That Voodoo That You Do So Well

at

This morning.

Fianna Fáil General Election HQ, Dublin.

Fianna Fáil spokesperson on Finance Michael McGrath TD (centre), Barry Cowen (right), spokesperson on Public Expenditure and Dublin City Councillor Deirdre Heney (left) at a press briefing on the party’s personal taxation proposals.

To wit:

The party is planning to reduce the 4.5% Universal Social Charge rate to 3.5%.

It is proposing to increase the standard rate of income tax band by €3,000 for an individual, and €6,000 for a couple.

Fianna Fáil’s Michael McGrath said his party would also increase the so-called rainy day fund from €500,000 to €750,000 per year – bringing the fund to €5.2bn by 2025.

Tax cuts and increased spending.

Apart from bitter experience, why the hell not?

Rollingnews

35 thoughts on “That Voodoo That You Do So Well

  1. ReproBertie

    Was it FG that promised to abolish the USC? The USC, for those who’ve forgotten, was a temporary tax introduced to help cover the cost of FF’s Bank Guarantee. Temporary.

    The justice, education and transport systems are a shambles and these geniuses want to fix that by cutting the source of funding.

    1. Cian

      USC was supposed to be temporary. This is true.

      However in 2010 there used to be a Health Levy (4% up to 75K and 5% thereafter) and an Income levy (2% to 75K, 4% to 175K, and 6% thereafter).
      In 2011 USC was introduced as well as Income Levy and a Health levy.
      But the Income Levy and a Health levy were subsequently abolished leaving just the USC.

      USC is weighted to get more tax from higher earners. @3€0K the 2020 USC is €670, in 2010 using the old levies €30K would have been €1,800 in levies!

        1. Cian

          The point is that USC was introduced at the start of the crisis as “temporary”. (Actually the Income and Health Levies were pushed up first, then USC was introduced).

          When the national accounts started to improve they looked at Income Levy, Health levy, and USC and decided to remove the first two as the USC was a more progressive tax.

          USC wasn’t there to “the cost of FF’s Bank Guarantee” it was there to raise more money for the government to continue to provide social welfare payments and government services (pensions, dole, health, education, garda, etc)

          1. ReproBertie

            “USC wasn’t there to “the cost of FF’s Bank Guarantee” it was there to raise more money for the government to continue to provide social welfare payments and government services ”

            Money that the government didn’t have because they were bailing out the banks?

          2. Cian

            The banks were bailed out using promissory notes – effectively there were “IOU”s.

            The USC was created to fill the hole in taxes that appeared when the tax take plummeted. VAT on building disappeared, VAT on everything dropped as there was less money in the country, Stamp duty went, social welfare payments increased (as unemployment went from 4 – 17 %).

            Comparing 2007 to 2011:
            Total Tax that the government has to spend: €47.2bn… €34.0bn …. a drop of €13 billion! FG has €13bn less to spend in 2011 than FF had in 2007. So they had to borrow money and put it onto the National Debt.

            this was made up of:
            VAT: €14.5bn.. .€9.7bn
            CGT: €3.1bn… €0.4bn
            Stamp: €3.1… €1.4bn
            Corporation: €6.3bn… €3.5bn
            Excise: €5.8bn… €4.7bn

            Income tax increased slightly €13.6bn …€13.8bn (this was because of USC and the higher rates) – but this was from fewer workers so anyone working was hit hard.

    2. Charger Salmons

      This is true O’Bertie.
      Some of us have been paying ” taxes ” of well over 50% for years.
      Obviously we can afford it but I can tell you it breeds tax avoidance, the black economy and lost investment like nobody’s business.
      And do you know what I still see the same feller who hasn’t done a stroke of work in 20 years still standing outside the same pub every day at lunchtime having a fag break.
      Forget the grey vote – we’re overwhelmed by the benefits class.
      With an increasingly foreign accent.
      Suck it up.
      Any more racist nonsense from me and I’m on the naughty step again though.

        1. Charger Salmons

          ” Taxes ” in inverted commas.
          Tax,PRSI,USC,Corporation Tax.
          It ain’t easy being wealthy in Ireland let me tell you.

      1. ReproBertie

        “we’re overwhelmed by the benefits class.
        With an increasingly foreign accent.”

        You just can’t help yourself can you Spoofer? Let’s put your fear mongering to one side and look at the facts. Analysis performed by the ESRI in 2018 showed that the employment rate for migrants to Ireland was 70% while that for Irish nationals was 66%. That means immigrants were more likely to be working than Irish nationals.

        Suck it up.

  2. Madam X

    Ah here now kids. These nice FG men in suits ( they dont like women I hear) are going to give us nice sweeties in tax cuts.. I’m going to spend mine on paying more rent as it’s over half my take home and the rest to VHI as the HSE scares the s**t out of me

  3. Bruce Wee

    Would it not be more prudent to ask from more regulation on Banking interest rates? Ireland has one of the highest interest rate in the EU.

