# Budget 2009



## agadele

When is the date for the 2009 budget? Is it the same as last year 05 December?
Many thanks


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## ClubMan

Normally first Wednesday in December which would be the 3rd this year.


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## joejoe

ClubMan said:


> Normally first Wednesday in December which would be the 3rd this year.


 
any preductions?

Joejoe


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## eileen alana

joejoe said:


> any preductions?
> 
> Joejoe


 
Do you mean any predictions? 

I heard on the 6 O'Clock news this evening that it is very likely that income tax could go up for the first time in years.


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## joejoe

eileen alana said:


> Do you mean any predictions?
> 
> I heard on the 6 O'Clock news this evening that it is very likely that income tax could go up for the first time in years.


 
Any indication by how much?

Joejoe


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## csirl

I think income tax will remain the same. But this is a tax rise in net present value terms due to inflation.


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## Afuera

joejoe said:


> any preductions?
> 
> Joejoe


Wouldn't be surprised if CGT on property went back up to 40%. Given the current state of the market it may not help the coffers so much but it might prevent the flood of property for sale turning into a tidal wave.


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## bacchus

joejoe said:


> Any indication by how much?
> Joejoe


my crystal ball is telling me 2%.


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## joejoe

Afuera said:


> Wouldn't be surprised if CGT on property went back up to 40%. Given the current state of the market it may not help the coffers so much but it might prevent the flood of property for sale turning into a tidal wave.


 
BIFFO made a statement and has said that the recent cut backs are only the start, and thing are going to get alot thougher. Tax are on the way up and dole to say the same, well thats just a guess.

Joejoe


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## ccbkd

I think you can take it as a given Income Tax will Rise!


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## MrKeane

I expect income tax to go up by 2% top rate and 1% bottom rate. Lots of stealth taxes and increases in duty on drink, petrol to bring it in line with diesel etc. Tax bands will not be adjusted and there will be no increase in childrens allowance etc.

Things will get bad, very bad, for Ireland over the next few years.


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## pc7

Just heard on the radio the budget is being moved forward to October, had a look online looking like october 14th!


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## ubiquitous

Afuera said:


> Wouldn't be surprised if CGT on property went back up to 40%. Given the current state of the market it may not help the coffers so much but it might prevent the flood of property for sale turning into a tidal wave.



It would certainly suit developers at the expense of private homeowners.


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## z103

> I think you can take it as a given Income Tax will Rise!


Thanks unions.


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## Towger

This has been changed to make it possible to increase tax (PAYE) and make changes to the calculation formula. With the system as it stood they could not make changes except to PAYE Rates and Bands, as there was no time to implement them. Also they could not lower TC/COPs, as these are implemented on a yearly basis. Lowering them would result in back tax been taken in a lump, when they changed a couple of months into the tax year. This just left changes to PRSI, which has been done before a few months into the year.

My predictions, like Macker I will eventually be right :

PAYE
3rd Rate of Tax/Cut off point - The terminology being used will allow this 

PRSI
Remove Employee upper earnings limit or PRSI Holiday as Charlie called it.


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## z103

> This has been changed to make it possible to increase tax (PAYE) and make changes to the calculation formula.



Do you know this for certain, or are you guessing?


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## ccbkd

Bravo - The Government - at last a Bit of action, for what seemed an age their inertia was starting to scare me.. at least the gravity of the situation is being dealt with head-on - I propose an increase to 51% tax to those earning over €100,000


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## ubiquitous

ccbkd said:


> I propose an increase to 51% tax to those earning over €100,000



Yeah, that plan really worked in the 1970s.  Our economy recovered well ... after two decades.


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## ubiquitous

Towger said:


> This has been changed to make it possible to increase tax (PAYE) and make changes to the calculation formula. With the system as it stood they could not make changes except to PAYE Rates and Bands, as there was no time to implement them. Also they could not lower TC/COPs, as these are implemented on a yearly basis. Lowering them would result in back tax been taken in a lump, when they changed a couple of months into the tax year. This just left changes to PRSI, which has been done before a few months into the year.



