The Budget

[INDIANA]

1- Lads you have to put the banking issue aside- if they don't solve that the economy will never recover. I wouldn't knock them for that. They have finally taken some action on this.

2- I disagree with them on the levies on the middle incomes. If you're a middle-class family with 2 kids you get hit with

- levies
-reduced mortgage interest
- reduced child benefit

They are getting hammered from all angles. Totally inequitable.

3- The entire tax system needs to be reformed. The high earners still not getting hit. How people over 100k only pay 27% tax should be outlawed (or 32%) now.

4- I worry whats coming down the line. Property tax, carbon tax etc.

I only agree with them on the banking system measures. I think the remainder of the measures are inequitable because the tax exiles and those huge public sector pensions will rest easy.

What are you talking about?

41% PAYE + 5% Health levy + 6% Income levy + 5% PRSI (up to €75,000).

Up tp today 33% of workers paid no tax at all while those earning over €100,000 paid over 50% of all income tax. Obviously those who earn most should pay most but it is sickening to hear the whinging of those who contribute nothing demanding those who bankroll everything pay even more.

That is bullshit muppet. The statistics are there for public consumption- due to tax reliefs for high earners they are not paying there fair share of tax. That is a statistical fact. Rarely have I heard such an uneducated comment. If you want me to put up the mathematics on it- I will only be too glad to do so. Every single day I see these people availing of mickey mouse tax reliefs created by Mc Creevy where as a family on 60-70k are scrimping to try and make ends meet with a couple of kids. These people were hammered yesterday in one of the worst budgets I've ever seen.

[ludermor]

Genuine question Indiana
What do you consider a high earner?
85k ( most people would)
100k
150k
500k?
While im aware of the tax relief's (avoidance!) for the super rich, for people on 100k i dont know of any. And there would have been lots of people earning that the last few years ( say in construction) earning 100k plus.
For clarity i think you should put up the maths because i would be of a similar opinion to muppet.

[INDIANA]

I'll put the maths up at lunchtime with a few scenarios. Phone is hopping after yesterday's shambles unfortunately. But to give you a short answer anyone earning 110k plus is nowhere near as badly affected as those on 55k -85k.
The only people over 110k who are affected by this are those that bought houses they couldn't afford, car loans-holiday homes etc. These people get advised not to do these things- and they still do it. I don't have any sympathy for them.

If you are a family on about 80k a year . that budget is a bloodbath- . Interest relief reduced, child benefit cut, 4% extra tax.
With a property tax and a carbon tax inevitable in the next budget. Carnage.
Nothing done to stimulate job creation- unbelievable.

[magpie seanie]

I'll put the maths up at lunchtime with a few scenarios. Phone is hopping after yesterday's shambles unfortunately. But to give you a short answer anyone earning 110k plus is nowhere near as badly affected as those on 55k -85k.
The only people over 110k who are affected by this are those that bought houses they couldn't afford, car loans-holiday homes etc. These people get advised not to do these things- and they still do it. I don't have any sympathy for them.

If you are a family on about 80k a year . that budget is a bloodbath- . Interest relief reduced, child benefit cut, 4% extra tax.
With a property tax and a carbon tax inevitable in the next budget. Carnage.
Nothing done to stimulate job creation- unbelievable.

I'm not in that group myself but the statement is true. That is the portion of society that got creamed yesterday. On a rough calculation a colleague of mine who fits that demographic is hit twice as bad as myself and my wife.

Nothing has been done to stimulate anything. Its basically batten down the hatches and hope Obama can turn the US economy round and in turn ours.

[the Deel Rover]

I'll put the maths up at lunchtime with a few scenarios. Phone is hopping after yesterday's shambles unfortunately. But to give you a short answer anyone earning 110k plus is nowhere near as badly affected as those on 55k -85k.
The only people over 110k who are affected by this are those that bought houses they couldn't afford, car loans-holiday homes etc. These people get advised not to do these things- and they still do it. I don't have any sympathy for them.

If you are a family on about 80k a year . that budget is a bloodbath- . Interest relief reduced, child benefit cut, 4% extra tax.
With a property tax and a carbon tax inevitable in the next budget. Carnage.
Nothing done to stimulate job creation- unbelievable.

