How much can we borrow?

mcsean2163 · 19-03-2021 11:27am

Ok, just to say by food I was thinking Oscar Wilde's earnest friend, i.e. not food in a literal sense.

Greece had a debt haircut in2012 which we stupidly avoided.

https://countryeconomy.com/national-debt/greece

I was surprised by Finland, (I got that wrong) but they're doing significantly better than us per capita.

eire4 · 19-03-2021 6:28pm

FreudianSlippers wrote: »

Please stop thinking about national debt like you think about personal debt. This populist approach to government expenditure is why we have such awful infrastructure.

There is no such thing as too much debt as long as we can service it.

Why? IMF already has multi-currency reserve. The USD has historically been one of the most stable currencies and nothing has changed there. US debt is largely short-term, so we'd need to see a massive depression in the US which didn't materially impact other countries to see a realistic reason to move away from the USD as the main currency reserve; but as I said, there are already other reserve currencies.

If we're talking hypothetical in the longer term, maybe crypto could potentially be a new reserve... that's about as realistic as a massive move away from USD in the foreseeable future.

Very important point about not looking at national debt in the same way a person can look at their own personal or family debt. It simply is apples to oranges.

Arthur Daley · 19-03-2021 6:59pm

An argument that's generally put forward by people who have no intention of spending a brass farthing on capital expenditure.

Massive debts run up over the last 15 years, yet at the same time the EU gets all the credit for building the roads.

mcsean2163 · 20-03-2021 1:18am

eire4 wrote: »

Very important point about not looking at national debt in the same way a person can look at their own personal or family debt. It simply is apples to oranges.

Said Mugabe's advisors.

The deficit myth assumes that the US operates in a vacuum. Do you think that if it issued $100 trillion the US would still function as normal? That it could still import from China at the same prices?

What would happen if China sold all its US bonds and said a dollar is now worth a tenth of its previous value against yuan?

If you listened to McWilliams podcast bear in mind that the dude lives in an extremely expensive house in dalkey and has s holiday home in Croatia and is completely insulated to ponder and experiment.

We are part of the EU and are at the mercy of the other states. With more borrowing we surrender our ability to determine our future or get ever closer to bankruptcy.

Low Energy Eng · 20-03-2021 4:52am

I would normally argue for fiscal responsibility and it always disappointed me how badly the coffers are managed in Ireland.

However, if some Asian country or the ecb are willing to take a bond at near 0% interest rates, give us money today, while the central banks are hell bent on creating inflation, then why wouldn't we let someone else absorb the loss at our gain?

I would add, as long as the money we receive isn't spent on increasing long term liabilities.

mcsean2163 · 20-03-2021 4:08pm

The bonds must be renewed. We're the most indebted per capita in Europe. When we go back to the ECB, they may say, you've been spending a lot. You need to abide by EU fiscal treaty rules of 3% at exactly the time when we need it. If we're in a bad way the market say no thanks. To put it in context, Greek GDP is still at 2003 levels.

https://tradingeconomics.com/greece/gdp

Our GDP is over double 2003 levels.

There's a long way to fall and the more we borrow the more exposed we are.

Larbre34 · 21-03-2021 2:51pm

The ECB won't be saying that, not now, not for a decade.

Post Brexit, post Covid EU will be stimulating like World War 3 just ended. All nations, all sectors that do big infrastructure and employ big numbers.

Its Covid bond Christmas boys and girls, if its not nailed down, sell it. If it is nailed down, leverage against it. Its a bonanza for the long term and there's nothing wrong with that.

10000maniacs · 22-03-2021 5:14pm

You know it is only a matter of time before the government start sniffing around peoples savings as a way of plugging the shortfall.
I'm sure a few in the government have being looking at this as an un-tapped opportunity.
DIRT tax hasn't produced anything in 5 years. And people who are working haven't been spending an awful lot of their savings in the last couple of years for obvious reasons.

