5/12/12

Irish Examiner

Our vitriol in this crisis is seriously misplaced

By Joe Gill

WEDNESDAY, DECEMBER 05, 2012

Have you noticed the level of vitriol aimed at various Irish people who sit in the pigeon holes marked "property developers" and "bankers" recently? A series of attacks comprised of violent spoken and written words has been under way now for some time, positioning their victims as pariahs in Irish society who deserve to be at least jailed if not worse.

This new apartheid is aimed at a group who have become utterly defenceless against a media gang who have shaped a narrative which goes something like this — Ireland has been destroyed by a small group of bankers and property developers who gorged themselves on the Celtic Tiger and bled the country dry b helping themselves to fortunes while screwing the entire population.

Any attempt at putting balance against this view is met with a wave of snorting about the privileged few who are spoilt brats in need of a good hiding. Writing in their defence attracts opprobrium.

Handy, isn’t it? Instead of exploring some dark corners of Irish society to understand our national crisis, it is far better to have a small number of named individuals we can take photos of, stone metaphorically and abuse repeatedly in an effort to re-assure ourselves that a small group of Baddies killed lovely Ireland.

The truth is very different. Back in the mid-noughties, I worked in Irish stockbroking. I clearly remember the management teams of leading Irish banks being excoriated by international fund managers and analysts as being too conservative relative to the thrust of Anglo Irish Bank.

Anglo Irish itself was over-run with international investment bankers who were offering ever more exotic financial instruments that could swell its balance sheet and turbo-charge its loan volumes. A vicious cycle ensued of Anglo aggressively expanding its loan book and AIB and Bank of Ireland executives being repeatedly lectured about their relative backwardness. We all know what happened next.

A similar tale washed over the property sector. Individuals running small construction companies were propelled into global property magnates through a set of financial steroids provided by a system that salivated on a complex collection of asset- backed securities, otherwise known as debt.

This system was an integral part of the euro and was regulated and overseen by the ECB. The ECB was part of a global group of central banks that conspired to create a debt-filled bubble across the US, UK and Europe. Ireland was flame- grilled in the midst of that.

So, as we face another bone crunching budget designed to meet the needs of a troika which contains the ECB, why are we largely directing our vitriol at a group of Irish citizens when it should be focussed on much bigger institutions?

These monoliths are not easy to personalise. You cannot get photos of them next to swimming pools. Yet, that is where our firepower needs to be trained now. Alongside the unemployed and underworked, are a group of previously wealthy and not so wealthy Irish now in financial ruin. One of these groups is presented as the effect of an Irish tragedy and the others are portrayed as the cause.

In fact, they are all citizens of this society. A somewhat more sophisticated analysis is needed to root out what went wrong here instead of the Cartoon Network that masquerades as informed comment and debate.

In the rush to judgment, we are at risk of another witch-hunt against a set of Irish men and women who are now voiceless. They live in leafy suburbs, wear fancy clothes, and get indignant when challenged. Many of them are also financially and professionally destroyed.

"Let them burn" is an attractive populist perspective on how they should be treated, but Ireland is a civilised society — isn’t it?

The Irish Times - Wednesday, December 5, 2012

Where deepest cuts and tax hikes will hit hardest

HARRY MCGEE

While leaks about the contents of today’s budget were contained compared with last year, the shape of the €3.5 billion in adjustments have emerged in the past few weeks, especially last weekend when the Government signed off on most of the big-ticket items.

Taxes

Almost €1 billion in new taxes will have to be raised, as there is €250 million of the full-year effect of measures from last year’s budget.

Property tax

A bulwark of this will be property tax. It will be levied at 0.18 per cent of the value of the property. The late decision to add a so-called mansion tax on houses worth more than €1 million meant the rate reduced from 0.2 per cent. This measure was introduced as a quid pro quo to Labour following Fine Gael’s rejection of a 3 per cent hike in the USC rate for PAYE employees earning more than €100,000. It is mostly symbolic as the proportion of houses worth over €1 million is tiny. The property tax could generate €250 million in revenue during the six months it operates in 2013.

PRSI exemption

Another big change in the offing that has not attracted the same publicity is the scrapping of the €127 exemption from PRSI for all those earning over €352 a week. That will cost each taxpayer some €261 per annum and will yield more than €300 million to the exchequer in a full year.It could prove controversial as it will affect lower income groups proportionately harder. Other PRSI changes will be extended to unearned income, such as rental and share income. That could bring in up to €80 million in additional revenues.