If your a family on 40k is  it not a bloodbath budget as well,  they would also see their Interest relief reduced , child Benefit Cut , taxes go up, as far as i can see its a bloodbath budget fullstop.

[GaillimhIarthair]

If you're interested in seeing what the next pay check will bring please follow the link below and input your details for an estimate:


http://www.deloitte.ie/tc/

[bingobus]

I would fall into the "hammered" net.

Wife a nurse (already hit with pension levy), 16mth and another baby on way in July. Wife was hoping to take unpaid leave when maternity leave up in December but that unlikely.

Got hit all sides, just under 3 yrs left on Mortgage. At least I don;t smoke or drive a diesel motor.

Most disappointing is the lack of stimulation. Nothing to keep people of dole, nothing to start shifting the surplus new builds (not a dig out for developers but there is a ball of VAT for the Gov to be earned on unsold houses) and nothing to stimulate spending or keep money in the state.

Have been talking to alot of people all morning and one local independent cllr was livid!! Said it was a political budget aimed at securing votes at the local elections.

[bcarrier]

I only agree with them on the banking system measures. I think the remainder of the measures are inequitable because the tax exiles and those huge public sector pensions will rest easy.

Banking measures are appalling.This is from bloomberg this morning ...

The difference in yield, or spread, between Irish and German 10-year notes widened to 215 basis points today from 204 yesterday. The spread widened from 40 basis points a year ago as investors demanded higher premiums to lend to smaller European economies amid the global financial turmoil.

"The bond markets are paying more attention to the bad loan rescue package," said Padhraic Garvey, head of investment- grade debt strategy at ING Group in Amsterdam. The loans are the "worst stuff" on the banks' books and "this is effectively going to be taken over by the Irish government."

Everyone will suffer for no gain if they dont get this right and at every turn they seem to be digging a bigger hole. We are lead to believe most of the bad loans are property related.

As I have argued before he could have  improved bank collateral levels on completed unsold residential property by 13.5% by suspending VAT on new homes....the effect on land values would have been greater maybe 50% He would have lost a future tax receipt (until the market could take it again) but not have had to make so much additional borrowing now... this is what the markets are penalising ireland for. Either they dont understand how property is valued or most of these impaired loans are on overseas property and it would have no effect. Maybe both. 

Dan Boyle thinks state will make money out of this but I have no faith in any state agency managing up to 90Bn of property loans ...another fecking quango.

[Declan]

But the impact for 10-15, maybe 25 years out will be extraordinary – even if they negotiate a massive price reduction on the dodgy loan book.
Also anyone see the bank shares this morning? E: Ok ..maybe the banks understated the dodgy loans earlier - who would jump into bank shares..AIB down 20%, BoI down 33%..the game is up for these guys

The real hoot from yesterday was the look on Cowen and Lenihan's faces when Joan Burton said "...whatever loss the banks incur on the book value of their loans in the transfer to the new agency, they will be able to offset that loss against tax paid  over the last number of years..not alone that, but the developers who take a writedown on the value of the assets those loans were taken out for will also be abel to offset those losses against their tax bills paid over the last few years" !!!
The figures for the tax to be repaid to these boys is not quantifiable is  at this stage..but JB reckoned that it would be a min. of a billion, but could run to any fig...! She asked that the Govt rush through emergency legislation last night to block off this rebate avenue for any loans that would be involved in the Toxic Agency, but did they even take the idea on board – the answer is the same James Gogarty got from Mike Bailey when Gogarty asked if they would get a receipt from Ray Bourke..."Will we **** !!!"
If the NAMA forces say a 40% discount to buy bank loans of €90 billion, it would purchase the assets for €54 billion. This would double the national debt to €108 billion.
Fine Gael finance spokesman Richard Bruton said: "Fianna Fáil has taken a massive €90 billion gamble on behalf of the taxpayer in bailing out the very property speculators and banks that dragged our economy over a cliff in the last few years."