Arthur Daley · 22-03-2021 8:45pm

Or pension levies. It would be naive to think this will continue without consequences.

mcsean2163 · 24-03-2021 9:30pm

People losing patience with tax haven Ireland.

https://euobserver.com/opinion/151169#:~:text=Ireland%20is%20a%20tax%20haven&text=The%20standard%20corporate%20income%20tax,expenditure%20by%20the%20international%20corporations.

Wanderer78 · 24-03-2021 9:32pm

mcsean2163 wrote:

People losing patience with tax haven Ireland.

Ah get in the queue, it 'll rumble on for many more years, we 'll protect it till the end

Geuze · 24-03-2021 10:32pm

mcsean2163 wrote: »

People losing patience with tax haven Ireland.

https://euobserver.com/opinion/151169#:~:text=Ireland%20is%20a%20tax%20haven&text=The%20standard%20corporate%20income%20tax,expenditure%20by%20the%20international%20corporations.

Note that if that is true, then we would see MNCs here, from many countries, taking advantage of our tax haven status.

We don't.

What we do see are mainly MNC from the USA generating huge profits here.

So the issue is with the tax laws of the USA.

http://economic-incentives.blogspot.com/2021/03/why-exaggerate-when-reality-is-bizarre.html

1oEtwXUmUyyqdt-VCtdkbRjTO-UghVKaz?nonce=svr0ct8iucebu&user=03813347836532349622Z&hash=i2r8ae2om7lkb0d727fgt0ntpa45gmg4

1oEtwXUmUyyqdt-VCtdkbRjTO-UghVKaz?nonce=svr0ct8iucebu&user=03813347836532349622Z&hash=i2r8ae2om7lkb0d727fgt0ntpa45gmg4

Wanderer78 · 25-03-2021 6:39am

Geuze wrote:

So the issue is with the tax laws of the USA.

There's clearly issues with our tax rates, we 're clearly a tax haven for mnc's, and it's always important to bare in mind, our sme's are in fact our biggest employer, but pay far higher tax rates than these mnc's

View · 25-03-2021 3:12pm

mcsean2163 wrote: »

People losing patience with tax haven Ireland.

https://euobserver.com/opinion/151169#:~:text=Ireland%20is%20a%20tax%20haven&text=The%20standard%20corporate%20income%20tax,expenditure%20by%20the%20international%20corporations.

There’s a simple solution to this, namely raise the CT rate to, let’s say, 15% and “ring fence” the additional monies raised. These would be in a fund to be spent, with joint input from the MNC, either on infrastructure that would directly benefit the MNC (eg roads near its offices) or on joint university-MNC R&D programmes with the university and MNC getting to split the profits (somehow) on the fruits of any successful R&D. In both cases the MNC gains a benefit for itself from the additional taxes it would pay.

Wanderer78 · 25-03-2021 3:16pm

View wrote: »

There’s a simple solution to this, namely raise the CT rate to, let’s say, 15% and “ring fence” the additional monies raised. These would be in a fund to be spent, with joint input from the MNC, either on infrastructure that would directly benefit the MNC (eg roads near its offices) or on joint university-MNC R&D programmes with the university and MNC getting to split the profits (somehow) on the fruits of any successful R&D. In both cases the MNC gains a benefit for itself from the additional taxes it would pay.

yup, i think 15 is a very good starting point, but id take the new difference in stocks and shares, and use sovereign wealth funds from there to put it to work, for all, including for future fdi

moon2 · 25-03-2021 7:39pm

Wanderer78 wrote: »

There's clearly issues with our tax rates, we 're clearly a tax haven for mnc's, and it's always important to bare in mind, our sme's are in fact our biggest employer, but pay far higher tax rates than these mnc's

Out of curiosity did you head the article linked by the comment you responded to? It goes to great lengths to provide actual data which refutes the position you're taking.

Do you have data to prove your point?

Wanderer78 · 25-03-2021 7:44pm

moon2 wrote: »

Out of curiosity did you head the article linked by the comment you responded to? It goes to great lengths to provide actual data which refutes the position you're taking.