    The exact order for average interest rates at the top end is as follows:
    Romania @ 5.17%,
    Hungry @ 5.04%,
    Poland @ 4.30%
    Ireland @ 2.95%

    The lowest in the EU btw is Sweden @0.76% and Denmark @ -0.5% respectively.
    What does this mean? if we used a Mortgage calculator with the following figures, they would equate to:

    Example:
    €400,000 – 10% deposit for first time buyers = €360,000. If we applied the interest rate of say Belgium @ 1.79% APR over a 35 year mortgage term the repayments are = €1,154.12

    With the exact same figures but we change the rate to the standard rate of interest charge by Irish Banks (2.95%) and we get = €1,375.43

    The is the calculator I used https://www.simonconn.com/portuguese-mortgage-calculator/

    That is a difference of €221 per month (€2,652 per year) in interest per year.

    Also, what I find amazing is that we bailed the majority of these banks out and yet we are still paying one of the highest rate for mortgages in the developed nations in the EU.

    Retails banks will argue that repossession is so difficult in Ireland that they have to charge these rates just to break even and cover the negative and defunct loans but the is complete horses*** because they can simply load them off to a vulture fund who will snap them up.

    Tax break would be great but if we don’t raise our voices on this are effecting our standard of living and what is dictating for some the majority of expenditure and I fully understand it is not relevant to everyone but hopefully it might be at some stage in your life (Mortgage or say Childcare) then a 1% difference in the USC is pointless.
    Welcome, but pointless.

    AIB

    https://www.independent.ie/business/irish/aib-reports-436m-pre-tax-profit-for-first-half-of-2019-38348378.html

    Bank of Ireland

    https://www.rte.ie/news/business/2019/0729/1065763-bank-of-ireland/

    Ulster Bank

    https://www.rte.ie/news/business/2019/1008/1081914-ulster-bank-mortgage-portfolio/

    1. Rob_G

      Why do you think we have such high interest rates?

      It’s because it can can 7, 10, 15 years to evict someone who has stopped paying their mortgage on their house. The interest rate is higher because the risk is much higher.

      1. Bruce Wee

        I 100% agree, I think its insane that people who don’t engage with a lender for some periods up to 36+month are able to retain their house. I simply pointing out that if a lower rate was applied to our mortgage rates, they would ultimately become more affordable to people. Arrears mightn’t happen as often and tie that in with prudent financial lending . The average house costs roughly 265k in Ireland. @ a rate of 1.79% the repayment would be €764 @ 2.95 it’s €911.

        1. Rob_G

          This is true.

          But banks have to make up the losses from non-performing loans somehow. So the people that already pay for the scroungers through PAYE end up paying for them again through higher interest rates.

          1. Bruce Wee

            And there it is and well put…the issue is that the Bank are using new and existing customers to cover the loss of people who should never have gotten a mortgage in the first place. if we could amend existing repocession laws that would ultimately remove people who do not engage with lenders I feel this would massively help the situation. Cian sent on a very good link explaining interest rate and you also raised it the point about competition in the market. there is no way a commercial bank would engage in the Irish market with that level of risk. I think we solved it lads

    2. Cian

      Retails banks will argue that repossession is so difficult in Ireland that they have to charge these rates just to break even and cover the negative and defunct loans but the is complete horses*** because they can simply load them off to a vulture fund who will snap them up.

      Wrong. If the bank “offloads the mortgage to a vulture fund” the bank take a big loss on the mortgage.

      1. Bruce Wee

        How is what I said wrong? I never mentioned a profit or loss. I simply highlighted a way out for them to offload bad mortgage dept. It’s 100% correct and factual

        1. Rob_G

          Banks sell mortgages off for pennies on the euro; it involves huge losses, its not something that they do for the craic.

          Given that out interest rates are higher than elsewhere; you would expect to see new entrants coming into the market to make all this money; in fact the opposite is true – banks have left the Irish market due to the unfavourable business climate.

          1. Bruce Wee

            Due to repossession issues in the housing market mainly and I’m not disputing that Rob. I’m not arguing against repossession. I’d be in favour of it if there is a clear indication of a mortgage holder not making any effort or attempt in repaying the amount or even engaging with their lender. I’m simply saying that a reduced mortgage rate could help massively for new entrants to get on the property ladder and for existing customers to free up month expenditure. They don’t have to sell to Vulture funds and yet they do because they know of the heart ache involved with trying to remove someone from a defunct house. Takes years…and years…..and years

          1. Bruce Wee

            Thank you for that Cian. Some very interesting points to the interest rates. I just want a better rate!! LOL…I think the tracker point was an interesting one. The banks actively sold that product. the rest though are valid and the repossession law is the real issue. Must look into that. cheers for the link

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