As other contributors have said - nothing at all to try and stimulate job growth - FT this morning was pretty succint about it:
As for the  "young, well educated, flexible workforce," the Financial Times Lex columnist writes today: "After the party, the bill. Ireland's second emergency budget in six months will have the country's "young, well-educated, flexible workforce" making a bee-line for the exit. Its construction-led recession – the economy could contract by 8 per cent this year and unemployment hit 12 per cent – has left consumers under severe strain...Mr Lenihan sees the future of the Irish economy in exports. They will be no panacea, at least in the short term: Ireland can hardly devalue its currency to stimulate demand. By pulling this hard on the tax lever, Mr Lenihan may cause Irish history to repeat itself. Ireland may only succeed in exporting its best hope of recovery: its talent."

I think I said about 6 months ago on another thread that if I was back in my mid 20's I'd be outta here quicker than you could say where's me coat - I'm now seriously considering going anyway because on the face of it my kids will be gone within the next 5/7 years anyway 

Latest good News:
Moody's has this morning announced the downgrade of 12 Irish banks, including, AIB, BOI, IL&P, EBS, Irish Nationwide, Ulster Bank, HBOS and KBC.
The Bank Financial Strength Raging (BFSR) on each bank has been downgraded by at least one notch, with most moving to D. AIB, BOI and EBS's ratings are on "developing outlook", while IL&P and Ulster are on review for possible downgrade and HBOS and INW are on negative outlook. It would appear that some of the change in ratings is attributable to an increase in the weighting of capital and future earnings prospects in its BFSR methodology, although Moody's does highlight that its expectations for loan losses have "considerably increased" due to the "continuing deterioration in the outlook for commercial real estate prices, the likelihood of more corporate defaults as the Irish economy enters a deep recession, and the current erosion in residential loan performance", including buyto let. It now expects "significantly higher credit losses than previously anticipated" as a result of
this and the global economic crisis. It has affirmed the most important bank deposit and senior debt ratings (which are on negative outlook), but has downgraded subordinated and hybrid debt ratings

[Bogball XV]

1- Lads you have to put the banking issue aside- if they don't solve that the economy will never recover. I wouldn't knock them for that. They have finally taken some action on this.

Unfortunately this is their 3rd attempt at doing something on this issue and yet again it's doomed to failure.  The only fair solution is to nationalise the banks.
How is this supposed to get the banks lending again anyway?  Look at the current situation we're in, disposable income has been cut massively in our economy, worldwide credit has disappeared, what sort of a business is a good proposition to lend to at the minute and where will the banks get the money to lend even if opportunities arose?
The current solution, like every other one I've seen mooted does nothing for the thusfar hidden catastrophe awaiting us, that is the residential property mortgage crisis.  Throughout the country we have people with very large amounts of negative equity (which won't recover in the lifetimes of the mortgage holders), we have jobs haemorraging and disposable income falling through the floor, how will these people ever pay these loans?  More to the point, why would these people ever pay these loans?  They see that the developers and bankers are being bailed out, everyone but them basically - it can't and won't happen.  The government will have to come up with a debt forgiveness scheme, and that can only be done when we own the banks.

[bcarrier]

Lex makes a very good point.

Expect and exodus of talent and high earners .....It seems to go over most heads that those who pay most tax are also most mobile in terms of where they choose to reside/ set up their businesses. I am not even talking about moving to Monaco...there are six counties on the island with a significantly lower tax rates for self employed high/middle earners. Tech jobs etc will go North too.

Higher tax rates = less tax collected.

[muppet]

1- Lads you have to put the banking issue aside- if they don't solve that the economy will never recover. I wouldn't knock them for that. They have finally taken some action on this.

2- I disagree with them on the levies on the middle incomes. If you're a middle-class family with 2 kids you get hit with

- levies
-reduced mortgage interest
- reduced child benefit

They are getting hammered from all angles. Totally inequitable.

3- The entire tax system needs to be reformed. The high earners still not getting hit. How people over 100k only pay 27% tax should be outlawed (or 32%) now.

4- I worry whats coming down the line. Property tax, carbon tax etc.

I only agree with them on the banking system measures. I think the remainder of the measures are inequitable because the tax exiles and those huge public sector pensions will rest easy.

