The View from the Brokers

Davy, Goodbody and NCB have collaborated on this joint report on the Irish economy: you can download it here.

2 replies on “The View from the Brokers”

any ‘academic’ economist views on the merits of their suggestions? given that both Davy and NCB were previously owned by banks (BOI and Ulster) and Goodbody is owned by AIB; one would think its not the most impartial view point.

also distinctly remember NCB telling us in 2006 that the good times were going to roll until 2020, with economy due to grow 5% p.a. precisely because of the structural imbalances in the economy, not in spite of them.

The question will be of course how the government proceeds next Tuesday.

My expectation is that they will waste a one-time only opportunity to tackle the ridiculously high social welfare budget by slashing payments to levels which reflect lower cost of living and our closest neighbours such as the UK. Decreasing even more the incentive to work. We simply can longer afford our gold-plated social welfare payouts.

The Government will instead (of course) target the middle income group > €30k and the so called ‘fat cats’ earning more the 100k i.e. those whose voice is not represented on the streets!

On top of doubling the levies and not dealing with social welfare, the morons in government will also abolish +/or introduce the following:

(a)the DIRT rate 23% ceiling removed i.e. make it subject to income tax (bye bye billions of savings!!!) not to mention it wont actually raise any money as rates collapse and returns are made in Nov 2010 – but it will scare the big money overseas.

(b) The PRSI ceiling lifted – hitting the middle/upper income bracket with a stealth 4% tax on top of levies up to 6% – Bye Bye wealth creators, entrepreneurs and prospective international employers

(c) means test or limit child care allowances (this I agree with BUT not combined with the other hits on the middle/upper income bracket!!

(d) announce property tax on private residence for next year: this is the most insane of all so it warrants further analysis:

We have plenty of evidence from our pre-98 property tax days – it was a disaster which produced no net income. AND I believe if any attempt to re-introduce this it will be a spectacular failure – do we honestly think people who paid huge stamp duty and saddled with big management fees and mortgage costs will do their patriotic duty and pay? short answer is NO!!! This property tax will cost too much to collect; it will be political dynamite – up for abolition at every election.

Contrary to David McWilliam’s view that it is not a tax on work and therefore should be pursued I would strongly disagree. For instance who does he think would be asked be pay such a tax? those who are jobless, NO; those on pensions, NO; those on low incomes NO: those on middle to high incomes YES; so in fact it would be yet another tax on work NOT to mention further damaging the already crippled property sector. Which by the way we own through our guarantee of the banking system.

The time to consider this type of annual property tax is (if ever) only when we see clear signs of recovery so it can be truly counter-cyclical, but not beforehand.

(e) water rates for next year – I agree with this and have no choice anyway EU requirement

(f) reduce tax breaks on redundancy payments (excusing it by saying it will only affect to ‘rich’ i.e. payments above €100k – of course these unfortunates wont be rich for long as there aint any jobs left and the banks will want this €100k to payback loans/mortgages etc.

(g) and of course the unexpected sneaky option – which will be designed to keep the Vincent Browne and Fintan O’Toole’s of this world happy.

As for me and many others I will be looking at every way for me and my 30 colleagues to leave this sinking island – possibly the UK or Holland – if my dire expectations of left leaning, populous, lost opportunity budget prove correct!


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