# Upcoming budget.



## thedaras (25 Sep 2010)

If the government bring in, water tax,property tax etc and if on average most people can expect to lose say 1oo euro a month ( though God knows how much it will be!) what would you cut back on to make up this amount?

For example if you had a second car,and it wasn't absolutey necessary ,would that be the first to go? Even though it would be very difficult to sell,you could save on car tax,insurance ,petrol.

What ideas for cutting back do you have,.
I think most have cut back significantly already,but what next is my question?


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## z107 (25 Sep 2010)

I believe people should forget about the idea of suffering for others' sins.


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## Towger (25 Sep 2010)

Water tax, property etc they all take time to implement and they need to keep something in reserve for the following years 3bn of taxs/cuts. 
I believe the following will with bring in €3bn+, and could take more than €100 out of some pockets:
Doing a way the PAYE Tax Credit of €1830 Per Year.
Doing a way with the PRSI Free Allowance of €127 Per Week.
Removing PRSI Employee Ceiling €75036.
Doing a way with exemptions form the 4% health levy, for those with medical cards, widows etc. 
The last 3 may be rolled into the introduction of the '*universal'* social contribution.


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## thedaras (26 Sep 2010)

umop3p!sdn said:


> I believe people should forget about the idea of suffering for others' sins.


That depends on your definition of sins..and your idea of suffering..


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## thedaras (26 Sep 2010)

Towger said:


> Water tax, property etc they all take time to implement and they need to keep something in reserve for the following years 3bn of taxs/cuts.
> I believe the following will with bring in €3bn+, and could take more than €100 out of some pockets:
> Doing a way the PAYE Tax Credit of €1830 Per Year.
> Doing a way with the PRSI Free Allowance of €127 Per Week.
> ...


Yes I think most if not all of that will happen,but I also think what may happen is that workers who are presently outside the tax net will be targeted.
At this stage we may be better off if the IMF took control!


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## RMCF (26 Sep 2010)

I think those options are better than letting the IMF intervene to be honest.

Once the IMF come in, then you'll see bad cut backs!

I also think its not a bad thing to have everyone pay some sort of income tax. IT should be a small contribution for many, but I think if you contribute something to the tax intake it will make you value what you receive a bit more. We can't continue as an economy where 50% of people pay zero tax at all. 

Of course, we should also be trying to make sure that there is no tax evasion at the upper end which is just as, if not more, damaging.


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## shnaek (26 Sep 2010)

RMCF said:


> I also think its not a bad thing to have everyone pay some sort of income tax. IT should be a small contribution for many, but I think if you contribute something to the tax intake it will make you value what you receive a bit more. We can't continue as an economy where 50% of people pay zero tax at all.



I agree. When everyone contributes, then everyone has a bit more respect for how their money is spent, and a bit more satisfaction that they are making a contribution to the country also.


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## computerman (27 Sep 2010)

Another thing to remember, the Gov has stated that it wants people to spend - not save. I think you will be looking at a substantial increase in the DIRT.

In relation to the IMF, they will not come in here.  There are other options before that would even be considered.

I do think the punitive measures would be made a little easier if the ministers would drop their own expenses and salaries to a reasonable amount in line with other world leaders or even in line with the service that they provide. (sic).


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## DB74 (27 Sep 2010)

I don't think the PAYE tax credit or the PRSI free allowance will be abolished. Too much impact on lower-paid for those changes to be implemented.

IMO some of the changes will be:

1. Decrease of both tax bands. This has the effect of not hitting those on low pay but those on higher pay

2. Levy to be incorporated into the PRSI system (already mooted by Brian Lenihan last year) and a flat rate of PRSI introduced instead of the tiered system in place now

3. Abolition of rent tax credit & rent-a-room relief

4. Further reduction in the amount of deductible mortgage interest allowed against rental income - probably down to 50%

5. Removal of the €10K tax free threshold for minding children in your own home.

6. Employer's PRSI to be increased, at least for lower paid, possibly to a flat rate of 10.75%

7. Removal of a few small tax credits, eg bin charges

I would like to see the removal of the PRSI ceiling and also I would like to see a higher tax rate introduced for salaries over say €75K. I would also like to see a minimum rate of tax introduced that everybody has to pay, chargeable on income before any losses or reliefs reduce that taxable income to NIL.


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## Shawady (27 Sep 2010)

Has the government commited to reducing the tax relief on pension contributions?
I would be interested to hear what this would save the government, particulary if they intend to apply it to the pension levy for public sector workers.


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## Caveat (27 Sep 2010)

A brave and sensible move IMO would be as intimated, to introduce some measure of income tax for those who don't pay. The lesser of many evils in lots of ways.


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## shnaek (27 Sep 2010)

DB74 said:


> I would like to see the removal of the PRSI ceiling and also I would like to see a higher tax rate introduced for salaries over say €75K.


Would you like to drive people that earn over 75k out of the country? The highest rate of tax is already 56% - and you have to remember that people who earn that kind of money are pretty mobile. Why would they stay here, when they can get a far better deal not too far away?


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## orka (27 Sep 2010)

Caveat said:


> A brave and sensible move IMO would be as intimated, to introduce some measure of income tax for those who don't pay. The lesser of many evils in lots of ways.


DB74's suggestion would probably be the best way to implement this - everybody, regardless of income, must pay x%. This is currently done at higher incomes (where I think there is a minimum of 20% payable) but, if introduced across the board, would bring in a large amount of tax as there are many people currently outside the tax net. 


DB74 said:


> I would also like to see a minimum rate of tax introduced that everybody has to pay, chargeable on income before any losses or reliefs reduce that taxable income to NIL.


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## Shawady (27 Sep 2010)

Bringing low paid workers into the tax net (which I aggree with), should be done in conjunction with lower social welfare rates. Otherwise it is going to make it unattractive for people to return to the workforce.


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## z107 (27 Sep 2010)

From reading this thread it seems many people are eager for tax increases.

Why?

I just can't understand it. We read about shocking waste of money, overpaid x, y and z, bank bailouts, NAMA, expensive blanket guarantees - and yet, people still want to pay more??? WTF.


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## Caveat (27 Sep 2010)

umop3p!sdn said:


> ...and yet, people still want to pay more??? WTF.


 
Nothing to do with "want".

It's a case of the most sensible, fair and relatively painless way to reduce the deficit.


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## DB74 (27 Sep 2010)

shnaek said:


> Would you like to drive people that earn over 75k out of the country? The highest rate of tax is already 56% - and you have to remember that people who earn that kind of money are pretty mobile. Why would they stay here, when they can get a far better deal not too far away?


 
Where do you think these people are going to go exactly? You think they will walk into a job in England that is just as well paid? Most will have families and other commitments that are not all that easy to just walk away from, not to mention the fact that they will find it tough to sell their houses. This idea that people earning over €75K are all going to up sticks and leave is crazy.


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## shnaek (27 Sep 2010)

umop3p!sdn said:


> From reading this thread it seems many people are eager for tax increases.
> 
> Why?
> 
> I just can't understand it. We read about shocking waste of money, overpaid x, y and z, bank bailouts, NAMA, expensive blanket guarantees - and yet, people still want to pay more??? WTF.



Hear hear - but if you read the posts - most people want other people to pay more


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## TarfHead (27 Sep 2010)

shnaek said:


> Would you like to drive people that earn over 75k out of the country? The highest rate of tax is already 56% - and you have to remember that people who earn that kind of money are pretty mobile. Why would they stay here, when they can get a far better deal not too far away?


 
75K is an arbitary figure and by no means a fortune. There are plenty of people earning that level of income who are not mobile. If you go through the households of the middle-class suburbs, you'll find plenty of people in that net. To suggest they will all uproot their family and sell their houses and emigrate to avoid a further reduction in household income, is risible.


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## Towger (27 Sep 2010)

umop3p!sdn said:


> From reading this thread it seems many people are eager for tax increases.


 
No one is eager. I just believe that the government is incapable making the required cuts, leaving tax increases as the easy get out. Of course there is only so much you can raise from taxes before the law of diminishing returns ticks in. Just look at the lack of what was done with Board Snip report etc etc. 

'They' have stated numerous times that the number of lower paid people who are not paying tax is a problem. That is why I have listed the cuts in the above allowances, they will bring in more tax from the lower paid, but not have much effect on the higher paid, except from the removing of the PRSI Employee ceiling or PRSI Holiday as Charlie McCreevy calls it.

I remember a budget about 10 years ago, when they increased the tax allowances/bands so much that someone who was on an average industrial wage was about £2,000.00 (IEP) better off. It was seen as a good budget, I wondered how they could afford it at the time and how they could reverse it. Well now the time has come.


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## DB74 (27 Sep 2010)

Of course nobody wants to pay more tax but the reality is that public service reform is a long-term gain financially so to get money in the short-term we will need more taxes.

Should also point out that people earning over €75,036 don't pay tax at 56%. Private sector employees earning over €75,036 pay tax at 46% on their income over this figure because they have reached the PRSI ceiling


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## shnaek (27 Sep 2010)

TarfHead said:


> To suggest they will all uproot their family and sell their houses and emigrate to avoid a further reduction in household income, is risible.


They won't be selling the houses...