All highly dubious theories. Major changes have been made to the PAYE system in the past 5-8 years, including the full adoption of the tax credit system & the adoption of the Euro, all within the previous Budget timetable. Rates and bands have also been updated annually also on this timetable.


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## Guest116

ccbkd said:


> Bravo - The Government - at last a Bit of action, for what seemed an age their inertia was starting to scare me.. at least the gravity of the situation is being dealt with head-on - I propose an increase to 51% tax to those earning over €100,000


 
I dont agree with this at all. You shouldn't penalise those who have worked hard and have been successful. We live in a capitalist economy and risk\reward is important to it. 

If taxes do need to go up then everyone should be affected.


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## Mpsox

There's been a lot of increases in stealth taxes already, with the cost of everything from a passport to getting a bar extension been raised

I also believe that the tax free allowances will not be changed this year, which will mean a tax rise in real terms

Not convinced there will be a 2% rise in income tax at higher rates and 1% at lower rates. Firstly that won't help people who are struggling and secondly there are council elections next year so it wouldn't help Fianna Fail on the doorstep

Definately big cuts in public spending which in some cases is no harm. I'd expect some infrastructure spending to be curtailed and postponed

Big question for me is if they leave income tax alone, will a carbon tax be added in some way and if so how much


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## Towger

leghorn said:


> Do you know this for certain, or are you guessing?


 
This is a highly educated guess, based on a number of things… There have been a number of plans to revamp the 'system' in recent years, but nothing has happened. For example a few years ago a lot of effort was spent on converting us to a UK style Tax Code system, in the end it was scraped as we have too many different allowances at employee level. Then there is the long running the plan to greatly simply the calculation of PRSI, this seems to have fallen apart/been delayed due to staff changes and decentralisation…


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## ubiquitous

The tax system has been not so much revamped but turned on its head in recent years, as I pointed out earlier.

PRSI changes have nothing to do with the Budget, except to the point that they are sometimes announced on Budget Day. They are the responsibility of the Dept of Social Affairs.


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## heretohelp

aristotle25 said:


> I dont agree with this at all. You shouldn't penalise those who have worked hard and have been successful. We live in a capitalist economy and risk\reward is important to it.
> 
> If taxes do need to go up then everyone should be affected.


 
So in other words make the poor poorer and the rich richer .


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## bond-007

The motorist will be victimised as per usual.


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## ccbkd

Coughlan Let the cat out of the Bag - Budget is in some way going to try to prop up the property Market - Folly or Genius - Folly I suspect


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## bond-007

The obviously have to try and protect their valued supporters.


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## Towger

Mpsox said:


> There's been a lot of increases in stealth taxes already, with the cost of everything from a passport to getting a bar extension been raised


 
It now costs €950 to become Irish (an Irish citizen), a big jump from the €127 it cost last week!


The simplest /stealthiest way to raise extra direct tax is by removing the Employee PRSI Ceiling as most people will not miss it unless reminded next year.

Note: For the purpose of this calculation I am assuming that the Health Levy is PRSI!!!

Example:
Employee on €60,000 per year, €5,000 per month. The ceiling is currently 50,700. 
They pay A1 PRSI as normal Jan to Oct of approx €278.
In November they exceed the ceiling by €4,300, so pay PRSI of almost €106.
In December they just pay the Health Levy of 2%, so pay PRSI of €100.

So with stroke of a pen they can take in an extra €350 from that person, who unless they understand PRSI!!! may not be any wiser. So of course the more a person earns the bigger the 'tax increase' will be. 

Whoops sorry Welfare, I forgot PRSI is not Tax....


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## Towger

ubiquitous said:


> PRSI changes have nothing to do with the Budget, except to the point that they are sometimes announced on Budget Day. They are the responsibility of the Dept of Social Affairs.


 
PRSI changes come from the Dept of Finance or more precisely the Minister..


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## Guest116

heretohelp said:


> So in other words make the poor poorer and the rich richer .


 
No, if everyones tax is increased then how does that make the rich richer?

And in fariness even if you do earn 100k it doesnt make you "rich".


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## teachai

Rest Assured, some taxes will go up immediately, eg booze, cigarettes, fuel. 

There's no point in the government bringing the budget forward if this is not going to happen, and yes there will be more stealth taxes. 

