# Proposed spending cuts and tax increases to cut the national debt



## NoRegretsCoyote (20 Jun 2019)

Brendan Burgess said:


> Hi Coyote
> 
> The "how soon" is very difficult to answer. But we must start cutting it now while we are in such a temporarily healthy economy.  It's clear that we could not get back to the €50 billion of debt we had in 2007 in ten years.
> 
> ...



Thanks Brendan. It would be great if you could specify how soon you want to get to €50bn and how.

I've said fiscal balance should be about 3bn greater at the moment. Personally I would get there by raising LPT, increasing VAT on some low- and non-rated items, reducing child benefit, cutting subsidies to universities (make them raise fees), and increasing employers' PRSI by a few pp.


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## Purple (20 Jun 2019)

NoRegretsCoyote said:


> Thanks Brendan. It would be great if you could specify how soon you want to get to €50bn and how.
> 
> I've said fiscal balance should be about 3bn greater at the moment. Personally I would get there by raising LPT, increasing VAT on some low- and non-rated items, reducing child benefit, cutting subsidies to universities (make them raise fees), and increasing employers' PRSI by a few pp.


I'd make all forms of welfare payment taxable. That way those on low incomes are not affected but those on high incomes are. I'd also get rid of the under 6 and over 70's medical cards, replacing them with a means tested equivalent.


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## odyssey06 (20 Jun 2019)

For starters...
Scrap the national broadband plan, or cap its budget at enough to reach 95% of the population.
Scrap the proposed national children's hospital.
Scrap the lower vehicle taxation on diesel cars and diesel fuel.
Scrap the proposed Minimum Alcohol Pricing Legislation (the extra money will go to retailers not government), look at VAT and Excise Rates instead.
Look at a 'tourist tax' on peak season hotel stays in Dublin.
Cap all welfare payments, including HAP, for next 5 years OR (Purple's suggestion) make all forms of welfare payment taxable.


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## Purple (20 Jun 2019)

I'd go ahead with the hospital but agree with the rest.
The big issue is State pensions and pay. This government has done a reasonably good job at keeping a lid on State sector pay increases but the pressure is mounting from the Unions as they see a crash of some sort coming and they want their pound of flesh first.


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## Brendan Burgess (20 Jun 2019)

I think we need to reduce the state's involvement in every aspect of our lives and thus cut the number of staff. 

All state pensions should switch to Defined Contribution.  Not only would this cut the cost and the administration, it would force us to realise the full cost of employing public servants.

I think a Property Services Regulatory Authority is a great idea. But we can't afford it. 

The  Residential Tenancies Board should be reduced to being a forum for resolving disputes - and not for logging every tenancy agreement. 

Why on earth should the state pay the nursing home fees for people who own big houses or big farms?   

We can't afford to have 5,000 individuals living on their own in two, three and four bedroom social houses. 

We should not be selling "affordable housing" at 40% discounts to people. 

We don't need a Senate. 

Self-employed who pay 4% PRSI should not get the contributory pension. 

We need to remove all the exemptions from Capital Gains Tax but especially the exemption on death. 

But overall it's an attitude we need to change. We have to say "Pay for it yourself and stop relying on the state".

Brendan


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## Brendan Burgess (20 Jun 2019)

The ESRI is clear that we need to raise taxes 

*Tax rises needed to prevent economy overheating - ESRI *


The Economic and Social Research Institute says the economy is now growing so strongly that the Government should increase taxes to avoid overheating, notably through increasing taxes on carbon and property.


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## Peanuts20 (20 Jun 2019)

the Childrens hospital should never have been built where it is going but that ship has sailed and we are probably beyond the point of new return. Broadband plan should be scrapped as technology will have moved on by the time it is implemented

We really should be asking ourselves a very simple question, what do we get for what we spend?. How many reports are done by quangos, Govt Depts and County Councils that will never have a concrete action put against them that will change things? Reporting for the sake of reporting? How many people work in the HSE that have no impact on patients?