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## orka (27 Sep 2010)

DB74 said:


> Where do you think these people are going to go exactly? You think they will walk into a job in England that is just as well paid? Most will have families and other commitments that are not all that easy to just walk away from, not to mention the fact that they will find it tough to sell their houses. This idea that people earning over €75K are all going to up sticks and leave is crazy.


 


TarfHead said:


> 75K is an arbitary figure and by no means a fortune. There are plenty of people earning that level of income who are not mobile. If you go through the households of the middle-class suburbs, you'll find plenty of people in that net. To suggest they will all uproot their family and sell their houses and emigrate to avoid a further reduction in household income, is risible.


So you think we should screw over the high earners because we can?

And it's not necessarily the 75K to 100K earners you need to worry about moving. Higher earners are undoubtedly more mobile than average and the higher you go, the more mobile they are. Revenue stats (2005 latest available year) show that something like 15% of all tax is paid by fewer than 1% of taxpayers and 40% of all tax was paid by fewer than 5% of tax payers. A lot of the very high earners are here with foreign employers and/or have transferable skills. Any decision to wallop these groups would have to seriously consider the impact of possible moves abroad.


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## Latrade (27 Sep 2010)

A recent quote from Bill Maher could be taken on board:



> It's so hard for one person to tell another person what constitutes being "rich", or what tax rate is "too much." But I've done some math that indicates that, considering the hole this country is in, if you are earning more than a million dollars a year and are complaining about a 3.6% tax increase, then you are by definition a greedy (expletive deleted).


 
Anyway my hope for the upcomming budget is for them to not just make up new taxes, but to take on the whole tax system and make the changes recommended in the last tax review (after all it was done and published with this budget in mind).

A more effective tax system is required, not just adding on new taxes here and there at the whim of the Greens.


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## orka (27 Sep 2010)

DB74 said:


> Should also point out that people earning over €75,036 don't pay tax at 56%. Private sector employees earning over €75,036 pay tax at 46% on their income over this figure because they have reached the PRSI ceiling


Should also point out that the 46% figure is also incorrect - you've left out the 6% income levy. So it's 41% tax, 5% health and 6% income levy = 52%.


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## DB74 (27 Sep 2010)

Well spotted!


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## DB74 (27 Sep 2010)

Also, plenty of high earners pay very little tax at all due to various tax-incentive schemes so why shouldn't the PRSI ceiling be abolished, especially when they aren't paying their share of PAYE.

[broken link removed]


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## orka (27 Sep 2010)

DB74 said:


> Also, plenty of high earners pay very little tax at all due to various tax-incentive schemes so why shouldn't the PRSI ceiling be abolished, especially when they aren't paying their share of PAYE.


Because plenty of high earners DO pay all the tax they are obliged to pay - which is at least their fair share (how would you define this?) and probably way beyond!  So your suggestion is to hammer the compliant high earners to somehow get at the 'dodgers'? - brilliant! And, as mentioned above, there is now a minimum tax rate so none should get away with paying little tax.


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## shnaek (27 Sep 2010)

There would be none of these issues if we had one tax rate across the board and no loopholes. That would be the fairest solution.


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## DB74 (27 Sep 2010)

Someone who avails of a tax-incentive scheme is NOT a "dodger" as you put it. 

And for 86 people with earnings between €250K and €500K to be paying less than 10% tax is a disgrace. Do you regard this as their "fair share" or how would you define it?


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## thedaras (27 Sep 2010)

umop3p!sdn said:


> From reading this thread it seems many people are eager for tax increases.
> 
> Why?
> 
> I just can't understand it. We read about shocking waste of money, overpaid x, y and z, bank bailouts, NAMA, expensive blanket guarantees - and yet, people still want to pay more??? WTF.



What does "WTF " mean?


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## DB74 (27 Sep 2010)

What
The
F...


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## DB74 (27 Sep 2010)

shnaek said:


> There would be none of these issues if we had one tax rate across the board and no loopholes. That would be the fairest solution.


 
That would be ideal but it's not going to happen. It's too late at this stage to have just one tax rate. Bringing in one tax rate is only going to benefit high-earners no matter what way you look at it.


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## orka (27 Sep 2010)

DB74 said:


> Someone who avails of a tax-incentive scheme is NOT a "dodger" as you put it.


Okay, I'll rephrase the question. So, your suggestion is to hammer the 'non-availing of tax breaks high earners' to somehow get at the high earners who currently pay low tax by availing of tax breaks? 


DB74 said:


> And for 86 people with earnings between €250K and €500K to be paying less than 10% tax is a disgrace. Do you regard this as their "fair share" or how would you define it?


The minimum tax initially targetted those earning over 500K - and this has been quite successful (as your article shows). The minimum tax then moved on to target the 250K to 500K earners - the figures you and Joan Burton quoted were before this had started. And, as the article states, there is a long tail on some of the old tax breaks to get used up so it'll be a few years before tax take reaches status quo - but the system as it currently stands has massively reduced scope for tax breaks reducing tax to low levels.
I still don't think 20% is enough for this group, but these would be very mobile people and 20% of a high income is better than 0% of no income which would be a real possibility with this group. I don't think there should be any tax breaks at all - just unescapable tax rates, tiered at reasonable levels. But your suggestion of hammering ALL high earners even more to try to get at low numbers (86?? really?) of low-payers is extremely unfair.


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## thedaras (27 Sep 2010)

> orka;Should also point out that the 46% figure is also incorrect - you've left out the 6% income levy. So it's 41% tax, 5% health and 6% income levy = 52%.



Thats a good point,also those who earn enough to be able to pay this much tax,are surely the ones who are keeping others in jobs by having the income they have.



> orka:Revenue stats (2005 latest available year) show that something like 15% of all tax is paid by fewer than 1% of taxpayers and 40% of all tax was paid by fewer than 5% of tax payers.



Another valid point,those1% of taxpayers end up paying 15% of all tax paid therefore are an necessity to the country in terms of the revenue they contribute.
If they end up paying even more,of course they will get out if they can.

Why study for years and earn the same as someone who doesn't, isn't this a communist way of running a country..


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## DB74 (27 Sep 2010)

Where did I say they should be hammered?

I don't think anyone should be hammered at all but I don't think anyone should pay less than 20% (PAYE only) of their total income (before reliefs/losses) and I don't think there should be a PRSI ceiling.

That's it!

Also the figure of 86 is from 234 people in that earnings bracket which is over 1/3 of that bracket.


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## cork (27 Sep 2010)

I think the new PRSI levy will do people no favours.

The low paid will be brought into the tax system.

I can see socail welfare also being hit.

Why start hitting those on low to medium levels of income?

But the elephant in the room is government spending.

Cutting public spending without reform is a joke as it does nothing to cut down on waste.


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## orka (27 Sep 2010)

DB74 said:


> Also the figure of 86 is from 234 people in that earnings bracket which is over 1/3 of that bracket.


Here's a link if you would like to read the source document rather than Labour's interpretation: http://www.finance.gov.ie/documents/publications/reports/2010/taxreliefs.pdf

The 234 is the number of people in that earnings bracket (250K to 500K) who were subject to some form of minimum tax restriction (ie the ones identified as paying little or no tax) - so perhaps not hugely surprising that if you start with those paying not much tax, there'll be a reasonable fraction of those who are paying mega-low tax. There are probably at least 5,000 people in that earnings bracket (250K to 500K) who were not identified as needing the application of a minimum tax rate. So you've identified a subset (86) of mega-low payers in a subset (234) of very low payers in a subset (5,000+) of high (but not the highest) earners out of over 1.5M taxpayers.  And those 86 won't be able to pay such low rates in the future once the reliefs are used up - so what is your point?


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## micheller (27 Sep 2010)

I don't think it's fair to say that people want others to pay.
I think most people accept that they are going to take a hit, I know I am accepting that I'll be paying more tax. 

I'd like to see people who pay little or no tax, so the lower and higher earners, to contribute a reasonable amount. 
Also Pension recipients to take a small cut as they were sheltered in the last budget. Social welfare and benefit packages need to fall to marginally below working rates so as not to disincentivise employment.
But most of all I want the politicians to take decent swinging cuts in their own pay and perks.


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## orka (27 Sep 2010)

micheller said:


> I'd like to see people who pay little or no tax, so the lower and higher earners, to contribute a reasonable amount.


Most higher earners (see above) don't 'pay little or no tax'. Most pay lots and lots. But I agree that everyone should pay a reasonable amount.


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## DB74 (27 Sep 2010)

orka said:


> But I agree that everyone should pay a reasonable amount.


 
THAT'S my point


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## joe sod (27 Sep 2010)

*average industrial wage*

It makes you wonder what a farce the "average industrial wage" as a measure is. If it is an average how is it that so many workers do not pay tax because they earn less than 17000 per year, methinks it is a measure dreamed up by civil servants to allow them to pay public servants big salaries and the say how their pay relates to the "average industrial wage"


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## shnaek (27 Sep 2010)

DB74 said:


> That would be ideal but it's not going to happen. It's too late at this stage to have just one tax rate. Bringing in one tax rate is only going to benefit high-earners no matter what way you look at it.



I wasn't talking about who it would benefit, but rather talking about a 'fair' solution - though I do agree with you - I can't see it happening in Ireland.


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## DB74 (27 Sep 2010)

shnaek said:


> I wasn't talking about who it would benefit, but rather talking about a 'fair' solution - though I do agree with you - I can't see it happening in Ireland.