They don't need a budget to curb public spending. They do to increase the amount of tax we pay.


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## efm

ccbkd said:


> Bravo - I propose an increase to 51% tax to those earning over €100,000


 
Would you apply an equivelant tax on a two income family earning €50,000 each?

I'm not sure how an increase in direct taxes will improve the economy of this country if more disposable income is taken away from tax payers and given to the government (but maybe I'm not seeing the bigger picture ).

The economy is faced with multiple problems at the moment - contracting labour market, rising inflation, increased unemployment, increasing cost base for business, appreciating euro making our exports more expensive and falling tax revenues - taxing "high" earners at 51% won't solve our problems.


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## bond-007

End the artists exemption. Make the big wigs pay their taxes i.e. close off all the loopholes and schemes they have used to avoid paying.


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## ubiquitous

bond-007 said:


> Make the big wigs pay their taxes i.e. close off all the loopholes and schemes they have used to avoid paying.



Pretty much done already in the past 2-3 Finance Acts.


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## z107

> All highly dubious theories. Major changes have been made to the PAYE system in the past 5-8 years, including the full adoption of the tax credit system & the adoption of the Euro, all within the previous Budget timetable. Rates and bands have also been updated annually also on this timetable.


Yes these changes have been updated on this time table. Payroll developers have had no choice. Often the changes are pretty substantial as well, like the PRSI €101000 ceiling (which changed twice) and the BIK implementation.

Three weeks to make the changes, test them and distribute them to our customers. This all happens during the Christmas period as well.
I welcome the early budget, as long as they are not hoping to implement Payroll changes early! - maybe we'll get to enjoy Christmas this year


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## Sunny

With all the talk about raising taxes, why is it that Corporation Tax seems to be untouchable in that nobody even mentions the possibility of raising it. I am not talking about putting it up 20% but there must be merit to at least discussing a 1-2% increase.


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## Don_08

Do you think they would increase the VAT rate?


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## dockingtrade

sunny -- that would increase the cost of doing business (which is crazy as it is) here leading to more mutli-nationals moving abroad then more unemployement, or less starting up here. We should be reducing it to attract biz here to give more employment and generate more paye, and vat. I see no issue with low or zero corporation tax if the company provides high levels of employment

i know theres an eu tax thing etc...


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## Sunny

dockingtrade said:


> sunny -- that would increase the cost of doing business (which is crazy as it is) here leading to more mutli-nationals moving abroad then more unemployement, or less starting up here. We should be reducing it to attract biz here to give more employment and generate more paye, and vat. I see no issue with low or zero corporation tax if the company provides high levels of employment


 
That argument is all well and good but the main companies coming here now for tax reasons are not creating employment. Look at the UK companies moving their headquarters here which will basically be a plaque on the door. I work for a foreign financial institution who came here for the tax reasons and has built up a sizeable operation. They would not pack up their bags and leave if corporation tax went up to 14% just like they didn't leave when it went up to 12.5% from 10%. If multinationals are going to move to Eastern Europe or India, they will more than likely do it for reasons other than tax because it is the other costs of doing business here that is the problem.

I am not saying it is a good idea. Just wondering why it has suddenly become an untouchable tax


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## Towger

ubiquitous said:


> All highly dubious theories. Major changes have been made to the PAYE system in the past 5-8 years, including the full adoption of the tax credit system & the adoption of the Euro, all within the previous Budget timetable. Rates and bands have also been updated annually also on this timetable.


 
There was plenty of notice for the change to the TC system and the short tax year, this was in 2000/2001 if memory serves me. The euro was a non event for changing computer systems, all do some companies made a killing on it. A simple batch process of running through databases and converting all monetary amounts, add a few currency fields to reports and if you felt like it adding duel currency reporting. Since 2001 the start of the tax year has been 1st January, with the budget in December. The only real change has been the extra PRSI class and the €100,100 PRSI limit in 2007 and they botched that.


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## ubiquitous

Towger said:


> Since 2001 the start of the tax year has been 1st January, with the budget in December.



