“How many IT staff are employed by the HSE?”

Its about 370, which by any comparison is a tiny amount.

So this is where relief for Trades Union subscriptions was introduced.

FINANCE BILL, 2001

“Section 11 introduces an annual tax allowance at the standard rate of tax of £100 in respect of subscriptions paid for membership of trade unions, regardless of the level of those subscriptions.”

Minister of Finance Charlie McCreevy? That well known hater of Trades Unions.

The phrase “Fianna Fail Trap” comes to mind.

Still, small potatoes in the face of the deficit. I just found it interesting.

That ‘gem’ on TU subscriptions may have even been partly inspired by Brian Lenihan!

A few weeks ago, he and JB were both interivewed on Morning Ireland. Joan Bruton was demanding the abolition of all tax reliefs. A few minutes later BL referred to her remarks and pointed out that such reliefs included such things as tax relief on TU subscriptions and capital investment in plant by start up businesses and such like (hazy about most of the items he listed, but the TU one stuck out like a sore thumb) and that it simply wouldn’t be practical, nor desirable, to abolish the lot.

Anyway, it’s a good populist one and a way of indicating ‘we’re not in the pocket of the TUs even if we endorse their policies’. So, fair enough in terms of the politics of the document.

I believe the State also pays the salaries of the GRA full time staff. That should go as well.

Maybe I sdould have gone to Specsavers.

Well that’s exactly the point. Labour are in the unique position of having an institutionalized link to the unions, and also gain indirectly from that tax relief via their union-originated funding.

Hence they must be seen to be willing to take as much away from their beardy mates as they squeeze out of anyone else, lest they be accused of hypocrisy.

Will membership subscriptions of the Irish Medical Organisation also lose their tax deductible status?

Yes of course, why wouldn’t they?

Its only €70 a year for crying out load. A GP would nearly make that back in a single 5 minute consultation

“Not cutting that tax relief would simply serve to make a rod for Labour’s own back.”

Not sure that’s the case. I haven’t heard Fianna Fail, the Green Party, Fine Gale or Sinn Fein suggest removing tax relief on Trades Union subscriptions.

It seems to me to be a cynical exercise designed to put distance between the Labour Party and the Public Service Unions.

Will membership subscriptions of the Irish Medical Organisation also lose their tax deductible status? If so why was this not mentioned?

http://www.imo.ie/IMOPage_4_67.aspx

Thank you for contributing and placing your cards on the table.

However I wish to push you more on the residential investment relief.

The country is flooded with property, rents have had to be reduced and there is now a movement of net emigration from the country.

This has put pressure on landlords. In addition interest rates are low, and in the next few months they will be going in one direction only, upwards.

If you cut interest relief against profit obtained then one of two things will happen.

1) Either rents will have to rise.
2) Landlords will have to go bust.

In addition it does not send out a good signal to future investors in this country.

The CIF has estimated there is a large amount of money still being held back from the Govt in the form of unsold properties, I am open to correction but I believe it is around the 1B mark.

This policy does not make economical sense. In addition Greg has mentioned the possibility of Court action with regard to Retrospection for landlords.

Repeating your doctrine will not answer the questions that I and others have raised. LP doctrine in this case is illogical, we know what your doctrine is, you are being challenged to show how it squares with reality.

In addition landlords are business people, not homeowners. If you reduce cost offset against profit for landlords will the LP continue implementation of this doctrine against other business’s? All business’s have costs which impact on their profit.

You need to explain logically in a clear manner how will points 1 and 2 not occur on implementation of LP policy.

Unless of course it is the LP policy to destroy landlords, and after having destroyed this business, which business will you target next?

Optics, Greg, its all about the optics.

Not cutting that tax relief would simply serve to make a rod for Labour’s own back.

A rod that would be enthusiastically siezed upon by the right, though of course their real agenda would be to protect the more lucrative property-based reliefs.

It is for FG and Labour to decide if they wish to craft a credible alternative, but, imo, Irish voters deserve and require this.

http://www.revenue.ie/en/tax/it/leaflets/it1.html#section1

“Trade Union Subscriptions

An annual flat rate allowance of €350 at the standard rate of tax 20% (tax credit €70) is available for Trade Union subscriptions paid in 2008 and 2009.”

It seems astounding that the Labour Party (of all parties) would want to take €70 in cash from Trades Union members.

Who came up with that gem?

“As proposed, the 48% third rate of tax appears discriminatory and unfair in its impact on ‘single’ earners as opposed to dual income households whose gross income amounted to €199,999 per annum to whom it would not apply.”

I think this just follows the existing tax code. No?

Though you could be right. It doesn’t seem clear to me.

Unless it is intended that a dual income household were the first income is €190,000 and the second is €10,000 is not subject to the 48% rate.

From Revenue: http://www.revenue.ie/en/tax/it/leaflets/it1.html#section1

“€45,400 @ 20% (with an increase of €27,400 max), Balance @ 41%”

If the 41 in that formula turns into 48 then it is consistent with the current tax code.