 
Fair enough. If something was introduced which hit low earners harder than high earners as blatantly as a flat tax rate, there would be riots on the streets.

Well, Joe Duffy's phone lines would be jammed to incapacity anyway!


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## shnaek (27 Sep 2010)

DB74 said:


> Fair enough. If something was introduced which hit low earners harder than high earners as blatantly as a flat tax rate, there would be riots on the streets.
> 
> Well, Joe Duffy's phone lines would be jammed to incapacity anyway!



It's true - which shows that it isn't fairness that people are concerned about in society in general. People are always concerned about the other guy, particularly if the other guy is richer!
20% of a high earners income is a lot more than 20% of a low earners income, but proportionately they pay the same, which in an ideal world could be described as fair. But begrudgery isn't just an Irish trait, it's a human trait.


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## orka (27 Sep 2010)

yes, it is strange that there seems to be some acceptance that a flat rate might be fair but that we can't do it because we don't currently do it - and to try to change would hit lower earners harder - which might be seen to imply that the current (unchangeable) system is unfair to higher earners...  Like the post on the previous page where an average earner got an increased take home of 2K in a previous goodtimes budget - easy (and popular) to give but next to impossible to take back even though it should never have been given.  And also similar was the taking out of so many people from the tax net - trying to get them back in now is 'unfair because they are hit harder than higher earners' - but they should never have been taken out in the first place.  It will be a brave government that tries to go back to square one and design a new tax system.


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## micheller (27 Sep 2010)

You could lessen the impact of a flat tax two ways; first by getting rid of tax reliefs which generally favour higher earners and secondly by ensuring standard secondary benefits like FIS, BTS etc. The means tested packages are unavailable to the higher earner but there for the people who need extra support.


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## orka (27 Sep 2010)

I don't think a totally flat tax would be fair or workable.  You could maybe have one low flat tax (but tax nonetheless on ALL income, including pensions and social welfare which might be paid net) up to the level of a living wage and above that a single higher flat tax (to encompass prsi, health levies, income levies) so that everyone kept the same proportion of the fruits of their efforts once a minimum living wage had been reached.


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## micheller (27 Sep 2010)

orka said:


> I don't think a totally flat tax would be fair or workable.  You could maybe have one low flat tax (but tax nonetheless on ALL income, including pensions and social welfare which might be paid net) up to the level of a living wage and above that a single higher flat tax (to encompass prsi, health levies, income levies) so that everyone kept the same proportion of the fruits of their efforts once a minimum living wage had been reached.


 
Sounds like another eminantly reasonable suggestion.
I wonder what the government will come up with?


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## csirl (28 Sep 2010)

I prefer the pure flat rate tax on all income from all sources with no exemptions, personal circumstances etc. This is by far the most efficient way of collecting tax. It is also extremely customer friendly - everyone understands, so less mistakes and less excuses. And needs less staff to be employed by Revenue.

The argument that people keep on making against it is that there may be some low income earners who are struggling live, yet are paying tax. These people can be helped with family income suppliments etc.

When you give out exemptions, it is very difficult to know how much money this is costing the state and to hit the target that the exemption is designed to hit. People tend to get creative about claiming exemptions and usually you end up losing a lot more tax revenue than intended. This is as true for the PAYE exemptions as it is for business and property exemptions. 

I firmly believe that you are always better to collect all the money in the first instance and then returning some to those who need it as opposed to giving people exemptions. And if you are more efficient at collecting money, you will have more money to spend on the needy.


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## shnaek (28 Sep 2010)

orka said:


> I don't think a totally flat tax would be fair or workable.  You could maybe have one low flat tax (but tax nonetheless on ALL income, including pensions and social welfare which might be paid net) up to the level of a living wage and above that a single higher flat tax (to encompass prsi, health levies, income levies) so that everyone kept the same proportion of the fruits of their efforts once a minimum living wage had been reached.



Once you make it two rates you are going to have tinkering with it all over the place. You'll end up with something like we have already. A flat rate tax would be simple to implement. We wouldn't need half the amount of people in the department of finance, nor would we need half the accountants we have, as there would be no work to do. But once you tinker with a simple idea it no longer works.


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## shnaek (28 Sep 2010)

Just saw csirl's post above - which I agree with.


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## Shawady (28 Sep 2010)

I think a single flat rate of tax would make more sense as it would be easier to administer and would be easy to increase the rate if more tax was required. However, if it was implemented now it would mean lower earners paying more tax and government unlikely to do this.

One other option may be a simple tax scale similar to how the government implemented the pay cuts in civil service.
For example, 10% tax on first 20K, 15% from 20 to 50K, 20% for over 50K.

Does anyone know what percentage of income tax the government takes compared to total income in the country?


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## shnaek (28 Sep 2010)

Here's an interesting article in light of Irish Bond rates heading towards 7%:

http://home.thejournal.ie/do-we-need-the-imf-heres-what-the-world-thinks-2010-09/?h=d88

The last paragraph is particularly scary:

"At the first whiff of a haircut, everybody’s going to want to be the first to bail out entirely. Ireland’s technocratic elite seems to understand that and so it’s unhappily bailing out its foreign lenders at 100 cents on the euro, even [sic] the government continues to slash spending domestically. It’s not fair, everybody knows that. But it might be unavoidable. "


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## csirl (28 Sep 2010)

Here's some interesting stats:

Income tax target from 2010 Book of Estimates = 11,979m

Average Wage Q1 2010 (CSO) = 35,634 per annum

No. of tax payers in country (Revenue Annual Report) = 2,496,762

Doing the maths, it means that if we had a flat rate tax, the 2010 rate would be: 13.5%

Whats encouraging is that we can easily increase our tax take by 25-30% (i.e. to c.18% flat rate tax) without much difficulty.

Flat rate is the way to go.


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## csirl (28 Sep 2010)

Minimum wage is €8.65 p/hr = 346 per week (40 hrs).

Tax of 13.5% reduces take home pay for a min. wage earner to 299 per week. This figure is still in excess of the dole. Dont forget, a min wage earner will also get Family Income Suppliment to top up their pay.


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## Firefly (28 Sep 2010)

csirl said:


> Flat rate is the way to go.


 
as with all of these types of changes, the devil is in the detail. Some will pay more tax, others less. It's a question of who pays more and what political clout they have.

The other thing, is that if this flat rate of tax were to replace all the other taxes such as prisi, income levy etc, our "low tax economy" mightn't look so low after all


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## Towger (28 Sep 2010)

csirl said:


> Income tax target from 2010 Book of Estimates = 11,979m
> 
> Average Wage Q1 2010 (CSO) = 35,634 per annum
> 
> ...


 
But look at it this way. 13.5% tax takes in 12bn, we have a shortfall of 20bn, so we will have to increase income tax to 30% to balance the books.


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## Latrade (28 Sep 2010)

Firefly said:


> The other thing, is that if this flat rate of tax were to replace all the other taxes such as prisi, income levy etc, our "low tax economy" mightn't look so low after all


 
I guess it depends on the math and how much the new rate would bring in with all the additional people paying tax. 

I'm on the fence with the system as I don't trust the figures from the countries that have recently switched over to the flat rate. 

One issue I do believe is that easier and clearer taxation isn't just attractive to the population, it's attractive to investment. Even if it's only the cost savings on payroll administration, it's attractive.

I still think there should be other taxes too in order to keep the tax on employment down, but they can be kept simple. I think local authorities should be able to generate their own revenue through rates, VAT should stay, duty, etc. 

My latest gripe is that the current system is so much weighted to consumer spending that we'll never close the gap. No matter how muchn tinkering with tax rates, no matter how much tinkering with the PS, until we're all (in the words of George Hook) "Millionares" again, that will remain. And to be honest, I know it's not great for retail, but I hope for all our sakes, our spending does remain more modest and representative of this small market.

But all policy from all parties is about how to get more out of people using the tax system we have. Pure bull, we need a complete reshape of how the government collect taxes. It'll probably mean I pay more I've no doubts about that, but a more secure and less vulnerable tax system is essential, not just inventive new taxes to get a few more euro out of people.

It's completely contradictory, but I'd go for a flat rate tax on income only, then look at a limited amount of sales, rates, etc taxes to support that.


----------



## shnaek (28 Sep 2010)

Towger said:


> But look at it this way. 13.5% tax takes in 12bn, we have a shortfall of 20bn, so we will have to increase income tax to 30% to balance the books.



Only if we maintain the same level of spending/wastage. We could put the rate up to 20%, and cut the rest.


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## shnaek (28 Sep 2010)

csirl said:


> Here's some interesting stats:
> 
> Income tax target from 2010 Book of Estimates = 11,979m
> 
> ...



Hear hear. We need some radical thinking - something more than cut here and raise there - we should lead the rest of Europe in introducing a simple, fair, easy to implement tax system.



Latrade said:


> It's completely contradictory, but I'd go for a flat rate tax on income only, then look at a limited amount of sales, rates, etc taxes to support that.


Agreed.


----------



## Shawady (28 Sep 2010)

csirl said:


> Here's some interesting stats:
> 
> Income tax target from 2010 Book of Estimates = 11,979m
> 
> ...


 
Interesting stats.
The problem is if the goverment introduced a 13.5% flat rate on all income tomorrow, high earners would pay less tax and lower earners more tax. For example someone on 20K would pay 2.7K in income tax. I suspect this is substantially more than what is paid at the moment.
I like the idea of a flat rate. Easy to administer and calculate future tax yields. I also think it is fairer that when someone gets a pay rise they will pay the same rate of tax on the extra money, not the 60% they pay now.