What are you talking about?

41% PAYE + 5% Health levy + 6% Income levy + 5% PRSI (up to €75,000).

Up tp today 33% of workers paid no tax at all while those earning over €100,000 paid over 50% of all income tax. Obviously those who earn most should pay most but it is sickening to hear the whinging of those who contribute nothing demanding those who bankroll everything pay even more.

That is bullshit muppet. The statistics are there for public consumption- due to tax reliefs for high earners they are not paying there fair share of tax. That is a statistical fact. Rarely have I heard such an uneducated comment. If you want me to put up the mathematics on it- I will only be too glad to do so. Every single day I see these people availing of mickey mouse tax reliefs created by Mc Creevy where as a family on 60-70k are scrimping to try and make ends meet with a couple of kids. These people were hammered yesterday in one of the worst budgets I've ever seen.

http://archives.tcm.ie/businesspost/2009/02/08/story39389.asp

"Statistics from the Revenue Commissioners show that, contrary to some assertions, Irish income tax is highly progressive. Current figures show that half of all income tax - €6.5 billion - is paid by the top 6.5 per cent of taxpayers.

A third of all income tax is paid by the top 2.5 per cent of taxpayers, numbering just 60,000 out of the total 2.4 million income earners. Some 38 per cent of all income earners are under the tax threshold and pay no income tax at all."

"Rarely have I heard (on the internet  ) such an uneducated comment."

My family is down over €1,000 a month as a result of yesterday. I don't enjoy reading idiots saying we don't contribute.

I am looking forward to reading your statistical facts.

I suspect the fact reads something as follows:

< €30,000 - less than 5% of income  goes in income tax
< €75,000 - less than 20% of income goes in  inome tax
> €75,000 - Less than 27% of income goes in income tax

[tyronefan]

1- Lads you have to put the banking issue aside- if they don't solve that the economy will never recover. I wouldn't knock them for that. They have finally taken some action on this.

Unfortunately this is their 3rd attempt at doing something on this issue and yet again it's doomed to failure.  The only fair solution is to nationalise the banks.
How is this supposed to get the banks lending again anyway?  Look at the current situation we're in, disposable income has been cut massively in our economy, worldwide credit has disappeared, what sort of a business is a good proposition to lend to at the minute and where will the banks get the money to lend even if opportunities arose?
The current solution, like every other one I've seen mooted does nothing for the thusfar hidden catastrophe awaiting us, that is the residential property mortgage crisis.  Throughout the country we have people with very large amounts of negative equity (which won't recover in the lifetimes of the mortgage holders), we have jobs haemorraging and disposable income falling through the floor, how will these people ever pay these loans?  More to the point, why would these people ever pay these loans?  They see that the developers and bankers are being bailed out, everyone but them basically - it can't and won't happen.  The government will have to come up with a debt forgiveness scheme, and that can only be done when we own the banks.

I can see where the banks are getting bailed out but can someone explain to me how are the developers getting bailed out.

Are they not having to pay back the money they borrowed from the banks or is the government paying this also

[Hereiam]

I would say alot of the developers are going bankrupt, changing their business name and leaving the debt with the banks.

[INDIANA]

There is no point in me putting up the various tax relief schemes these people invest in because people wouldn't understand them. But people who earn in excess of a gross salary of 100k per annum invest in these schemes and make substantially less of a contribution to the revenue. I can't believe you've never heard of these schemes (As a result the contribution of these people is essentially up until yesterday is 27%.
I'm not getting hammered to extent of  the 55k -85 k group. I'm fortunate in that respect. But I'm in more of a position to take  a hit then other members of society. Thats what called an equitable tax system -not the sham of a one we have,
There is a certain level of arrogance among people in the 100k bracket who don't want to pay any tax. I deal with these people regularly unfortunately. The reality is the excess income they earn covers any of these tax increases more than adequately.  People in the most vunerable bracket - don't have the excess income to cover yesterday's budget- thats it makes it grossly unfair in my view.
they've hit the vunerable while leaving the high earners alone.
And of course the property developers- who get their bad loans taken off them- and get tax relief too- nice work if you can get it.