If not then behaviour will change. A single income household on €195,000 will arrange for the one without income to get a part time “job” in the local Spar at €4,999 to avoid the 48% rate.

I’m sure that is not the intention. Clarification would be good.

If the Labour Party budget document followed a pattern of response among socialists in other small economies in the EU as to the best way to deal with the current economic crisis, then at least there might be something to be said for it in terms of ideological coherence. But it doesn’t seem to be about that; and is more about a populist response than anything else.

Any fool can come up with figures of €4bn, or €5.8bn, simply by writing them up on the back of a packet of fags, as has already been noted in the comments above. Credibility rests on the actions proposed to achieve the desired result. Most of the comments here and elsewhere in the media have been directed at the lack of credibility of Labour’s proposals – in marked contrast, incidentally, to the reception accorded to the Fine Gael document. Like it or not, you can see exactly where their cuts are coming from, the economic case that underpins them and the concept of social fairness that informs them.

It’s also hard to square Labour’s commitment to a €5.8bn adjustment with Joan Burton’s Dail statement in the pre-Budget debate that: “The Labour Party accepts a deficit reduction target of €4 billion as long as the actual measures do not cause even further contraction in the economy.” A statement, incidentally, that implies no cuts at all are acceptable since some deflationary impact must be a given. €5.8bn implies an even bigger deflationary wallop.

Labour’s approach to the €1.3bn savings in public sector pay seems to have been based on the incorrect assumption that the ICTU unpaid leave approach would carry the day. Apart from being a major political mistake and misjudgement, since it aligns Labour with the deeply unpopular and widely discredited leadership of the public service trade unions, it does not excuse the failure to specify how the €1.3bn should be achieved. FG, to be fair to them, set out a line by line framework, which exempts lower paid earners in the public service from any further pay cuts. Gilmore’s alternative - to direct Departments to cut 6% plus from their respective pay budgets - sounds more like something straight out of the guidebook to Soviet-era central planning. And we all know how that ended up.

As proposed, the 48% third rate of tax appears discriminatory and unfair in its impact on ‘single’ earners as opposed to dual income households whose gross income amounted to €199,999 per annum to whom it would not apply. It would also shove marginal tax rates up towards 60% according to some economists. How this fits with Joan Burton’s “I am not a supporter of high marginal rates. I never have been. The high marginal rates of yesteryear are a nightmare scenario”, is another of life’s little mysteries.

Making these points might seem like cribbing about details to you, Vic. Except for the fact that the details of what the opposition parties are proposing for the Budget, and the credibility and economic coherence of those proposals, is hugely important in a political context in which the Government may fall when it puts its Budget before the Dail. It’s of particular interest to long standing Labour Party members and supporters like myself, who would wish to see Labour having a strong and credible input into the direction of economic policy in any alternative administration rather than having their proposals consigned to the paper recycling bin, because that’s the only use worth making of them.

All credit to you for having the cojones to identify yourself and put your case out there.

They’re an unforgiving/merciless lot on this board, and quite rightly so if someone can’t make their case stand up….. and some of them don’t take too kindly to ‘pinko lefties’ policies (of which, I have to admit, I am one)

Is there not more mileage on the tax break side of things? I thought I read somewhere the other day a figure not unadjacent to 7bn in tax breaks doled out in Ireland?

For example, complete removal of tax relief on pension contributions. The right will no doubt scream blue murder and that it would damage the financial services industry terrible etc. but would it really? Would people actually stop saving for their retirement? I bet they wouldn’t. After an initial sulk they would just continue on with it.

I say squeeze all (all) tax breaks really hard and see what pips squeek. Things can always be reversed if they really cause a problem. Most of the right wing shouting is usually just that….. shouting. It has more to do with personal loss than what’s actually good for society.

Anyway…. enough of the politics on a Sunday morning.

I’m not looking forward to 2010 in Ireland. I suspect it’s going to fall in on itself.

“That means building strong indigenous firms, as well as attracting Foreign Direct Investment. It means putting in place infrastructure that complements the knowledge economy, and ensuring that investment is channelled towards enterprise and infrastructure. It also, crucially, means investing in people, at all levels of skill and learning.”

What will be produced for export that the East cannot produce for one quarter of the price?

What sector will produce indigenous firms strong enough to compete with China? Do we have the cheapest labour and capital in the world?

Perhaps it’s because were Irish. Obviously we are 10 times smarter than the Chinese. We produce more engineers and scientists from our universities.

Not true is it.

The West including Ireland has lived high on the hog of cheap Chinese imports and cheap Chinese credit. China is mercantilist. We’re not smarter. We’re not more productive. And what’s more we can’t be.

“At a time when most homeowners, bar first-time-buyers, have had their mortgage interest relief phased out, Labour is advocating that this ‘phase out’ be extended to investors.”

If it is your intention to raise revenue on trapped investment you will have limited success and will also succeed in driving many buy-to-let investors to bankruptcy. That ought to help the banks. Mind you that will be after the Supreme Court challenge on retrospection.

If it is your intention to eliminate private investment in the residential market you will be 100% successful.