----------



## csirl (28 Sep 2010)

Towger said:


> But look at it this way. 13.5% tax takes in 12bn, we have a shortfall of 20bn, so we will have to increase income tax to 30% to balance the books.


 
No, income tax makes up only approx. 1/3rd of all Government income. So the pro rata deficit in income tax is only 6.6bn - and this is assuming no spending cuts.

The target for 2011 is 3bn. A 16.8% flat rate tax would generate this, assuming no cuts in spending. 

If it were me, I'd go for a slightly higher flat rate tax - 18% would bring in an additional 4bnper annum.

I would also make some cuts in spending etc. to bring in another couple of billion. This would put us ahead of the curve in dealing with this deficit and without putting too much burden on the average tax payer or targeting specific groups of taxpayers with punative 50% plus tax rates.


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## RMCF (28 Sep 2010)

Sorted then. Lets do it !!


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## Deiseblue (29 Sep 2010)

Shawady said:


> Interesting stats.
> The problem is if the goverment introduced a 13.5% flat rate on all income tomorrow, high earners would pay less tax and lower earners more tax. For example someone on 20K would pay 2.7K in income tax. I suspect this is substantially more than what is paid at the moment.
> I like the idea of a flat rate. Easy to administer and calculate future tax yields. I also think it is fairer that when someone gets a pay rise they will pay the same rate of tax on the extra money, not the 60% they pay now.


 
The most perceptive post yet.

No Government is going to introduce a tax system whereby those on lower incomes are brought into the tax net while higher earners pay less tax than they are currently paying.

A recipe for major social unrest I would have thought ?


----------



## shnaek (29 Sep 2010)

Deiseblue said:


> A recipe for major social unrest I would have thought ?



Everything the government needs to do to get us out of this mess is a recipe for social unrest. That is why they are doing nothing.


----------



## csirl (29 Sep 2010)

Deiseblue said:


> The most perceptive post yet.
> 
> No Government is going to introduce a tax system whereby those on lower incomes are brought into the tax net while higher earners pay less tax than they are currently paying.
> 
> A recipe for major social unrest I would have thought ?


 
Good point, but, there are some political advantages to flat rate tax that could be real vote getters i.e.

- means that high earners cannot reduce/eliminate their tax bill with various tax schemes. Whether perception or reality, the prospect of rich people paying their fair share is something that the electorate would be pleased with.
- while low paid workers will pay some tax, political research suggests that the low paid and unemployed dont vote and many arent even registered to vote, so from a cynical political point of view increasing taxes for the low paid will not lose votes.
- The big winners in a flat rate tax system will be middle income earners who are currently overburdened with tax. These people vote in large numbers at elections. 
- the system is simple and fair.

I think you get civil unrest when the ordinary average joe citizen gets hit hard. The middle income earners are the backbone of society. If they are getting a fair deal, you wont have civil unrest.


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## z107 (29 Sep 2010)

The government aren't quite doing nothing.
They're bailing out their buddies at the tax payers' expense.

I wish they were doing nothing.


People who are suggesting tax increases should consider the laffer curve
http://en.wikipedia.org/wiki/Laffer_curve

Increasing income tax may well reduce the amount of income generated.


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## shnaek (29 Sep 2010)

csirl said:


> The middle income earners are the backbone of society.



True, and they always get hit. 

Another advantage to a flat rate tax is that, if government wanted to raise it to pay for something, then everyone would be paying a bit more, so people would be a lot more likely to scrutinise what their money was being spent on.


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## z107 (29 Sep 2010)

Any decision that bertie ahern and the government made since they assumed power should be reversed. This includes all the property related tax breaks, huge pensions, and 'benchmarking' decisions.

We would probably have to couple this with some form of debt forgiveness, otherwise there will be a huge number of homeless people. Unfortunately, someone is going to have to pay for the debt forgiveness, and I don't want it to be me.


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## Deiseblue (29 Sep 2010)

I can see the headlines in the Indo already.

" Government employs sleight of hand tax reform to ensure Public Sector workers pay cuts are reversed at the expense of the lowest paid workers "


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## starlite68 (29 Sep 2010)

Shawady said:


> Bringing low paid workers into the tax net (which I aggree with), should be done in conjunction with lower social welfare rates. Otherwise it is going to make it unattractive for people to return to the workforce.


 leave the low paid alone, and dont think of lowering social welfare rates! you are no doubht one of those lucky to have a job.


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## micheller (29 Sep 2010)

Do you disagree in principle with the low paid contributing something, no matter how small? 

I think everyone should contribute something, and the plain fact is that some low paid pay no tax, and actually receive from the system (like childrens benefits and FIS). 

Everyone should be putting something in. Unfortunately when you do that, you have to reduce welfare a little too so as not to disincentivise work.


----------



## starlite68 (29 Sep 2010)

micheller said:


> Do you disagree in principle with the low paid contributing something, no matter how small?
> 
> I think everyone should contribute something, and the plain fact is that some low paid pay no tax, and actually receive from the system (like childrens benefits and FIS).
> 
> Everyone should be putting something in. Unfortunately when you do that, you have to reduce welfare a little too so as not to disincentivise work.


 dont take  me wrong, but i assume you have a job! try living on the other side of the street for a while.


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## thedaras (29 Sep 2010)

csirl said:


> Good point, but, there are some political advantages to flat rate tax that could be real vote getters i.e.
> 
> - means that high earners cannot reduce/eliminate their tax bill with various tax schemes. Whether perception or reality, the prospect of rich people paying their fair share is something that the electorate would be pleased with.
> - while low paid workers will pay some tax, political research suggests that the low paid and unemployed dont vote and many arent even registered to vote, so from a cynical political point of view increasing taxes for the low paid will not lose votes.
> ...



Your posts are always excellent..But can you say what you consider to be "middle income "?


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## micheller (29 Sep 2010)

starlite68 said:


> dont take  me wrong, but i assume you have a job! try living on the other side of the street for a while.



I see what you're saying and I have huge sympathy for anyone trying to pay their way on the dole or on low wages. When I started out years ago in a low paid job, I contributed, so I guess I don't see the problem with a small contribution.

Can you not see the other side yourself? 
And do you essentially disagree with everyone making some small contribution?


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## DerKaiser (29 Sep 2010)

csirl said:


> Doing the maths, it means that if we had a flat rate tax, the 2010 rate would be: 13.5%
> 
> Whats encouraging is that we can easily increase our tax take by 25-30% (i.e. to c.18% flat rate tax) without much difficulty.



1) What about the levies, are they in addition to the 13.5%?

2) All you're doing is taxing the higher earners less and the lower earners more

3) The idea that by simply changing the tax system we could generate 25% additional revenue with little or no hardship for anyone should have set alarm bells ringing as to the absurdity of the suggestion given the point from which we are starting.

Simple example.

A married couple on €50k p.a.(€25k each) probably pay about €3k p.a. in income taxes and possibly €3k p.a. in levies.

They possibly pay €18k p.a. on rent/mortgage, leaving them €500 a week to live on.

A 13.5% flat income tax would increase their income tax payments by about €70 a week.

The 'not so difficult' stretch to 18% flat tax would reduce their disposable income (after rent/mortgage) from €500 p.w. to about €385 p.w.

My point is this Csirl.  You have been continually touting this flat rate tax idea, but I seriously doubt you have given a seconds thought to the real consequences of why it would cause enormous hardship on many people.  

You're suggestion would involve reducing the disposable income of two married couples by up to 25% in order to cut the taxes of a guy on €100k p.a. by €12k per annum.  How can this be easy?

13.5% is a nice sound bite compared to the current tax rates, but this is hugely misleading as you are not comparing like with like.  When you factor in the elimination of tax free allowances and layer on the levies what your suggestion amounts to is real hardship on people who can least afford it.  

To be honest you don't need these examples to arrive at the conclusion that if high earners are significantly benefiting, the less well off must be getting hit hard.

For my part, I'd suggest we eliminate the levies and PRSI and have a combined rate of income tax at a few levels.  0% on the first €10k, 15% on the next €10k, 30% on the next €10k and 50% of earnings above €30k.  I do believe lower incomes need to be brought into the tax net to some extent, but we shouldn't cause excess hardship for the lowest paid, which is exactly what a flat rate tax would do.


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## Complainer (29 Sep 2010)

micheller said:


> and the plain fact is that some low paid pay no tax,


This is a myth. Ever heard of VAT?


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## starlite68 (29 Sep 2010)

RMCF said:


> Sorted then. Lets do it !!


  if life were only so simple!


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## RMCF (30 Sep 2010)

I always wondered why there is such a delay to the budget?

This country is borrowing €500mill per week yet we have to wait til Dec for it. Is it not a matter of urgency or does the Gov feel afraid to bring the cuts around too quickly? We seem to have been talking about this Budget for ages now.


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## Towger (30 Sep 2010)

DerKaiser said:


> For my part, I'd suggest we eliminate the levies and PRSI and have a combined rate of income tax at a few levels. 0% on the first €10k, 15% on the next €10k, 30% on the next €10k and 50% of earnings above €30k.


