Commission on Taxation

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DerKaiser

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1. Why, all of a sudden, can the politicians not decide on taxation themselves?
2. It's not rocket science, why will it take till August?

It will probably cost millions in consultant fees, will probably be overtaken by events by the time the report is complete and will need to be reassessed on a regular basis.

In reality we probably need to add 10% to each income tax band, in practice we could start with 5% on the income tax rates and knock a few percent off VAT and other consumption taxes to ensure we don't completely destroy consumption.

There it is for free and six months ahead of schedule.

We're really having the wool pulled over our eyes by this one
 
This is yet another example where the Govt outsource decisions rather than make the decision themselves. The Govt can then say that they are only implementing the recommendations of the Commission on Taxation.

There are now so many unelected groups involved in Govt decisions that I wonder why we bother having a national Parliament. The Opposition parties have no role (other than opposing) because the reality is that Unions etc (through "Partnership) now have more power than many elected representatives. Yet listening to Union leaders you would swear that they were never part of the Partnership process. Davis Begg's comments yesterday clearly indicate that he is looking to get back inside the tent (and touting the threat of a national strike as a bargaining chip).
 

Der Kaiser, I aggree and actually posted a similar comment on another thread this morning.
I think your comment about pulling the wool over our eyes sums it up.
My two cents is that it was a big mistake bringing the budget forward last October. They grossly underestimated the extent of the problem and the measures introduced are not enough for 2009.
Instead of admitting their mistake and having a proper budget early in the year they introduced the pension levy to recoup some money.
I am a civil servant and am not complaining about taking a pay cut, but I think the 'pension levy' should have been only one of several measures aimed at saving 4 or 5 billion this year.

At the very least they could have doubled the income levy rates and add a coulpe of points to the two tax rates until the taxation report comes in.
 
DerKaiser said:
2. It's not rocket science,
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Actually, it is. It is very complex. How much will your proposed changes bring in? What will be the broader macroeconomic impacts of these changes? What will be the practical on-the-ground impacts?
 
Complainer said:
Actually, it is. It is very complex. How much will your proposed changes bring in? What will be the broader macroeconomic impacts of these changes? What will be the practical on-the-ground impacts?
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Do you mean that all the quick-fix solutions posted on AAM are about as useful as snake-oil?

We are wasting our time here. My excuse is that I have retired, and have time to waste.
 
Complainer said:
Actually, it is. It is very complex. How much will your proposed changes bring in? What will be the broader macroeconomic impacts of these changes? What will be the practical on-the-ground impacts?
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First off you can work out the additional tax take assuming there are no knock on effects and levels of employment remain the same. This is a 5 minute job when you have the figures to hand on current tax revenues.

Then you have to project levels of job losses, the decline in incomes and knock-on effects to consumption, etc.

You'll make as good a stab at these assumptions in the first 5 minutes as you will in 6 months.

You can say with almost certainty that we will require more than 5% added to tax rates. Why not do this now as an interim measure, study its impact and let the commission work in parallel towards their answer.

Spending six months on this will not result in a silver bullet solution
 
The taxes do need to be raised right now, you're right on that DerKaiser. Waiting until the next budget will be way too long and the deficit will only have grown. Right here, right now. Only way I think.
 
So take 5 minutes, show us the numbers, and answer the other questions I asked.
 
Right. Av wage of about €35k. Roughly 2 million workers. Total wage 70bn, roughly 40bn in the tax net. 5% of this is €2bn. Say people cut consumption of about €1bn, first round VAT impact of about €200m. Throw in some tax reliefs and the net gain might be of the order of €1.5bn.

I might be wrong on some of the figures but those figures would be readily accessible to the finance department.

And that's only half my point. Even if I have got it very wrong and it only raises €0.5bn this year, that's still better than waiting and doing nothing

The practical on-the-ground impacts of delaying correcting the deficit will be worse the longer we wait to begin addressing it
 
I don't think it's easy to come up with a solution, if you look at the thread about a new party and the discussions about concrete suggestions what to change than you know that ther is a lot of opinion out there.

Having said that however our Goverment has once again shown that they are are not able to do what we are paying them a good salary to do, which is govern and set the agenda. This happens if we elect people to a job that they are note qualified to do. I know we did not elect Cowen, he is in his job because nobody wanted to follow Berti by decision of the FF faithfull.

Quite clearly a 6 month commision is an irish solution to an irish problem ignoring the urgent need for action for which no side of the politicial spectrum has a real answer on their own. Only combining the best of all solutions is the right way here to get us out of this deep hole we are in.

So instead of a commission we need a goverment of national unity instead of the old FF guard supported by the "i just want to stay in goverment greens" and the rest of the PD's (anybody missing them by the way?).