2002 actually. 2001 was the year of the short tax year (5 April - 31 Dec)


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## raven

I expect that they will go against all impartial, learned advice and try to "stimulate" the property market with first time buyer grants to try and appease their vested interests. Stimulating the property market is what has gotten us into this mess and that is what they will continue to do.


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## ubiquitous

Sunny said:


> That argument is all well and good but the main companies coming here now for tax reasons are not creating employment. Look at the UK companies moving their headquarters here which will basically be a plaque on the door. I work for a foreign financial institution who came here for the tax reasons and has built up a sizeable operation. They would not pack up their bags and leave if corporation tax went up to 14% just like they didn't leave when it went up to 12.5% from 10%. If multinationals are going to move to Eastern Europe or India, they will more than likely do it for reasons other than tax because it is the other costs of doing business here that is the problem.
> 
> I am not saying it is a good idea. Just wondering why it has suddenly become an untouchable tax



There are very good reasons why it is untouchable. It is widely acknowledged that it contributes massively to employment in the multinationals despite your generalisation to the contrary.

Raising the rate is off the agenda as (1) it would reopen all sorts of issues with the EU who would frankly prefer if our CT rate was 25%-30% (2) it would create the perception that governments are going to gradually increase the rate towards those levels over a period of time, thus defeating its purpose in the first instance.


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## raven

heretohelp said:


> So in other words make the poor poorer and the rich richer .



It is well established that high tax rates slow the economy generally (why work harder and take risks for less gain) and ultimately effect the worse off. High tax rates are (one of) the large reasons this economy was crippled in the 80s


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## Sunny

ubiquitous said:


> There are very good reasons why it is untouchable. It is widely acknowledged that it contributes massively to employment in the multinationals despite your generalisation to the contrary.
> 
> Raising the rate is off the agenda as (1) it would reopen all sorts of issues with the EU who would frankly prefer if our CT rate was 25%-30% (2) it would create the perception that governments are going to gradually increase the rate towards those levels over a period of time, thus defeating its purpose in the first instance.


 
But you could make the argument about employment creation with regard to other taxes as well but they Government will still look at raising them. I am not talking about putting them up to 20% but why not look at the possibility of a small increase. 

My point remains. Why do we assume that touching the corporation tax rate will lead to every multi-national company packing their bags and leaving the country in a big sulk. Why haven't they left already? Estonia is offering a 0% tax rate. As I said before the IFSC has grown since 2005 when the 10% corporation tax rate ended and went up to 12.5%. My own company's assets have gone from €1 billion to €4.5 billion and we have gone from a staff of 5 to a staff of 13.

I would also make the point that Ireland will have to look at it sooner or later because Countries like the UK and the US are getting increasingly annoyed at companies using Ireland as a tax base. It is only a matter of time before the US makes it harder for American companies to use Ireland. Last weeks decision of Henderson Asset Management and Charter Engineering to move their headquarters here is a perfect example. They are creating zero employment here and it damages our reputation. 

As a compromise, how about making it that the low tax rates only apply to companies that create a certain number of jobs instead of any company that simply hold their board meetings here.

Again I could be totally wrong but I just wonder why everyone discusses raising every other tax except this one.


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## ubiquitous

Sunny said:


> But you could make the argument about employment creation with regard to other taxes as well but they Government will still look at raising them.



Yes but the State actively markets itself to transnational corporations using what it sees as its "USP" of the 12.5% Corporation Tax rate - not our income tax rates, our vat rates, our PRSI rates but our Corporation Tax rate.


Sunny said:


> My point remains. Why do we assume that touching the corporation tax rate will lead to every multi-national company packing their bags and leaving the country in a big sulk.




Who made that assumption? 





Sunny said:


> Last weeks decision of Henderson Asset Management and Charter Engineering to move their headquarters here is a perfect example. They are creating zero employment here


Can you provide a source to support this latter contention?


Sunny said:


> and it damages our reputation.


Ditto


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## raven

I always wonder why other countries (that are generally "pro free market") get miffed with Ireland's low tax rate.
There's an easy solution for them; drop their tax rate, - but no they want to have their cake and eat it too.