 
*New Simple DerKaiser system:*
So a single person on 50,000 would pay:
10,000 @ 0 % = 0
10,000 @ 15 % = 1,500
10,000 @ 30% = 3,000
20,000 @ 50% = 10,000
= *14,500* or *29%*

*Existing Complex Gombeen System:*
They are currently paying (PAYE worker & if my calc is correct):
PAYE:
36,400 @ 20% = 7,280
13,600 @ 41% = 5,576 
Less TC: 12,856 - (1,830+1,830) = 9,196
PAYE = 9,196

PRSI @ Class A1 :
Health Levy Free Allowance: 127 * 52 = 6,604 
6,604 @ 4% = 264.16
50,000 - 6,604 = 43,396
43,396 @ 8% = 3,471.68
PRSI = 3,735.84

Income Levy:
50,000 @ 2% = 1,000

Tax = 9,196 + 3,735.84 + 1,000
= *13,931.84* or* 27.86*%

You would need to set up a spread sheet, for different levels of income, but not much difference in tax take @50k and much simpler to administer.


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## csirl (30 Sep 2010)

DerKaiser said:


> 1) What about the levies, are they in addition to the 13.5%?


 
There are no levies with a flat rate tax system. The rate is based on the total tax take that the Government needs to achieve.



> 2) All you're doing is taxing the higher earners less and the lower earners more


 
No, what I'm proposing is taxing everyone in a fair and equal manner. The comes a point in time when you must step back and ask "what is fair?". In this country we've got to bogged down in a strange combination of a pseudo leftist wealth distribution policy and vested interests availing of tax breaks. This needs to stop. We cant afford to give away billions in tax breaks and we cant afford not to have everyone pay their fair share.

The beauty about a flat rate tax is that it is a % of income and 100% proportionate. You earn more, you pay more. 

Also, as a flat rate tax is more efficient and costs a lot less to administer, you will invariably find that compliance will be much higher and it will yield higher. This gives you a more money to target at the genuinely disadvantaged in terms of income suppliments etc.

Using my own circumstances as an example - my household = 2 adults, 2 children, PAYE income, average house/mortgage. Household income was almost bang on the national average in 2009, yet we paid more than twice the national average in income tax. And this seems to be replicated among many friends and family. This is wrong full stop.  



> Your posts are always excellent..But can you say what you consider to be "middle income "?


 
Average income. On a % scale of 1 to 100 of all tax payers, where 50 is the average, I suppose you'd call everyone between 30 and 70 middle income earners.


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## shnaek (30 Sep 2010)

I agree completely with csirl. We need this sort of radical move, if we really want a 'fair' society. Then at least everyone will have a vested interest in how the country is run and how our money is spent. There will be no disincentives to doing overtime etc and nobody can point at people who don't contribute. The system as it is benefits those at the bottom and the top, leaving the vast majority in the middle carrying the can.


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## Shawady (30 Sep 2010)

But the government won't do what is fair. They will do what is politically easy despite what they are saying about taking the hard decisions.
The MOF has already said he has to introduce a new 4 year package of measures at the request of Europe by November. the 3 billion fo rthis budget will be exceded.
They have been bluffing for the past two years and now Europe and the markets are forcing their hand.

Only a few weeks ago the S&P figure of 35 billion for Anglo was dismissed. Now this morning the MOF says it may reach 34 billion.


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## shnaek (30 Sep 2010)

Shawady said:


> But the government won't do what is fair. They will do what is politically easy despite what they are saying about taking the hard decisions.


And that's the scary thing. With the Croke Park Agreement there, where is the 3bn + going to come from?


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## z107 (30 Sep 2010)

Croke Park Agreement - lol!
Can't see that lasting.


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## Shawady (30 Sep 2010)

Croke Park agreement will prob last beyond this budget.
3 by-elections early next year. If government lose all 3 we are looking at a general election in May.
FF leave ripping up agreement, introducing property tax and cuttting pensioners for new government.

Thats my theory anyway!


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## shnaek (30 Sep 2010)

Shawady said:


> Croke Park agreement will prob last beyond this budget.
> 3 by-elections early next year. If government lose all 3 we are looking at a general election in May.
> FF leave ripping up agreement, introducing property tax and cuttting pensioners for new government.
> 
> Thats my theory anyway!



I would have agreed with that, except for the announcement of a four year plan this morning.


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## Shawady (30 Sep 2010)

You wonder it would it make sense to have an election now so, that all parties can detail how they would implement the 4 year plan and people could vote accordingly.


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## shnaek (30 Sep 2010)

Shawady said:


> You wonder it would it make sense to have an election now so, that all parties can detail how they would implement the 4 year plan and people could vote accordingly.



Good point.


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## orka (30 Sep 2010)

I don't think the non-government parties have access to the same information as the government so it would give them an easy out to set-out a populist 4 year plan and then say 'ah sorry lads, they've left us a worse mess than we thought so we can't stick to our plan'


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## DerKaiser (30 Sep 2010)

csirl said:


> There are no levies with a flat rate tax system. The rate is based on the total tax take that the Government needs to achieve.


I'm not sure that the €12bn estimate you mentioned includes PRSI, Health Levy or Income Levy.  If this is the case you'd still have to impose these on top of the flat rate tax.




csirl said:


> No, what I'm proposing is taxing everyone in a fair and equal manner. The comes a point in time when you must step back and ask "what is fair?". In this country we've got to bogged down in a strange combination of a pseudo leftist wealth distribution policy and vested interests availing of tax breaks. This needs to stop. We cant afford to give away billions in tax breaks and we cant afford not to have everyone pay their fair share.


 
I don't think there is a consensus on fair in terms of Proportionate Vs Progressive taxation anywhere in the world.

http://en.wikipedia.org/wiki/Progressive_tax

I'm with Adam Smith though (highlighting progressive taxation is not a leftist concept):

_The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion_

The four things we need to do to reform taxation are:

Close off excessive tax breaks for the rich
Bring more lower paid into the tax net (gradually)
Simplify the system
Increase the tax take
I believe we could and should achieve all 4 without huge changes in who bears the burden.  It is clear that middle income people are heavily burdened at the moment which is why 1) and 2) should be implemented first.


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## z107 (30 Sep 2010)

This report http://www.bbc.co.uk/news/business-11441473 states that


> The increased cost will see the government run a budget deficit equivalent to 32% of GDP this year.
> The cost includes a bill of up to 34bn euro to rescue the worst-hit lender, Anglo Irish Bank.
> The government said it would now have to rewrite its budget to cut borrowing more quickly in the coming years.
> 
> ...



The original budget was going to be €3billion euros of saving/tax increases. This was to reduce the deficit from 14.3%. Now Brian intends to go from 32% of GDP to 3% of GDP by 2014. How many extra billion euros is that?

This really is going to be a budget from hell.


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## DerKaiser (30 Sep 2010)

umop3p!sdn said:


> This report http://www.bbc.co.uk/news/business-11441473 states that
> 
> 
> The original budget was going to be €3billion euros of saving/tax increases. This was to reduce the deficit from 14.3%. Now Brian intends to go from 32% of GDP to 3% of GDP by 2014. How many extra billion euros is that?
> ...



Perversely, the higher this year's deficit, the more likely we are to ensure the 2014 budget is more balanced.  The bank bailout, if done entirely in this year, will avoid us having to take it on the drip into future year's deficits.


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## z107 (30 Sep 2010)

I wonder what the country will be like by 2014?
Maybe something like mad max.


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## DerKaiser (30 Sep 2010)

You're not the first person to say that, stock up on petrol and pig **** and you'll be grand


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## Shawady (1 Oct 2010)

orka said:


> I don't think the non-government parties have access to the same information as the government so it would give them an easy out to set-out a populist 4 year plan and then say 'ah sorry lads, they've left us a worse mess than we thought so we can't stick to our plan'


 
Maybe, but Labour, FF and FG would still have to produce a manifesto to outline their intentions if they are in government. The cuts will still have to made, so at least we get some specifics e.g property tax, pensioners, croke park deal, bringing more into tax net etc.

The EU have forced the government's hand in relation to budget details.


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## Complainer (1 Oct 2010)

DerKaiser said:


> You're not the first person to say that, stock up on petrol and pig **** and you'll be grand


Where does the piggy stuff come into it? Smearing on the face before battle like Mel Gibson?


----------



## Towger (1 Oct 2010)

*Pig* poo *methane* to generate power


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## DerKaiser (1 Oct 2010)

Towger said:


> *Pig* poo *methane* to generate power


 
He's only copying off Tina Turner


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## RMCF (5 Oct 2010)

If the Gov sat down and really looked at where money is being used foolishly I think they would not only make savings but also get a lot of plaudits from the public.

OK so the savings may not be massive, but its the principle of the thing and if Joe Public seen little things being cut that are not really necessary then it might ease the pain a bit.

One thing that comes into my head is the car/driver and security for likes of Bertie. All this "I used to be Taoiseach so need my perks" nonsense. Let him drive himself around. And lets be honest, its hardly as if his life is under threat to warrant full time security.

Anyone else any simple ideas that might please the public?


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## TarfHead (5 Oct 2010)

RMCF said:


> One thing that comes into my head is the car/driver and security for likes of Bertie. All this "I used to be Taoiseach so need my perks" nonsense. Let him drive himself around. And lets be honest, its hardly as if his life is under threat to warrant full time security.