In terms of taxes we shouldn't be afraid to increase taxes if it will also help save money elsewhere. Hate to say it as someone who enjoys a pint or glass every so often but a significant increase in drink taxes could also save the HSE money if there are fewer drunks staggering into A&E. I wouldn't make welfare taxable but would means test all of it instead so those who have more don't get it.


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## Purple (20 Jun 2019)

Peanuts20 said:


> I wouldn't make welfare taxable


Why not? If you are single and get €325 a week in welfare you wouldn't pay any tax on it anyway.
If you are a couple you can get €650 a week and pay no tax.

Make it all taxable and, without the cost of means testing, all the rich parents would pay tax on their children's allowance etc.
Maybe put a value on the under 6 and over 70's medical card and add that to people's nominal income as well so that rich OAP's and parents pay tax on those handouts too.


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## WolfeTone (21 Jun 2019)

Increase Corporation Tax rates. 
If, as has been suggested elsewhere, that CT are artificially high and not sustainable in the long run, then taking advantage of high amounts of corporate profits being registered here would make sense. A €bn or two extra could be collected each year for paying down national debt.
Ireland's CT is purportedly highly competitive, there is room to increase it.


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## Brendan Burgess (21 Jun 2019)

Folks

This thread is about *specific *proposals to cut expenditure and raise tax.

It's not a general discussion of the ills of Irish society.  Any off topic posts or posts with off topic content will be removed.

Brendan


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## Purple (21 Jun 2019)

WolfeTone said:


> Increase Corporation Tax rates.
> If, as has been suggested elsewhere, that CT are artificially high and not sustainable in the long run, then taking advantage of high amounts of corporate profits being registered here would make sense. A €bn or two extra could be collected each year for paying down national debt.
> Ireland's CT is purportedly highly competitive, there is room to increase it.


How about just get everyone to pay an effective rate of more than 10%?
That alone would raise billions in the short term but may cost billions in the longer term.


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## Zenith63 (21 Jun 2019)

odyssey06 said:


> Scrap the national broadband plan, or cap its budget at enough to reach 95% of the population.


As somebody working in IT I really think the government should consider scrapping the NBP in favour of one of the new high-speed satellite broadband providers as per articles like this - https://www.irishtimes.com/opinion/letters/time-to-rethink-national-broadband-plan-1.3878881.  SpaceX have already launched their first satellites, the government could approach them and do a deal to subsidise access for rural users.  No upfront expenditure, clear costs from the offset, similar if not better performance.  No brainer for me.



> Self-employed who pay 4% PRSI should not get the contributory pension.


As somebody in this position, I'd agree a change here is required.  Personally I'd be in favour of simplifying the whole thing by just getting rid of the self-employed PRSI category and make us pay what everybody else does, including the higher employer contributions, but give us the same benefits.  These safety nets encourage people to take the leap and start new businesses which is really important.

I think CGT should be higher, but with a much higher annual allowance to allow less wealthy people access the returns available in the markets and not at banks.  Also think the deemed disposal should be extended beyond just ETFs.  And 100% agree CGT exemption on death should be long gone.

Do something about the grey market around VAT in the construction sector.  Have had a load of work done on my house recently, guys intending to pay VAT was by far the exception.


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## Protocol (21 Jun 2019)

*Corporation tax*

It is unrealistic to call for an increase in the 12.5% rate.  We have made in a central plank of our industrial policy.

What we could do is further reduce exemptions/reliefs, etc.


*Taxing welfare payments*

All SI benefits are already taxable.

SA welfare payments are not taxable, for the reason that you only qualify for them if your income is low, and you pass a means-test, therefore you are not in the tax net anyways.

*PRSI*

The 4% rate is low, compared to the benefits, that is true.

I suggest merging USC into PRSI, and charging PRSI on a broad base of incomes, but with a max rate for ee of 8%.

*Income tax*

Abolish the three tax reliefs that people over 65 get.