Sunny said:


> But you could make the argument about employment creation with regard to other taxes as well but they Government will still look at raising them. I am not talking about putting them up to 20% but why not look at the possibility of a small increase.
> 
> My point remains. Why do we assume that touching the corporation tax rate will lead to every multi-national company packing their bags and leaving the country in a big sulk. Why haven't they left already? Estonia is offering a 0% tax rate. As I said before the IFSC has grown since 2005 when the 10% corporation tax rate ended and went up to 12.5%. My own company's assets have gone from €1 billion to €4.5 billion and we have gone from a staff of 5 to a staff of 13.
> 
> I would also make the point that Ireland will have to look at it sooner or later because Countries like the UK and the US are getting increasingly annoyed at companies using Ireland as a tax base. It is only a matter of time before the US makes it harder for American companies to use Ireland. Last weeks decision of Henderson Asset Management and Charter Engineering to move their headquarters here is a perfect example. They are creating zero employment here and it damages our reputation.
> 
> As a compromise, how about making it that the low tax rates only apply to companies that create a certain number of jobs instead of any company that simply hold their board meetings here.
> 
> Again I could be totally wrong but I just wonder why everyone discusses raising every other tax except this one.


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## ubiquitous

The paradox is that tax cuts usually increase tax revenues and tax increases do the opposite.


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## z103

> My point remains. Why do we assume that touching the corporation tax rate will lead to every multi-national company packing their bags and leaving the country in a big sulk. Why haven't they left already? Estonia is offering a 0% tax rate.


What percentage of Estonians speak English? If English was their mother tongue, and with 0% corp tax, then I suspect that every multi-national would leave Ireland. The multi-nationals are only here for the low tax. What else is here for them?


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## Sunny

leghorn said:


> What percentage of Estonians speak English? If English was their mother tongue, and with 0% corp tax, then I suspect that every multi-national would leave Ireland. The multi-nationals are only here for the low tax. What else is here for them?


 
But you are contradicting yourself. According to you they are here for the tax AND the English speaking workforce


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## z103

> But you are contradicting yourself. According to you they are here for the tax AND the English speaking workforce


Okay, they are only here for low tax and English speaking work force.


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## michaelm

ubiquitous said:


> The paradox is that tax cuts usually increase tax revenues and tax increases do the opposite.


Yes indeed.  They should cut corporation tax, employer PRSI and VAT.  But they usually do the opposite of what they should.  When the economy was booming they stoked it further and now that it is fading rapidly they will starve it of oxygen . . do they not realise that their job is to even out the peaks and troughs rather than compound them?


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## raven

Sadly, I agree, - this is exactly what they will do



michaelm said:


> Yes indeed.  They should cut corporation tax, employer PRSI and VAT.  But they usually do the opposite of what they should.  When the economy was booming they stoked it further and now that it is fading rapidly they will starve it of oxygen . . do they not realise that their job is to even out the peaks and troughs rather than compound them?


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## csirl

I cant see them raising corporation tax - would be economic suicide.

On income tax, remember that not raising the limits, credits etc in line with inflation equates to a tax increase which isnt visible. I would expect PAYE income tax to remain the same, which is really a 4% increase when inflation is taken into account.

My prediction is to expect loads and loads of eco-taxs - carbon tax, waste tax, pollution etc. under the PR guise of being environmentally friendly. With the Green's in power and money needed, these are a certainty. 

I'd expect PRSI ceiling to be abolished or increased.

I see no changes in max rate of VAT, though could be tweaking of other rates.

The Book of Estimates is now part of Budget Day, so I'd expect some savage cuts in Government spending. Government has already announced a 3% cut in current spending for remainder of current year. Cuts may not be as deep in the infrastructure area, as to do so would cripple us for years and hit the construction industry harder. I'd expect them to be in services - and presented as "efficiencies". Inevidently, in the likes of the health sector, the staff will not impliment more efficient work practices and so the punter will be hit.

I see non-essential Government spending being hit most - arts, sport, culture etc. Dont expect to see the likes of Abbotstown anytime soon.

I see a few ill advised schemes to help the building industry which will hit the taxpayer in the pocket and slow our recovery. 

I see the Government trying to save money short term by converting more capital projects into concessions or public private partnerships which have the effect of collecting money from the public for usage or spreading the initial outlay over a period of years. 