 
All the former Taoisigh have this privilege.

Cosgrave
Fitzgerald
Reynolds
Bruton

And, possibly, former President Robinson, too.

Anyway, that's small change. Anyone else see Shane Ross shilling his latest book on the Late Late ? The salaries that are paid to the CEOs of the various semi-state quangos are a disgrace. And, I assume, the other salaries cascade down from the amount paid to the CEO.


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## Shawady (5 Oct 2010)

RMCF said:


> Anyone else any simple ideas that might please the public?


 
Well they could implement some of the ideas from ABS in relation to the government for a start. Didn't Colm Mc Carthy recommend the abolition of one department?
They could also reduce the number of TDs from 166. Even 150 TDs would be plenty.
Small change, but if they are serious about stream-lining the public sector they could start at the top.


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## TarfHead (5 Oct 2010)

Shawady said:


> Small change, but if they are serious about stream-lining the public sector they could start at the top.


 
+1

The actions to reduce the Current deficit will be made over 4 or 5 years. Over the same period, salaries and expenses for all public representatives, higher civil servants and QUANGO CEOs should be reduced accordingly, to a more modest level.

If the argument is used that they could earn more in the private sector, call their bluff and let them leave.


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## Purple (5 Oct 2010)

TarfHead said:


> +1
> 
> The actions to reduce the Current deficit will be made over 4 or 5 years. Over the same period, salaries and expenses for all public representatives, higher civil servants and QUANGO CEOs should be reduced accordingly, to a more modest level.
> 
> If the argument is used that they could earn more in the private sector, call their bluff and let them leave.



A major problem with finding leaders in the private sector that would do well in the public sector is that in Ireland we don’t really have an indigenous multinational sector. We have banks and we have foreign MNC’s but we don’t have the big companies with big senior management teams that we can harvest political or public sector leaders from. Government departments are the closest thing we have to big MNC’s, along with semi-states and the laughably named “commercial” semi-states. Therefore when we hear about a departmental secretary earning €250’000 a year there is public consternation which, in my opinion, is misplaced.

The people heading up government departments are controlling budgets of billions. The right person can save tens or hundreds of millions (or at least spend it well). If they earn an extra €50’000 or 100’000 a year then that’s money well spent. The problem is the lack of accountability in the civil service and, more particularly, the semi-state sector and “public bodies” such as FAS. I have no problem with the best of the best in the public sector getting well paid, hell I’d pay them more if they were accountable and could be sacked without a pension if they kept screwing up.


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## TarfHead (5 Oct 2010)

Purple said:


> The problem is the lack of accountability in the civil service and, more particularly, the semi-state sector and “public bodies” such as FAS.


 
+1

According to Shane Ross, the head of the DAA got a performance bonus of 100K last year, when the DAA declared a multi-million loss. I believe that could not have happened in the private sector.

Also, the senior civil servants in the Department of Finance are allowed determine their own performance ratings. Last year they decided that the advice they had provided to theMinister was first-class, which merited a top rating, and attendant bonus.

I rail at the inaction of the Government when it come to rooting out this sort of nonsense, and also think that, if I were given the power, where on Earth would I start  ?


----------



## Towger (5 Oct 2010)

It is only chicken feed:


> Last week after a Freedom of Information request to the Department of Finance, it was revealed that the former NTMA chief, Michael Somers, received a total pay packet of €1m.


----------



## Purple (5 Oct 2010)

Towger said:


> It is only chicken feed:



Money well spent. They are doing a fantastic job. I'd be happy if the top guys running the NTMA all got a million a year.


----------



## TarfHead (5 Oct 2010)

Towger said:


> It is only chicken feed:


 
The NTMA is not, IMHO, the best reference.

Michael Somers had to recruit treasury specialists from the private sector and make sure they were 'incentivised' to stay. And, especially in the early years of their operation, they actively dealt down the cost of Ireland's national debt, i.e. saved the country money.

There was market/competitive sensitivity about the salaries paid, hence the secrecy.


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## RMCF (5 Oct 2010)

TarfHead said:


> All the former Taoisigh have this privilege.
> 
> Cosgrave
> Fitzgerald
> ...




Many people will say that cutting these things aren't going to make a difference, and overall it might not. But there are thousands of cases of wasted money in this country that could be tackled. They all add up.

But I think the point I was trying to make is the principle of it all. IF the Gov we seen to be addressing its own wastage it might help all the cuts that me and you are taking sit better with the public.


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## PaddyW (5 Oct 2010)

If they were to bring in a flat rate tax, of 13.5% or even 18%, then I, by my calculations, would be better off. Lower paid people though, would suffer. I know we're talking about being fair, but surely that isn't?


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## shnaek (5 Oct 2010)

PaddyW said:


> If they were to bring in a flat rate tax, of 13.5% or even 18%, then I, by my calculations, would be better off. Lower paid people though, would suffer. I know we're talking about being fair, but surely that isn't?



There will be those who think things are free until everyone is paying at least some bit of tax. One of the advantages of a flat rate is that when people demand a service, and are told it will cost €x, then that will mean y% raise in EVERYONE'S tax. 

The trouble with things as they stand is that people think the money for these services come from government. It doesn't. It comes from all of us.


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## Complainer (5 Oct 2010)

shnaek said:


> There will be those who think things are free until everyone is paying at least some bit of tax. One of the advantages of a flat rate is that when people demand a service, and are told it will cost €x, then that will mean y% raise in EVERYONE'S tax.
> 
> The trouble with things as they stand is that people think the money for these services come from government. It doesn't. It comes from all of us.



This is a dangerous lie.

The state brings in more in VAT than in income tax. Everyone pays VAT. People on low salaries or on welfare will typically be spending all of their income, and pay a high proportion of their income on VAT.

Everyone pays tax.


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## Purple (6 Oct 2010)

People don’t see the VAT they pay, the figure is not in their face the way their income tax payments are.
It would be a good idea if all receipts issued in shops gave a breakdown of the VAT payment. That way everyone would see what the state takes directly from them. We will never see the added cost that taxes through the supply chain add to the pre-VAT selling price in the shop but that’s another story.


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## TarfHead (6 Oct 2010)

Complainer said:


> This is a dangerous lie.
> 
> ..
> 
> Everyone pays tax.


 
That's either pedantry, or trolling .

In the context of this discussion, and from the backdrop of successive FF Minsters for Finance claiming a virtue of removing people from the tax net, the assertion that more people need to pay tax refers to income tax. That should have been clear to all.

The current budget expenditure was engorged by transactional taxes, and not by a sustainable level of income taxation. One aspect of policy should be to rewind to a state where the two are aligned.


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## Complainer (6 Oct 2010)

TarfHead said:


> That's either pedantry, or trolling .
> 
> In the context of this discussion, and from the backdrop of successive FF Minsters for Finance claiming a virtue of removing people from the tax net, the assertion that more people need to pay tax refers to income tax. That should have been clear to all.
> 
> The current budget expenditure was engorged by transactional taxes, and not by a sustainable level of income taxation. One aspect of policy should be to rewind to a state where the two are aligned.


How does €8 billion of revenue this year (more than income tax) become 'pedantry'? VAT is a huge issue, and it is paid by everybody that lives in the State. People on low incomes pay a higher proportion of their income on VAT than others, because they spend everything they get. 

Don't expect people on low incomes to pay for the embarrassment of past FF Ministers of Finance (one of whom is currently our Taoiseach). People on low incomes are paying a considerable share already via VAT. Why would anyone want to pretend otherwise?


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## shnaek (6 Oct 2010)

Complainer said:


> The state brings in more in VAT than in income tax. Everyone pays VAT. People on low salaries or on welfare will typically be spending all of their income, and pay a high proportion of their income on VAT.



That's why I said the money comes from "all of us". We should reduce the VAT rate, and introduce the flat rate tax for the reasons Purple stated above. People are a lot more conscious of what comes out of their paypacket than what they pay in VAT.


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## DB74 (6 Oct 2010)

Reducing the VAT rate doesn't mean lower prices.

The VAT rate was pushed back from 20% to 21% because the government felt that some retailers weren't passing the reduction onto consumers but were keeping it themselves instead.


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## Complainer (6 Oct 2010)

shnaek said:


> That's why I said the money comes from "all of us". We should reduce the VAT rate, and introduce the flat rate tax for the reasons Purple stated above. People are a lot more conscious of what comes out of their paypacket than what they pay in VAT.


Why should we change our whole tax system just to make people more conscious? What benefit will arise from that?


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## TarfHead (6 Oct 2010)

Complainer said:


> How does €8 billion of revenue this year (more than income tax) become 'pedantry'?


 
It's doesn't.

Accusing someone of a '_dangerous lie_' does.


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## shnaek (6 Oct 2010)

Complainer said:


> Why should we change our whole tax system just to make people more conscious? What benefit will arise from that?



The benefit of collective responsibility. But that is not the only reason to change our tax system. We need radical changes in how we run this country. Otherwise we will just sink slowly to the bottom. Small steps are only plasters on gaping wounds. I think the country is ready for some bold new leadership, instead of more of the 'same auld, same auld'. Why not start with the tax system? Make it fairer for all, more transparant, and much easier to manage.