Lock the top "experts" of all parties into a bunker, bring in some wise guys from sucessfull businesses (how about Bill Gates and Warren Buffet) and some common people (they usual have a better understanding than our politicians). Come up with a plan and implement it with broad support.

Waiting 6 month is only going to result in a higher tax band of 50%.
 
DerKaiser said:
...the net gain might be of the order of €1.5bn... Even if I have got it very wrong and it only raises €0.5bn this year, that's still better than waiting and doing nothing...
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You seem to be allowing yourself a rather large margin of error. To return to the rocket science analogy, your moon shot might end up in the Pacific Ocean.

Economic forecasting is notoriously difficult. It's not so much the mathematical or computational aspects (although that is difficult for ordinary people like me) as making the right assumptions on which to base them. Tax projections are then imposed on the economic model, adding a further layer of difficulty. Hard sums.

Then we have to be realistic about the politics: what are the people likely to accept? We are already seeing lots of signs that people don't want to put up with meeting the bill for getting us out of our difficulties.
 
Padraigb said:
It's not so much the mathematical or computational aspects (although that is difficult for ordinary people like me) as making the right assumptions on which to base them.
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Exactly. The economic climate is changing so quickly that any taxation policy will have to be based on continuous analysis with regular revisions.

What we do know for sure, however, is that we are running a €20bn deficit this year and the sooner we take steps to address it the better.

Putting up taxation rates now might would also improve our reputation and reduce the interest costs on our borrowings. The international markets will not be impressed with posponing corrective measures for 6 months
 
DerKaiser said:
...The international markets will not be impressed with posponing corrective measures for 6 months
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I agree with that.

What I don't agree with is going to the other extreme of using calculations jotted down on beermats at the end of a night spent in the pub moaning about how bad things are.
 
Padraigb said:
I agree with that.

What I don't agree with is going to the other extreme of using calculations jotted down on beermats at the end of a night spent in the pub moaning about how bad things are.
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Ah, suddenly last years budget makes more sense!!
 
Padraigb said:
What I don't agree with is going to the other extreme of using calculations jotted down on beermats at the end of a night spent in the pub moaning about how bad things are.
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The computational end of things should be the bread and butter work of the department of finance. What I can do in 5 mins on a beermat they should be able to do to a much greater degree of accuracy with the information they have to hand. No way do I advocate giving this only 5 minutes consideration. A week or even a month might be acceptable, but taking six months to do the job will result in serious negative consequences

Any political decisions as to who should shoulder the burden should be taken by the politicians themselves.
 
DerKaiser said:
The computational end of things should be the bread and butter work of the department of finance. What I can do in 5 mins on a beermat they should be able to do to a much greater degree of accuracy with the information they have to hand.
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You'd think ???

The DoF have been consistently woeful with the accuracy of their taxation revenue forecasts. In the good times, no-one cared, cos their forecast errors were in our favour (e.g. we predicted a surplus of 2 billion, it's actually 3 !).

Now, when forecast accuracy is critical, so that the Budget is set correctly, they're still making a dogs of it.
 
Padraigb said:
I agree with that.

What I don't agree with is going to the other extreme of using calculations jotted down on beermats at the end of a night spent in the pub moaning about how bad things are.
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Agreed but in fairness to the posters above no one is suggesting that a comprehensive tax plan should be calculated on this forum. I don’t think it’s unreasonable to expect the computer models and expertise to be in place in the department of finance and for them to be able to come up with the numbers and projections within a few weeks. This has been going on for months now and still it seems that tax planning is beyond the government and department of finance. Are they waiting for the country to default so that they will not have to make the hard decisions.
 
DerKaiser said:
The computational end of things should be the bread and butter work of the department of finance.
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Agreed. I would link that with what you said in an earlier post:
The economic climate is changing so quickly that any taxation policy will have to be based on continuous analysis with regular revisions.
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But you can't reasonably adjust tax or spending policies as rapidly as the economic conditions have been changing recently. Equally, it does not appear to be a good idea in such turbulent times to be tied to a once-a-year intervention.

Any political decisions as to who should shoulder the burden should be taken by the politicians themselves.
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Also agreed, with a "but...". A political decision needs to be accepted by the people, or it can cause more problems than it might solve. Look at what happened the proposal to withdraw the medical cards from the over-70s, and look at the great resistance of many public servants to the pensions levy. Our politicians have failed to convince people of the gravity of the situation or to persuade them to go along with remedial measures. [The thought of elaborating on that point enervates me.]
 
Enervates... good word. Sounds better than “Gives me a dose of the hebe gebe’s”!
 
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