Private pensions

This Government has rowed back on the previous administration’s commitment to reducing tax relief on private pension contributions from 41 per cent to the standard 20 per cent, but has instead targeted a maximum annual pension of €60,000.

Pensioners

The group in society least affected in recent budgets has been pensioners. There may be some changes to the more generous tax exemptions available to over-65s, as well as the lower rate of the top USC band available to over-70s with income of €16,000 or more. However, the wholesale changes floated two months ago will not now materialise but the gap will be closed. At present, a person over 70 with an income of €40,000 pays €3,500 less tax than someone under 65 on the same income.

Universal social charge

The pressure from Labour to have the USC rate for PAYE workers earning over €100,000 increased by 3 points to 10 per cent has come to nought. Fine Gael never bought the Labour arguments and its Ministers dug their heels in, demanding a comparable cut of 3 per cent in social welfare rates.That was never going to happen.

Motor taxes

The likely increase in motor tax and vehicle registration tax is a steep 15 per cent with low- emission cars no longer enjoying an advantage. A combination of people buying CO2-efficient cars and a collapse in new car sales has meant the State’s take fell from €1.4 billion in 2007 to €387 million in 2011, with strong indications of further sharp drops in 2012.

Tobacco and alcohol

The old reliables also face increases. There is a Government commitment to deal with the sale of cheap alcohol in off- licences, although sharp hikes might lead to renewed cross-Border purchases of alcohol and tobacco. A 50 cent increase for a packet of cigarettes would be worth €81 million to the exchequer. A 20 cent increase in excise duties on beer and spirits and a 50 cent jump in excise on wine would garner €156 million in additional revenues in 2013.

Carbon tax

There is also likely to be an increase in carbon tax, although it may not be as high as the €5 per tonne mooted. If that happened, it would yield €108 million.

No supertax on bank pensions

There will be no supertax on the extravagant pensions of former top bankers. Government sources said the strong legal advice was that a specific group could not be singled out in that manner. A more general targeting of high-income pensioners – both in the private and public sector – may be announced.

CUTS

Social protection

The good news is that over the past few days, the department’s very onerous target of €540 million has been reduced by €150 million to €390 million, making the kind of savage cuts that seemed in prospect a month ago seem less remote.

Child benefit

The €10 cut per child in child benefit will not be popular with backbench TDs from either Government party but has been inevitable for many months. That will yield about €140 million to the exchequer.

Statutory sick pay

Another controversial proposal being refloated by the department is for employers to pay the first four weeks of statutory sick pay, for which the State is on the hook at present. However, what will be announced today will apply only to the public sector. The individual department or body will be responsible for paying their own sick pay.While that will reduce the cost to the Department of Social Protection, it will be revenue neutral as the State will still foot the bill. The Government will not apply the move to the private sector, to the relief of Fine Gael TDs.

Employers rebate for redundancy

Employers will no longer get State support for funding redundancy packages.This will save the State €25 million.

Household package, free travel, TV licence

Secondary allowances for pensioners will be tightened. Telephone allowances will be halved. There will be some adjustments to gas and electricity allowances. However, free travel, fuel allowance and television licences will all be unaffected.

School clothing allowances

Expected to be cut from €150 to €100 for primary school pupils and from €250 to €200 for secondary school pupils.

Health

Because of overruns, the total cut for health will be €930 million. However, the target has been reduced by €150 million to about €780 million as the Government has found savings elsewhere. Health staff and rising charges Savings include trimming back of agency staff, cuts in over-time, new terms for consultants, increases in charges for providing public hospital facilities – including beds and AE services – to private patients, and further reductions in drug pricing. A hike in the 50c prescription charge is also on the cards.

Medical cards

The income thresholds for medical cards for pensioners will be reduced substantially from €36,000 to €30,000 for a single person and from €72,000 to €60,000 for a couple. Those who fall outside the limit will be entitled to a GP-only medical card.

Education

Cuts will be €80 million. A big part of this will come from increasing the pupil-teacher ration from 21-1 to perhaps 23-1. There will also be rises in student fees as well cuts in allowances for Gaeltacht and Irish-speaking duties. There may also be some additional cuts to the €90 million budget for private schools.

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