are behind schedule or indeed VAT. Corporation tax would be more worrying.

rodento

Alibaba wrote: »

I think its turning out to be the law of diminishing returns. The more they tax the less people spend. I think they should consider REDUCING the 21% vat rate down to say 16-17% , to try and stimulate demand.

Don't understand how increasing the cost of living helps us when we really have to bring down overheads/the of doing business in this country

Take cars for example, the increase in Vat/Car Tax/Carbon Tax & road Tolls, will this increase the tax take or just stop people from driving and spending weekends away.

Would love to know how many families have gotten rib of the second car...

n97 mini

rodento wrote: »

Don't understand how increasing the cost of living helps us when we really have to bring down overheads/the of doing business in this country

It's a case of needing to balance the books as soon as possible. With the social welfare spend on the increase due to rising unemployment, and the public sector pay and pensions off limits, the options are not many.

rodento

But whats the cost of trying to balance the books, we need to make the country more competitive not tax it to oblivion

woodoo

K-9 wrote: »

Indeed, there is a hell of a lot of misreporting and singling out of PS pay in the media and on sites like this, good piece on it here:

http://www.irisheconomy.ie/index.php/2011/11/27/shares-of-public-expenditure/

People read stuff like that and swallow it.

PS pay and pensions account for about 25% of expenditure.

http://www.irisheconomy.ie/index.php/2011/09/11/public-pay-and-the-sindo/

Many around here seem to think we could half PS pay and pensions and that's 12% of Govt. expenditure saved, our deficit solved in one fell swoop, after banking bail outs.

Nope, a PS worker earning above 36k pays a marginal rate of 62% state deductions, so on that portion above 36k, the state only saves 38%. Hard one for the "PS workers don't really pay taxes" brigade to comprehend

Plus lower paid workers, while paying less tax so a better percentage saving, many would qualify for FIS, thus eating into any saving.

When you value the cuts to PS pay by Net pay and really that's what matters with PS pay, what exactly do Public Servants cost us?:

http://economic-incentives.blogspot.com/2011/11/this-is-old-ground-but-somehow-we-keep.html



Net pay is back to 06 levels and €2.35 Billion has been saved since 08, about a 18% saving, made up of less numbers and increased deductions.

Good post k-9. But there are a handful of people on here who will completely ignore what you have pointed out. And we will be back to the same old.. PS pay is 20billion rar rar rar :mad: Cut them now and we will all be saved rar rar rar :mad:

woodoo

K-9 wrote: »

http://www.irisheconomy.ie/index.php/2011/11/27/shares-of-public-expenditure/

Pay and pensions = 25.5%
Social payments = 37.8%
Intermediate consumption = 11.4%
Interest payments = 8.4%
Capital formation = 6.4%
Other (including subsidies) = 10.5%

The interesting one is Social Payments. Is there another country in the western world paying that percentage on welfare?

K-9

woodoo wrote: »

Pay and pensions = 25.5%
Social payments = 37.8%
Intermediate consumption = 11.4%
Interest payments = 8.4%
Capital formation = 6.4%
Other (including subsidies) = 10.5%

The interesting one is Social Payments. Is there another country in the western world paying that percentage on welfare?

Spain probably, was about 31% in 09:

http://stats.oecd.org/Index.aspx?DataSetCode=SNA_TABLE11

We've quite high social transfers IIRC, child benefit in particular though it has taken a big hit and more to come.

Villa05

Good loser wrote: »

Thank God for the bank guarantee - it generated €947 m for the Govt in the first nine months of 2011.

Villa05

K-9 wrote: »

Net pay is back to 06 levels and €2.35 Billion has been saved since 08, about a 18% saving, made up of less numbers and increased deductions.

Wow employment carnage and 4 years of austerity budgets leads to 2006 pay rates in the public service. 2006 the absolute peak of the credit fueled madness.

I and many others will not see our 2006 pay rates for a long long time, if ever.

You must be doing a great job

woodoo

Villa05 wrote: »

Wow employment carnage and 4 years of austerity budgets leads to 2006 pay rates in the public service. 2006 the absolute peak of the credit fueled madness.

I and many others will not see our 2006 pay rates for a long long time, if ever.

You must be doing a great job

If you were involved in the building, banking trade or any property related industry neither you should expect to get that level of pay. Tilers and the like charging €600 for a days work.

Villa05

woodoo wrote: »

If you were involved in the building, banking trade or any property related industry neither you should expect to get that level of pay. Tilers and the like charging €600 for a days work.

None of the above
Good old manufacturing for worldwide export.

Agree with your sentiment.