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## David1234 (21 Jun 2019)

The over 65s in Ireland have it very well in comparison to the rest of the country. State pension entitlements, fair deal schemes, medical cards, free travel etc. Due to political pressure this is likely to remain the case but with Irelands aging population something needs to be done ASAP

Fair deal scheme- This needs to be means tested/reformed. Elderly people with properties worth hundreds of thousands should not be getting subsidised care. It also gives rise to homes sitting idle for years.

Pension thresholds- This is too high at 2 million. Why are employers and employees getting tax breaks to contribute to fund pension pots of this size. 

Reduction in tax free/reduced rate pension withdrawals. At present if someone has a pension pot of €800,000 they can withdraw the first €200,000 tax free and an additional €300,000 at 20%. They are paying tax of 12% on the first €500,000 of their fund. This is obviously far too low and needs to be addressed.


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## Sophrosyne (24 Jun 2019)

In economic discussions, I wonder why we always think of ways of cutting things rather than ways of creating income.

Is it because the latter is more challenging?


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## Brendan Burgess (25 Jun 2019)

Sophrosyne said:


> In economic discussions, I wonder why we always think of ways of cutting things rather than ways of creating income.



The thread title is very clear 

*Proposed spending cuts and tax increases*


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## NoRegretsCoyote (25 Jun 2019)

Brendan Burgess said:


> The thread title is very clear
> 
> *Proposed spending cuts and tax increases*



I think what @Sophrosyne meant is increasing economic growth. 

Which of course generates extra taxes all by itself.


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## Protocol (25 Jun 2019)

Increase SI welfare payments in line with inflation, but do not increase SA welfare payments.

Move towards the abolition of entire welfare schemes:

replace JSA with a guaranteed job offer to everybody on JSA
abolish OPFP (no such scheme exists in the UK)
stricter on DA, as the numbers on DA keep rising

Curtail many tax reliefs, especially those used by higher earners, indeed abolish many of these schemes altogether.

Replace the PAYE tax credit with a tax credit only available to those in employment.


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## NoRegretsCoyote (25 Jun 2019)

Some of these ideas are not feasible:



Protocol said:


> replace JSA with a guaranteed job offer to everybody on JSA



In what workplace? Who will pay for it? Will it make any difference to an unemployed person's skills?



Protocol said:


> stricter on DA, as the numbers on DA keep rising



DA inevitably rises as the working-age population grows older. There have been no changes in eligibility criteria in recent years.



Protocol said:


> Curtail many tax reliefs, especially those used by higher earners, indeed abolish many of these schemes altogether.



The biggest income tax relief is of course on private pensions. There are very good reasons for not taxing pensions on the way in, but only on the way out.


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## Purple (25 Jun 2019)

NoRegretsCoyote said:


> Some of these ideas are not feasible:
> 
> 
> 
> ...



So we should do nothing. Is that what you are saying?
It is easy to be negative and knock every suggestion but, with respect, if you are not going to offer a solution why are you posting on this thread? Start one titled "It's pointless trying to reign in spending and managing our debt. We should just leave it to our children to sort out our mess"



NoRegretsCoyote said:


> The biggest income tax relief is of course on private pensions. There are very good reasons for not taxing pensions on the way in, but only on the way out.


 It getting a State pension that you haven't paid for not the same thing really? Private pension relief is deferred taxation. A State pension that you contribute almost nothing to is just dipping your hand into someone else's pocket. What's the difference?

I think that we should be running a surplus budget and using the money to pay down the debt. Somewhere between €3 and €5 billion a year. 

That should be funded through cutting spending by improving the efficiency of our public services and through tax increases in non wealth generating areas, so no increases in taxes on labour. I would increase property tax but change it to a site value tax, introduce local services charges which are paid by the occupant of the property rather than the owner since the occupant consumes the services, introduce a carbon tax on fuels and I'd find a way to have an effective vacant site tax.

The big aim should be in reducing spending. When Irish water was formed there were thousands of staff they didn't need because of the duplication of processes in each local authority. It doesn't take a genius to know that such duplications are rampant across the entire State sector. There should be no pay cuts, maybe there should be pay increases, but there should be tens of thousands fewer people employed (directly and indirectly) by the State.


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