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## DB74 (6 Oct 2010)

A flat rate of tax is not fairer than the current system if it takes money from the poor and puts it into the pockets of the rich


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## z107 (6 Oct 2010)

It looks like public sector wages are not going to be cut:
http://www.breakingnews.ie/ireland/lenihan-no-more-pay-cuts-for-public-sector-476559.html

So that means that the budget is just going to be about more tax.

Looks like I'll be investigating leaving Ireland.


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## shnaek (6 Oct 2010)

umop3p!sdn said:


> Looks like I'll be investigating leaving Ireland.


I'm with you.


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## shnaek (6 Oct 2010)

DB74 said:


> A flat rate of tax is not fairer than the current system if it takes money from the poor and puts it into the pockets of the rich



It puts it in the pockets of the government so they can run the country for the benefit of all of us.


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## elefantfresh (6 Oct 2010)

> it puts it in the pockets of the government so they can run the country for the benefit of all of us



lol!


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## truthseeker (6 Oct 2010)

umop3p!sdn said:


> It looks like public sector wages are not going to be cut:
> http://www.breakingnews.ie/ireland/lenihan-no-more-pay-cuts-for-public-sector-476559.html
> 
> So that means that the budget is just going to be about more tax.
> ...


 
What a disgrace.


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## Complainer (6 Oct 2010)

shnaek said:


> The benefit of collective responsibility. But that is not the only reason to change our tax system. We need radical changes in how we run this country. Otherwise we will just sink slowly to the bottom. Small steps are only plasters on gaping wounds. I think the country is ready for some bold new leadership, instead of more of the 'same auld, same auld'. Why not start with the tax system? Make it fairer for all, more transparant, and much easier to manage.


That's a nice theory. Is there any basis for thinking that it will work? Has it worked any where else?



umop3p!sdn said:


> It looks like public sector wages are not going to be cut:
> http://www.breakingnews.ie/ireland/lenihan-no-more-pay-cuts-for-public-sector-476559.html
> 
> So that means that the budget is just going to be about more tax.





truthseeker said:


> What a disgrace.


The public sector have done their bit, and have taken two serious cuts over the past two years. It's time for the other earners to step up. Tax is the only game in town.


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## Firefly (6 Oct 2010)

Complainer said:


> The public sector have done their bit, and have taken two serious cuts over the past two years. It's time for the other earners to step up. Tax is the only game in town.


 
Doing their bit doesn't count - what counts is the inability of the government to pay for the PS (without borrowing heavily for it). Pay and numbers need to fall further IMO.

I think higher earners should pay some more tax, that all workers should pay some income tax and that social welfare should be reduced....but this IMO will not bring in 400m a week


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## Complainer (6 Oct 2010)

Firefly said:


> Doing their bit doesn't count - what counts is the inability of the government to pay for the PS (without borrowing heavily for it). Pay and numbers need to fall further IMO.


I note your opinion. It is of course just that - your opinion. It is not the only solution to the inability of our goverment to pay for the public services that are used and needed by all citizens. The other major option is tax increases.


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## Howitzer (6 Oct 2010)

Complainer said:


> The public sector have done their bit, and have taken two serious cuts over the past two years. It's time for the other earners to step up. Tax is the only game in town.


Not necessarily. What about pensions - State and PS?

Didn't the top rate go up already, along with the new levies? Not that it shouldn't or won't be raised further, just that top earners have stepped up (to some extent) whilst some others have been completely untouched.

If you mean super high earners (100K+) I wouldn't really disagree but the likelihood is that anyone over that amount will find means and ways of reducing their taxable income. In the same way that all the high earners in the PS pulled a rabbit out of a hat and avoided the cuts that their minions took last Xmas.


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## csirl (6 Oct 2010)

No pay cuts doesnt mean that PS costs wont be cut. There is still the possibility of a reduction in the workforce.

My personal opinion is that you are better reducing/eliminating the staff in areas where services and expenditure have been cut. Much better to have a smaller number of productive staff who are paid ok. Across the board pay cuts only serve to keep unproductive people on the payroll and de-motivate productive staff.


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## Firefly (6 Oct 2010)

Complainer said:


> I note your opinion. It is of course just that - your opinion. It is not the only solution to the inability of our goverment to pay for the public services that are used and needed by all citizens. The other major option is tax increases.


 
I agree we need public services...we just cannot afford them at the current rates. Can you see tax increases on their own bringing in 400m a week?


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## Towger (6 Oct 2010)

> In return the unions have agreed to co-operate with a wide-ranging programme of work reforms.


 
Yawn... Where have we heard that before?
​


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## shnaek (6 Oct 2010)

Complainer said:


> The other major option is tax increases.


Tax increases won't impress the bond markets because they know how that works out, as do we from the 80's. As far as I can see, the government are happy to throw away our sovereignty over facing up to unpopular choices. The EU/IMF will be called in early next year - I'm with McWilliam's on this, even though I've been disagreeing with some of his analysis lately. Our democracy simply isn't capable of making mature choices, and our society is doomed to failure unless we change the way things work here.


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## thedaras (6 Oct 2010)

@shnaek...





> Our democracy simply isn't capable of making mature choices, and our society is doomed to failure unless we change the way things work here.



This sums it all up...


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## Firefly (6 Oct 2010)

Towger said:


> Yawn... Where have we heard that before?​


 
+1...specifics would be nice


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## TarfHead (6 Oct 2010)

shnaek said:


> Our democracy simply isn't capable of making mature choices, and our society is doomed to failure unless we change the way things work here.


 
.. or are made to change the way things work here.


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## Purple (6 Oct 2010)

Howitzer said:


> Not necessarily. What about pensions - State and PS?
> 
> Didn't the top rate go up already, along with the new levies? Not that it shouldn't or won't be raised further, just that top earners have stepped up (to some extent) whilst some others have been completely untouched.
> 
> If you mean super high earners (100K+) I wouldn't really disagree but the likelihood is that anyone over that amount will find means and ways of reducing their taxable income. In the same way that all the high earners in the PS pulled a rabbit out of a hat and avoided the cuts that their minions took last Xmas.


 As was pointed out in this thread high earners are already paying their fair share in income taxes. The top 5 or 6% pay over 50% of all income tax whereas the bottom 40% don’t pay any. That is both unfair and unsustainable. Just because our leftwing media keep repeating the lie that the rich don’t pay their taxes it doesn’t make it true.



shnaek said:


> Tax increases won't impress the bond markets because they know how that works out, as do we from the 80's.


 And that’s the crux of it; the cost of borrowing to the government and the banks has to go sown before any real progress is made. The priorities for the government should be 1) reduce the current spending deficit, 2) Do what is necessary to get interest rates down in the bond market and for interbank lending and 3) pay off the bill from the banking crisis. 



shnaek said:


> As far as I can see, the government are happy to throw away our sovereignty over facing up to unpopular choices. The EU/IMF will be called in early next year - I'm with McWilliam's on this, even though I've been disagreeing with some of his analysis lately. Our democracy simply isn't capable of making mature choices, and our society is doomed to failure unless we change the way things work here.


 We have already lost our sovereignty. After the civil war in the UK, when the king was put back in place (the Restoration) the only power parliament took from the monarch was the right to levy taxes. That’s all they needed as the guy holding the purse strings has total power. We as a state are now like the British Monarch; we can do anything we want as long as someone else gives us the money to do it but if they don’t like the idea then there’s no money...


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## Birroc (6 Oct 2010)

I worked in a county council for many years and the waste and expense abuse was simply astounding. So there is scope for huge savings as per Croke Park agreement but it will take very strong (i.e. new) management that can shake things up and keep unions on board (very difficult). It is up to the public sector to reform themselves and save money otherwise job cuts are inevitable, actually the reforms will/should more than likely point at redundancies anyway. Every public servant knows where the waste is so its up to everyone to be proactive rather than constant engage in siege mentality.


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## Firefly (6 Oct 2010)

purple said:


> the priorities for the government should be 1) reduce the current spending deficit, 2) do what is necessary to get interest rates down in the bond market and for interbank lending and 3) pay off the bill from the banking crisis.


 
2 = 1 + 3


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## TarfHead (6 Oct 2010)

Birroc said:


> .. and keep unions on board (very difficult).


 
If there's one thing that grinds my gears .. .

The unions can not have the final yea or nay on decisions that the democratically elected national parliament make.

If the employer is broke and can no longer pay what was one paid, the opinion and sensitivities of the union are, IMHO, irrelevant.


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## thedaras (6 Oct 2010)

The point is the unions are in bed with the government.. that they are extremely strong in this country,that they are very resistant to change. and it is outrageous that they have a yea or nay say on our country ..
But ,they are "Congress " after all...lol


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## Purple (6 Oct 2010)

Firefly said:


> 2 = 1 + 3


I don't necessarily agree, or at least I don't think it's a 50/50 split. If we can get the current spending under control we will look better to the bond markets and 3 gets easier. It’s the total cost over the period of the loan/bond that counts not it’s face value.


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## thedaras (6 Oct 2010)

The coming budget will see some if not all of the following IMHO..
Child benefit will be reduced ..
Flat rate water charges..
Property tax...
Higher taxes..
Low income earners will be brought into the tax net..
Social welfare cuts..
This is regardless of what we think say or do..
And even at that I think the IMF will have to be called in,as there is no way any government would have the nerve to tackle what is really wrong in this country..


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## TarfHead (6 Oct 2010)

thedaras said:


> Higher taxes..
> Low income earners will be brought into the tax net..


