Feb 17 2012

Irish Budget 2013 Hints

Category: EconomyTeknovis @ 18:02

During the week I read Latest memorandum reveals more austerity ahead in Budget 2013. I agree with the thrust of the Memorandum of Understanding (MoU), because we all know (except the Government) that you cannot keep spending money that you do not have:

The latest Memorandum of Understanding (MoU) between the Troika and the government has confirmed that “at least €3.5 billion” will be taken out of the economy in the next budget through tax increases and reductions in spending on social welfare and capital projects.

However, I was disgusted when I read the following:

Revenue raising measures amounting to €1.25 billion will include a broadening of the personal income tax base which could mean either raising taxes or lowering the bands on the amount at which people are taxed.

There will be further restructuring of motor taxation, increases in excise duty and other indirect tax measures. A reduction in general tax expenditures is also proposed – meaning a potential cut in tax credits.

Honestly, I do not understand why the Government is determined to take more and more money from the fewer and fewer people who are working in order to fund a bloated public service and social welfare system!

The document also outlines where €2.25 billion in savings will be made including reducing expenditure on social welfare, cutting the total bill for pay and pensions in the public sector and reductions in capital expenditure – all areas where the government has previously implemented cuts.

I would love to believe that this will happen, and I would be happier accepting increased taxes if I saw that our public service rates (not numbers) and social welfare payments were decreasing towards European averages.

Indeed, Colm McCarthy recently highlighted these two groups of people as “silent winners” of the economic downturn in Ireland’s squeezed middle:

The silent winners are, however, quite numerous. Social welfare rates of payment have been cut and scheme rules tightened, but not across the board. State and public service pensioners have been spared the cutbacks. Even high-income pensioners have had free medical cards restored. But pensioners reliant on funded occupational schemes are not so lucky: most schemes are underfunded and benefits are under threat – a situation exacerbated by a government levy on funded schemes.

The winners are those far-sighted enough to choose careers with employers who do not pre-fund for retirement, which means the public service.

All this is happening at an interesting time for me, because I may have the opportunity to continue my current work in another country with far more favourable tax rates. It really is starting to look attractive!