Do you have data to prove your point?

sorry im not sure what you re asking?

mcsean2163 · 25-03-2021 7:58pm

View wrote: »

There’s a simple solution to this, namely raise the CT rate to, let’s say, 15% and “ring fence” the additional monies raised. These would be in a fund to be spent, with joint input from the MNC, either on infrastructure that would directly benefit the MNC (eg roads near its offices) or on joint university-MNC R&D programmes with the university and MNC getting to split the profits (somehow) on the fruits of any successful R&D. In both cases the MNC gains a benefit for itself from the additional taxes it would pay.

Agree. Anything at all would be good, 0.5% to 13%. It would be a move in the right direction and placate our EU neighbors a bit.

View · 25-03-2021 9:05pm

Wanderer78 wrote: »

yup, i think 15 is a very good starting point, but id take the new difference in stocks and shares, and use sovereign wealth funds from there to put it to work, for all, including for future fdi

What I was trying to get at is that the extra monies raised in taxes would be spent on stuff that it would be beneficial for the MNCs. Better infrastructure helps them do business more easily. Better university/industry research in areas that they are interested in could benefit them directly and massively boost our post-grad research profile.

Wanderer78 · 25-03-2021 10:17pm

View wrote:

What I was trying to get at is that the extra monies raised in taxes would be spent on stuff that it would be beneficial for the MNCs. Better infrastructure helps them do business more easily. Better university/industry research in areas that they are interested in could benefit them directly and massively boost our post-grad research profile.

You could of course do that, but a sovereign wealth fund would probably be worth far more in the long run, and could be used to create further investment, such investments funds are used globally, with great success. Scandinavia countries have been doing so for many years, it is believed to be one of their main reasons why. Such funds become an asset of the state and can be used for many things, including raising funds via bond markets for such investments. A significant proportion of wealth in mnc's is in such assets, not only is it important to gain access to more of the wealth created via profits, but also via the wealth of their assets

Geuze · 26-03-2021 3:09am

View wrote: »

There’s a simple solution to this, namely raise the CT rate to, let’s say, 15% and “ring fence” the additional monies raised. These would be in a fund to be spent, with joint input from the MNC, either on infrastructure that would directly benefit the MNC (eg roads near its offices) or on joint university-MNC R&D programmes with the university and MNC getting to split the profits (somehow) on the fruits of any successful R&D. In both cases the MNC gains a benefit for itself from the additional taxes it would pay.

Given that corporate profits are already taxed twice (first by CT, then by IT if paid out as dividends, or by CGT if the share price rises), why not reduce the CT to 0%?

Lower CT may boost economic growth, without any loss of revenue, as higher profits will be eventually taxed by IT/CGT.

https://www.oecd.org/berlin/46391708.pdf

Geuze · 26-03-2021 3:14am

mcsean2163 wrote: »

Agree. Anything at all would be good, 0.5% to 13%. It would be a move in the right direction and placate our EU neighbors a bit.

We have spent decades building up our reputation as a good place to invest.

We have committed to a stable CT regime.

We have attracted massive FDI, creating thousands of well-paid jobs.

We are earning massive CT revenues, it is over €10 billion now.

(In fact, we are earning so much CT we are too dependent on it, IMHO.)

Even SF don't suggest that CT should be raised.

No serious political party suggest we should raise the CT rate.

Anybody who suggest raising the CT rate should reflect on these points.

Wanderer78 · 26-03-2021 8:53am

Geuze wrote:

Anybody who suggest raising the CT rate should reflect on these points.