Unfortunately I dont expect to see any ingenuity in the upcoming Budget that will soften the blow for everyone. Cowan's just not a risk taker.


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## Sunny

michaelm said:


> Yes indeed. They should cut corporation tax, employer PRSI and VAT. But they usually do the opposite of what they should. When the economy was booming they stoked it further and now that it is fading rapidly they will starve it of oxygen . . do they not realise that their job is to even out the peaks and troughs rather than compound them?


 
To be fair to the Government it is hard to justify raising taxes when you have a suplus of a few billion and then cut rates when you face a deficit of the same amount so smoothing out peaks and troughs is rather difficult! I take your general point though. Of course so far people have only concentrated on the revenue side of things. I still reckon like any company, there are savings to be made on the spending side for Ireland inc!


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## raven

A large part of smoothing out the trough would have been taking measures to slow the construction "boom", moreso than raising income tax rates i think, rather than taking measures to incite it further.



Sunny said:


> To be fair to the Government it is hard to justify raising taxes when you have a suplus of a few billion and then cut rates when you face a deficit of the same amount so smoothing out peaks and troughs is rather difficult! I take your general point though. Of course so far people have only concentrated on the revenue side of things. I still reckon like any company, there are savings to be made on the spending side for Ireland inc!


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## z109

leghorn said:


> Okay, they are only here for low tax and English speaking work force.


What about the stable social situation, eh Reg, they're here for that too...


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## queenlex

Afuera said:


> Wouldn't be surprised if CGT on property went back up to 40%. Given the current state of the market it may not help the coffers so much but it might prevent the flood of property for sale turning into a tidal wave.


 

The CGT hiike to 40 has been talked as a possibility for years and maybe a good thing to swell the coffers quick especially as there will surely be lots of sales with many people seemingly struggling.

Also its about time drink tax was upped it never gets touched year on year and the publicans are just taking all the increases for themseves and making a killing so the state miht as well take some of it.  Also they could up the cigarette duty too because Irish women need something drastic to stop them smoking for their own health and possible future generations they will possibly be giving birth too.


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## ubiquitous

queenlex said:


> The CGT hiike to 40 has been talked as a possibility for years and maybe a good thing to swell the coffers quick especially as there will surely be lots of sales with many people seemingly struggling.



Except that CGT hikes reduce CGT receipts as people are incentivised not to sell.


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## Towger

ubiquitous said:


> Except that CGT hikes reduce CGT receipts as people are incentivised not to sell.


 
The same effect happends with Gift/Inheritance Tax. They started to take in more money when this was reduced from 40% to 20%. People feel that they can live with paying 20%, but at 40% well....


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## ubiquitous

queenlex said:


> Also its about time drink tax was upped it never gets touched year on year and the publicans are just taking all the increases for themseves and making a killing so the state miht as well take some of it.  Also they could up the cigarette duty too because Irish women need something drastic to stop them smoking for their own health and possible future generations they will possibly be giving birth too.



What about the effects on inflation and the national pay negotiations?


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## Towger

ubiquitous said:


> What about the effects on inflation and the national pay negotiations?


 
It could only be done, if they are taken out of the basket.

But a very hefty A&E change should be levied on those admitted under the influence. Use the funds to build drunk tanks and have additional security.


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## michaelm

I wonder why the budget isn't next week rather than next month.  Surely the sooner they detail what remedial action they intend to take, the better.  The cynic in me can't help but think the timing (14th October) may be more to do with taking the focus (media attention) off what is happening on 15th October.


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## bigbadostric

forgive my ignorance but what is happening on the 15th?


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## Bronte

I think that on the 15th some official figures are coming out of how much tax they have taken this year and it's not good so they want to distract people's attention away from that.


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## michaelm

bigbadostric said:


> forgive my ignorance but what is happening on the 15th?


Well, at the risk of dragging this into LOS territory and incurring the wrath of the MODs , and unless I'm mistaken - on the 15th, Cowen and Co. will be off to Europe, caps doffed, to explain to their EU masters how they plan to usurp a recent democratic decision of the Irish people.


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