But going back on topic, I can see a 2nd emergency budget in the new year as these VAT increases are going to promote the black market big time. Extra tax on cars will lead to less cars on the road.

K-9

Villa05 wrote: »

Wow employment carnage and 4 years of austerity budgets leads to 2006 pay rates in the public service. 2006 the absolute peak of the credit fueled madness.

That's one way of looking at it alright. The welfare budget has sky rocketed as well, we should slash it to pre 06 totals even though it has trebled. Pretty simplistic way of looking at things but what the hell.

I and many others will not see our 2006 pay rates for a long long time, if ever.

Indeed. The private sector in general hasn't had a massive cut in wages though, certain sectors have suffered hugely. We are dealing with over all figures here, not personal experiences.

You must be doing a great job

You mustn't have then if your pay was slashed. Pretty stupid assumption for me to make don't you think?

I don't work in the PS btw. Personalising debates doesn't change reality.

Godge

K-9 wrote: »

Indeed, there is a hell of a lot of misreporting and singling out of PS pay in the media and on sites like this, good piece on it here:

http://www.irisheconomy.ie/index.php/2011/11/27/shares-of-public-expenditure/

People read stuff like that and swallow it.

PS pay and pensions account for about 25% of expenditure.

http://www.irisheconomy.ie/index.php/2011/09/11/public-pay-and-the-sindo/

Many around here seem to think we could half PS pay and pensions and that's 12% of Govt. expenditure saved, our deficit solved in one fell swoop, after banking bail outs.

Nope, a PS worker earning above 36k pays a marginal rate of 62% state deductions, so on that portion above 36k, the state only saves 38%. Hard one for the "PS workers don't really pay taxes" brigade to comprehend

Plus lower paid workers, while paying less tax so a better percentage saving, many would qualify for FIS, thus eating into any saving.

When you value the cuts to PS pay by Net pay and really that's what matters with PS pay, what exactly do Public Servants cost us?:

http://economic-incentives.blogspot.com/2011/11/this-is-old-ground-but-somehow-we-keep.html



Net pay is back to 06 levels and €2.35 Billion has been saved since 08, about a 18% saving, made up of less numbers and increased deductions.

Great post, but this thread will either be ignored (because the likes of filiball and others can't dispute your figures) or shouted down (on some spurious basis that public servants haven't had any pay cuts.

There are two problems with the budget deficit - taxes (other than income tax) are too low or too narrow and expenditure on social welfare is too high.

K-9

Godge wrote: »

Great post, but this thread will either be ignored (because the likes of filiball and others can't dispute your figures) or shouted down (on some spurious basis that public servants haven't had any pay cuts.

There are two problems with the budget deficit - taxes (other than income tax) are too low or too narrow and expenditure on social welfare is too high.

It's funny how it's painted as some defence of PS pay, haven't really been in these threads much lately, the more things change................

Even pretty right wing economists can see that there have been big cuts to PS pay and are just acknowledging that, don't see the harm in that tbh. Cuts still have to be made as it's still a ¼ of Government expenditure and more cuts there will be in the budget.

Some wouldn't be happy if PS pay was halved. They'd still want another pound of flesh. I'd nearly love to see it and their befuddlement at why a 50% cut doesn't solve the budget problem and in many ways makes it worse! We've slashed PS pay by half, how comes our economic ills haven't been cured? *

*Above maybe tongue in cheek!

woodoo

Villa05 wrote: »

But going back on topic, I can see a 2nd emergency budget in the new year as these VAT increases are going to promote the black market big time. Extra tax on cars will lead to less cars on the road.

Thats true

Lenihan increased VAT and then brought it back down again as it didn't work. Also. The deficit 3 year ago was approx €20 billion, they took approx €20 billion out of the last three budgets and now they tell us without this tough budget on tue the deficit would be €21.5 billion :eek: Hopeless case.

Bullseye1

Won't there be a massive reduction in the deficit next year as there won't be as much money pumped into the banks?

K-9

woodoo wrote: »

Thats true

Lenihan increased VAT and then brought it back down again as it didn't work. Also. The deficit 3 year ago was approx €20 billion, they took approx €20 billion out of the last three budgets and now they tell us without this tough budget on tue the deficit would be €21.5 billion :eek: Hopeless case.

That includes bank pay outs, hopefully we are at the end of the line there, Credit Unions aside.

It's a hard one to decypher on a Saturday night but the easiest way of putting it as that the deficit is expected to be about €13.6 Billion next year with little or no bank pay outs, the bank payments make it seem worse than it is:

http://economic-incentives.blogspot.com/2011/11/deficit-and-banks.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+EconomicIncentives+%28Economic+Incentives%29