Yes we have indeed done very well from our corporation tax structures, but let's call a spade a spade, it's unfair to other countries and to our fellow citizens, it is also long term unsustainable, as corporation financial activities globally, have become systemically dangerous for all humans. We now have a situation whereby in certain economic situations, it is more beneficial to many of these corporations to engage in rent seeking, wealth extraction methods such as share buy backs etc, rather than investing in productive means, I.e. job creation. These activities only truly benefit major share holders, which in many cases is a very small percentage of the population, I.e. accelerating wealth inequality, so enough is enough, these type of activities are dangerous for all humans, including the wealthy. I was glad to see the UK go for an increase of 25%

mcsean2163 · 26-03-2021 11:14pm

Wanderer78 wrote: »

Yes we have indeed done very well from our corporation tax structures, but let's call a spade a spade, it's unfair to other countries and to our fellow citizens, it is also long term unsustainable, as corporation financial activities globally, have become systemically dangerous for all humans. We now have a situation whereby in certain economic situations, it is more beneficial to many of these corporations to engage in rent seeking, wealth extraction methods such as share buy backs etc, rather than investing in productive means, I.e. job creation. These activities only truly benefit major share holders, which in many cases is a very small percentage of the population, I.e. accelerating wealth inequality, so enough is enough, these type of activities are dangerous for all humans, including the wealthy. I was glad to see the UK go for an increase of 25%

Yes and not only that, at some point EU may say, no stop that and then we are really exposed. If companies can't stomach a 50 basis point rise in CT then off with them but we're seriously exposing ourselves by doing nothing.

We borrowed the most in the EU for Covid19 etc.

Geuze · 27-03-2021 2:03am

As I stated earlier, Ireland is not a tax haven.

Here is yet more evidence:

http://economic-incentives.blogspot.com/2021/03/latest-country-by-country-reporting.html

mcsean2163 · 28-03-2021 4:24pm

Big write up today about how Ireland is a tax haven.

https://www.businesspost.ie/economics/colin-murphy-leprechaun-economics-are-a-very-real-threat-to-our-national-interest-f2ca8fb3

Apparently there is an issue with the term tax haven and some commentators use this to argue that it is not a tax haven despite many international reports, one Dutch one singling out Ireland as the 5th biggest conduit in the world. They talk of the reputational damage too.

Larbre34 · 28-03-2021 4:50pm

Ireland has been talked of as a "tax haven" for what 20 to 30 years now?

Can't see any evidence that situation has done any reputational damage so far. Ireland has no problem attracting investment, securing beneficial borrowing rates or growing the economy in a very healthy fashion compared to the rest of the World.

mcsean2163 · 28-03-2021 5:30pm

Larbre34 wrote: »

Ireland has been talked of as a "tax haven" for what 20 to 30 years now?

Can't see any evidence that situation has done any reputational damage so far. Ireland has no problem attracting investment, securing beneficial borrowing rates or growing the economy in a very healthy fashion compared to the rest of the World.

Agree. This is because until 2008 are finances were viewed as healthy and little could be done against. When we crashed we got the Troika. What'll we get next time, a known tax haven robbing from our European neighbours?

Larbre34 · 28-03-2021 8:46pm

You're kidding right?

Ireland is the EUs golden child at the moment, a shining example of the benefits of the single market and free movement, thriving even while our nearest neighbour and historical market dependent is committing slow motion suicide.

Even if we did require bailing out again (and I don't see it because we have overcorrected on fiscal responsibility), they wouldn't be punitive about it. All that matters now is showing EU = success, Brexit (or any member leaving) = catastrophe.

Podge_irl · 28-03-2021 11:26pm

mcsean2163 wrote: »

Yes and not only that, at some point EU may say, no stop that and then we are really exposed.

Stop what exactly?

mcsean2163 · 30-03-2021 2:07am

Podge_irl wrote: »

Stop what exactly?

Stop a corporation tax rate of 12.5% that facilitates companies not paying their share of tax.

Geuze · 31-03-2021 12:11am

Bear in mind that companies don't pay CT. People pay all taxes.

So if CT increases, then either one or all of the following pay the higher CT:

(1) workers
(2) customers
(3) shareholders

View · 31-03-2021 12:13am

Geuze wrote: »

Given that corporate profits are already taxed twice (first by CT, then by IT if paid out as dividends, or by CGT if the share price rises), why not reduce the CT to 0%?