 
Removing the PAYE Credit would accomplish both of these with little or no administrative overhead or increase in cost of collection.

People already paying income tax would pay more.
People not currently paying income tax would pay some.


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## Towger (6 Oct 2010)

TarfHead said:


> Removing the PAYE Credit would accomplish both of these with little or no administrative overhead or increase in cost of collection.


 
Is that not what I listed in Post#3! They will go for the quick and easy options, giving time to implement the messy ones.


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## Shawady (6 Oct 2010)

You know it is getting close to the budget when the 'PS pay cuts' issue starts up again. You would think cutting pay would solve all of the problems.
The governemnt have said the are not cutting pay but they can still reduce the PS pay bill.

1. Reducing numbers is the most obvious way. There are already 10,000 less working than 18 months ago. The government could easily determine how many workers are due to retire in the next 5 years. With a combination of natural wastage, early retirement and greater flexibility they could easily get the numbers down.
2. Cutting PS pensions in line with current worker's cuts. Average cut has been 13%. If that was done to pensions it would save approx 260 million. Even if they just cut by 6% it would save 120 million.
3. Freeze increments. It was reported that increments added 250 million to the pay bill last year. If there was a 4-year freeze it would save the government adding approx 1 billion to the PS pay bill. 
4. Reducing the tax relief on pension contribution to 20%. This would reduce the net pay of PS workers on the higher tax rate. If the government also applied this to the pension levy it would surely yield a significant saving.
5. There are allowances that could be abolished or phased out. At the time of the talks last year a figure of 100 million was mentioned that could be cut from the garda budget. There could be savings here.
6. The whole area of Quangos should be looked at. ABS recommended the abolition of some of these but most are still operational.

In summary, the government can reduce the bill without cutting core pay.


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## Howitzer (6 Oct 2010)

Shawady said:


> 4. Reducing the tax relief on pension contribution to 20%. This would reduce the net pay of PS workers on the higher tax rate. If the government also applied this to the pension levy it would surely yield a significant saving.


Can this be put to bed for once and for all? As far as I am aware there is no such thing as tax relief for pension contributions - it's deferred income.

The contribution is taken off your total income and effectively buried in a hole. At retirement age you dig it up and pay tax then at the prevailing rate. 

You do pay tax on this income, just at a later date.

That the pension levy entitled payers to a credit was just a piece of trickery to make it sound like they'd taken a big cut.


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## TarfHead (6 Oct 2010)

Towger said:


> Is that not what I listed in Post#3! They will go for the quick and easy options, giving time to implement the messy ones.


 
It would appear so  ! But 144 posts later, the thread shifts and crosses over ground already travelled.


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## Shawady (6 Oct 2010)

Howitzer said:


> Can this be put to bed for once and for all? As far as I am aware there is no such thing as tax relief for pension contributions - it's deferred income.


 
Well whatever it is, it is certainly on the government's agenda to reduce relief at the top rate.


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## Howitzer (6 Oct 2010)

Shawady said:


> Well whatever it is, it is certainly on the government's agenda to reduce relief at the top rate.


So I'll pay tax on income I don't receive and then 30 years later I'll pay tax on it again? No thanks. I'll give you one guess what'll happen to my pension contributions if that comes into effect.


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## Shawady (6 Oct 2010)

I am on the 41% so I am certainly not arguing for it but am just making the point if the government did this it would cut the net pay of PS workers without actually calling it a 'pay cut'.


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## Towger (6 Oct 2010)

Howitzer said:


> Can this be put to bed for once and for all? As far as I am aware there is no such thing as tax relief for pension contributions - it's deferred income.


 
Exactly.  It would also be very hard, if not next to impossible to administer. They can't take the same tax from you twice.  I think this idea came from some green/lefty politician who does not have a clue on how the tax system works.


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## Howitzer (6 Oct 2010)

For what it's worth here's my list of, non-deflationary, tax increases / expenditure cuts.

1. Introduce a windfall tax on Corporate taxes. Corporation tax rate remains the same and a commitment is made to that effect, but a 5% levy is imposed on 2010 profits.

2. Introduce a windfall tax on semi state profits. 100% of all 2010 profits to go to the state.

3. Sell the stake in Aer Lingus. At the very least reduce it to 10%.

4. Stop producing 1/2 cent coins.

I appreciate there are negative consequences but 1 and 2 should be seen as short term measures to plug a hole until other measures outlined in other posts, which re-align our tax base to our expenditure, take effect. The 1 and 2 cent coins? Well I'm afraid that's where we're at.


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## Firefly (6 Oct 2010)

Introduce a 10% capital gains tax on all Lotto wins over 100k.


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## Firefly (6 Oct 2010)

A 5c tax on all mobile texts


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## DB74 (6 Oct 2010)

Towger said:


> Exactly. It would also be very hard, if not next to impossible to administer. They can't take the same tax from you twice. I think this idea came from some green/lefty politician who does not have a clue on how the tax system works.


 
Why would this be so hard to administer?


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## shnaek (6 Oct 2010)

Pensions are a complete waste of money. I suggest instead that we all meet up when we're 66 and come up with a plan to rob the banks involving some sophisticated computer trickery...


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## oldtimer (6 Oct 2010)

I'm already 66 so can we meet to-morrow.


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## Caveat (6 Oct 2010)

TarfHead said:


> If there's one thing that grinds my gears .. .
> 
> The unions can not have the final yea or nay on decisions that the democratically elected national parliament make.
> 
> If the employer is broke and can no longer pay what was one paid, the opinion and sensitivities of the union are, IMHO, irrelevant.



+1 Tarfhead.


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## Firefly (7 Oct 2010)

Purple said:


> I don't necessarily agree, or at least I don't think it's a 50/50 split. If we can get the current spending under control we will look better to the bond markets and 3 gets easier. It’s the total cost over the period of the loan/bond that counts not it’s face value.


 
What I'm saying is that by (1) reducing the current spending deficit and (3) paying off the bill from the banking crisis then (2) the interest rates in the bond market will fall.


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## Complainer (7 Oct 2010)

TarfHead said:


> If there's one thing that grinds my gears .. .
> 
> The unions can not have the final yea or nay on decisions that the democratically elected national parliament make.
> 
> I


The democratically elections unions don't have the final yea or nay on decisions that the democratically elected national parliment make. They never did, and they never will, regardless of how may '+1's your post gets.


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## TarfHead (7 Oct 2010)

Complainer said:


> The democratically elections unions don't have the final yea or nay on decisions that the democratically elected national parliment make. They never did, and they never will, regardless of how may '+1's your post gets.


 
Unions are a lobby group and can stand in line with IBEC and Father Sean Healy and the rest.

Why do they get to block how the Government allocates resources, when the outcome of such allocations affects all of us, not just those who are in a union ?

What has '_democratically elections unions_' (sic) go to do with anything ? The Dail is democratically elected. So too is the parent's committee in my children's school. I would not equate one with the other when it comes to how the country is governed.


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## Complainer (7 Oct 2010)

TarfHead said:


> Unions are a lobby group and can stand in line with IBEC and Father Sean Healy and the rest.


Fully agree.


TarfHead said:


> Why do they get to block how the Government allocates resources


They don't get to block anything. They don't have a veto.

They are a stakeholder. The Govt has two choices;

1) Take the macho approach, impose a solution without any discussion or engagement, and then wonder why the whole thing blows up 6-12 months down the line or worse, fails to deliver results 3-5 years down the line.

2) Engage with stakeholders, identify shared goals, work towards consensus on how to achieve those goals, implement, reap the rewards.

Most AAM posters seem to prefer the macho option, for no good reason other than revenge. In general, it is better to bring people with you on any change management issue than to impose solutions from on top.


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## Towger (7 Oct 2010)

Complainer said:


> Most AAM posters seem to prefer the macho option, for no good reason other than revenge. In general, it is better to bring people with you on any change management issue than to impose solutions from on top.


 
Bertie and Co. have being taking option '2' for the last 15+ years and look at where it got us.


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## TarfHead (7 Oct 2010)

Complainer said:


> They are a stakeholder. The Govt has two choices;
> 
> 1) Take the macho approach, impose a solution without any discussion or engagement, and then wonder why the whole thing blows up 6-12 months down the line or worse, fails to deliver results 3-5 years down the line.
> 
> 2) Engage with stakeholders, identify shared goals, work towards consensus on how to achieve those goals, implement, reap the rewards.


 
Yet we. the people, seem to get the worst of both



Complainer said:


> Engage with stakeholders .. fails to deliver results 3-5 years down the line


 
"_Insanity is repeating the same mistakes and expecting different results_"


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## DerKaiser (7 Oct 2010)

Towger said:


> Bertie and Co. have being taking option '2' for the last 15+ years and look at where it got us.


 
The only thing they've been engaging on is pay.

This is something I've always found odd. It appears from the outside that 90% of union discussions with employers were pay or benefits related. I'd blame both employers and unions equally for this.

A large body representing employees should also be providing a pro-active forum for improving work practices (involving suggesting better ones as opposed to blindly resisting new ones). I think most people would agree that work practices are as big (or bigger) a source of frustration than remuneration levels


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## shnaek (8 Oct 2010)

Anyone get the feeling that Ireland is like the guy with the spoon, and the guy being chased is the taxpayer?

http://www.youtube.com/watch?v=9VDvgL58h_Y


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