Lower CT may boost economic growth, without any loss of revenue, as higher profits will be eventually taxed by IT/CGT.

https://www.oecd.org/berlin/46391708.pdf

The issue of CT is entirely separate from IT. The shareholders of a company can be anywhere in the world, so we gain no benefit from from the IT side of the equation apart from those shareholders that are tax resident in Ireland. Such (Irish) tax residency does not apply for most of the shareholders in our MNCs.

Podge_irl · 01-04-2021 3:14pm

mcsean2163 wrote: »

Stop a corporation tax rate of 12.5% that facilitates companies not paying their share of tax.

As I am sure has been explained to you before, they have no power or ability to do that. It is a fantasy.

mcsean2163 · 01-04-2021 4:00pm

Podge_irl wrote: »

As I am sure has been explained to you before, they have no power or ability to do that. It is a fantasy.

The EU have the power to put conditions on loans, see Greece.

Biden pushing for 21% corporation tax.

https://www.irishtimes.com/business/economy/biden-s-global-minimum-tax-rate-carries-big-dangers-for-ireland-1.4525075?mode=amp

Podge_irl · 04-04-2021 1:19pm

mcsean2163 wrote: »

The EU have the power to put conditions on loans, see Greece.

Biden pushing for 21% corporation tax.

https://www.irishtimes.com/business/economy/biden-s-global-minimum-tax-rate-carries-big-dangers-for-ireland-1.4525075?mode=amp

We don't need a loan from the EU so it doesn't really matter.

There are also far more countries than just Ireland who do not want member state competency over tax rates to be centralised.

mcsean2163 · 05-04-2021 12:19am

Podge_irl wrote: »

We don't need a loan from the EU so it doesn't really matter.

There are also far more countries than just Ireland who do not want member state competency over tax rates to be centralised.

We're getting loans because we're in the EU. We're the most indebted per capita in the EU.

Do you think we'll be allowed to grow our debt ever greater?

05-04-2021 12:28am

mcsean2163 wrote: »

We're getting loans because we're in the EU. We're the most indebted per capita in the EU.

Do you think we'll be allowed to grow our debt ever greater?

Is there a source for the most indebted per capita statement

Geuze · 05-04-2021 1:04am

Deleted User wrote: »

Is there a source for the most indebted per capita statement

A good place to look is the NTMA investor presentation, for data on public debt.

https://www.ntma.ie/uploads/general/NTMA-Investor-Presentation-April-2021.pdf

mcsean2163 · 05-04-2021 9:47am

[Deleted User] wrote: »

Is there a source for the most indebted per capita statement

A simple Google would have shown you multiple results or even reading back in the thread. Here it is again.

https://www.irishtimes.com/business/economy/ireland-to-have-highest-debt-per-head-in-europe-this-year-1.4503652?mode=amp

We're third in the world after US/ Japan.

FFG will soon be spending a billion a year on housing rental payments, (a huge portion of that long term leases that are more expensive than house purchases), in an attempt to buy the electorate and under the guise of covid19 borrowing.

https://www.thejournal.ie/factcheck-spend-rent-subsidies-social-housing-5004540-Feb2020/

https://www.rte.ie/news/business/2020/1118/1178948-cso-on-haps/

mcsean2163 · 05-04-2021 10:02am

Geuze wrote: »

A good place to look is the NTMA investor presentation, for data on public debt.

https://www.ntma.ie/uploads/general/NTMA-Investor-Presentation-April-2021.pdf

I think the opposite. It's dolled up data and relative debt.

Absolute debt is debt per capita. If Biden's new tax rate discourages pharma from coming to Ireland or more likely social media leaves we will still be left with the 3rd highest debt per capita in a currency we don't control and that will be unaffordable unless the EU agree to bail out Ireland.

mcsean2163 · 05-04-2021 10:07am

Also, we've had the strictest government restrictions over the last year in EU.

https://seanmcm.medium.com/how-strict-have-the-covid-19-lockdown-restrictions-been-in-ireland-22c80ea06222

We're spending money like it's water.

mcsean2163 · 05-04-2021 10:22am

In case anyone wondering about the one billion figure.

https://www.irishtimes.com/business/economy/the-plan-to-tackle-ireland-s-housing-crisis-has-failed-1.4528364?mode=amp

This shift from bricks to benefits has been one of most eye-catching features of the Government’s housing policy. Spending on rent subsidies has doubled since 2016 and will be close to €1 billion this year.

Professor Moriarty · 05-04-2021 10:24am

mcsean2163 wrote: »

A simple Google would have shown you multiple results or even reading back in the thread. Here it is again.

https://www.irishtimes.com/business/economy/ireland-to-have-highest-debt-per-head-in-europe-this-year-1.4503652?mode=amp

We're third in the world after US/ Japan.

FFG will soon be spending a billion a year on housing rental payments, (a huge portion of that long term leases that are more expensive than house purchases), in an attempt to buy the electorate and under the guise of covid19 borrowing.

https://www.thejournal.ie/factcheck-spend-rent-subsidies-social-housing-5004540-Feb2020/

https://www.rte.ie/news/business/2020/1118/1178948-cso-on-haps/

FFG? Who is that?

Seth Brundle · 05-04-2021 10:28am

mcsean2163 wrote: »

Also, we've had the strictest government restrictions over the last year in EU.

https://seanmcm.medium.com/how-strict-have-the-covid-19-lockdown-restrictions-been-in-ireland-22c80ea06222

We're spending money like it's water.

Providing a link to what i presume is your own blog wouldn't be considered an independent source in fairness!

Seth Brundle · 05-04-2021 10:30am

mcsean2163 wrote: »

In case anyone wondering about the one billion figure.

https://www.irishtimes.com/business/economy/the-plan-to-tackle-ireland-s-housing-crisis-has-failed-1.4528364?mode=amp

This shift from bricks to benefits has been one of most eye-catching features of the Government’s housing policy. Spending on rent subsidies has doubled since 2016 and will be close to €1 billion this year.

Which party represented in Dáil Éireann would not have spent that money?

Brussels Sprout · 05-04-2021 11:13am

last night's John Oliver show was all about National Debt:

##Mod Note##

No video dumps please

Arthur Daley · 05-04-2021 12:00pm

Seth Brundle wrote: »

Which party represented in Dáil Éireann would not have spent that money?

All the other boys were doing it. Is that their defence now

mcsean2163 · 05-04-2021 3:15pm

Seth Brundle wrote: »

Providing a link to what i presume is your own blog wouldn't be considered an independent source in fairness!

I take the Oxford data and analyse for Ireland and list the sources. Maths is math, interpret the results the way you like.

Are you challenging the objectivity of math?

Brussels Sprout · 05-04-2021 3:40pm

I see the John Oliver video I posted above was removed. It's worth seeking out on YouTube as it's quite relevant to this thread.

In summary he talks about how the concerns around the accumulation of the national debt, in America, is quite often coming from a place of bad faith. Specifically The Republican Party didn't seem to care about it when Reagan, Bush and Trump all inflated it to pay for large tax cuts for the wealthy. Instead they only show faux concern about it when the likes of Obama or Biden are in office trying to enacting their own policies.

He mentions how fearmongers like to depict it as something that will all need to be be paid at once to some foreign government (usually depicted as the Chinese) all at the same time. He explains how this is not true, how the largest holder American debt are the American people and that Japan (not China) is actually America's largest creditor.

Obviously that is all USA specific but a lot of it translates to the Irish context. The largest holder of our debt is ourselves via the Central Bank. It's never going to come all due at once. Quite often as well the people jumping up and down about this, you will find, are not specifically angry about the fact that the money is being spent. What they're angry about is more where, and specifically, who, it is being spent on - the 2 most common bugbears being Social Welfare payments (including PUP in the modern context) and Public Sector wages, pensions and benefits.

So McSean2163, since you're the one keeping this thread going, may I ask are you either a recipient of PUP or a public sector employee? (In the interest of fairness and transparency I am neither)

How much can we borrow?

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