If it is your intention to eliminate private investment in commercial property you will find equal success.

If I borrow money at 4% and invest for a yield of 6% can you think of any reason I would bother if I am going to be taxed as if my cost of funding were 1%. Are there not other opportunities for investment both here and abroad?

If I borrow €1mm to invest in plant and machinery would you say that the interest on the borrowing was not tax deducible?

Sounds like nonsense to me.

The fact that the DoF provide numbers in not an indication of sensible policy.

I would have to forgive myself first. Ok. Done. You are forgiven.

http://www.irisheconomy.ie/index.php/2009/12/05/receipts-and-expenditure-estimates/

“Greg Says:

December 5th, 2009 at 7:41 pm

Capital expenditure reducing from €14.6bn to €7.7bn.”

Not being expert at these things I was also thrown by the idea that an “investment” in Anglo Irish of €4bn could possibly be described as “Capital Expenditure”. I can think of a lot of other ways to describe it, “A complete and utter waste of money” would be one of the more polite.

Labour has accepted a target of a €1.3bn reduction in the public sector pay bill for 2010 and has insisted that this be achieved through a negotiated settlement between the stakeholders.

Interesting that the insistence on a negotiated settlement seems to trump the maintenance of existing service levels. I would have expected the latter to be the primary concern.

I think the point is still valid, though. How much of the capital spending is new spend that is being tendered for and how much is continuation under the NDP (e.g. I presume CIE subventions? payments for low volumes under PPP?).

“€865m raised from “Property Schemes” and “Reductions in Property Relief”?”

The figure of €435m for property schemes was provided by the Department of Finance.

The figure of €430m for ‘Modifications & Reductions Investment Property Relief’ is an estimate of revenue to be raised from the reduction of mortgage interest relief to 25% (from 75% in the case of residential property at present and 100% for commercial property)

At a time when most homeowners, bar first-time-buyers, have had their mortgage interest relief phased out, Labour is advocating that this ‘phase out’ be extended to investors.

€100m from tax exiles

There are currently circa 5,800 tax exiles in Ireland. Like Fine Gael, who have advocated a €20m contribution from tax exiles in their own 2010 budget submission, the Labour Party believes that during an economic emergency these people should be called on to make some financial contribution to the public purse.

€100m would constitute an average contribution of less than €17,500 per tax exile.

This contribution could be raised through the tightening of non-residency rules, through a flat rate contribution, as in the UK where a £30,000 tax on ‘non-doms’ was introduced in 2008, or a combination of the two.

€1.3bn public sector pay

Labour has accepted a target of a €1.3bn reduction in the public sector pay bill for 2010 and has insisted that this be achieved through a negotiated settlement between the stakeholders.

As such, one would not presume to dictate the terms of am agreement at the outset of negotiations, much as any Government would do - and has done.

Eamon Gilmore has confirmed that, should negotiations be unsuccessful, reductions in the pay bill would then be achieved through the unilateral implementation of a uniform reduction of 6.85% in the pay allocation of all govt. Departments and agencies.

@ Veronica

“The stimulus cum no cuts approach appears a common theme among Socialit Party responses to the current crisis in small countires anyway, which is probably why the the LP’s Budget formula sounds eerily familiar.”

Far from proposing ‘all stimulus and no cuts’, the Labour Party is proposing €2.1bn in current spending cuts - €1.3bn from the public sector pay bill and €899m from non-pay current spending.

And yes, Labour is proposing economic stimulus through the creation of a €1.15bn (full year) ‘jobs fund’, roughly half of which would consist of labour intensive capital projects.

Labour is proposing a gross full-year adjustment in the order of €5.8bn, of which €1.45bn would be ‘added back’ through stimulus measures.

assume we could throw in eradication of CGT avoidance on primary homes and transfers between spouses too?! … badly thought out.

I think the reduction in Capital Expenditure is the Non-Voted Anglo €4bn and NPRF €3bn.

http://www.finance.gov.ie/documents/publications/other/2009/whitepaper2010.pdf

Note 6

Capital spending is due to halve next year from this year. This is largely, I believe, due to projects completing and new projects not being tendered for. Does the remaining 7.7 billion of capital spend relate to ongoing projects or to new projects? If it relates to ongoing projects, there aren’t going to be many tender savings available…

Thanks for your comment about a common trend among socialist parties within small European countries. Unfortunately I would tend to agree with your comments.

I am of the same opinion as most of you, it is very dissappointing to see the LP offering little credible alternative to the present Govt.

Irish people are getting sick and tired of the spin, double speak of political parties. Is it any wonder people are so cynical.

Either the LP are devoid of serious suggestions to aid the country or they are still stuck in the game of winning elections. Maybe they are just trying to capitalise on a mob atmosphere of anger which is present in the country at the moment. Despite the fact that they have had several months to prepare their submission for budget day it has proved to be dissappointing. I suspect they have their focus on winning a popularity contest among the other parties, they are not interested in the budget, only winning the next election.

This strategy is not without its merits, the current establishment continues to weaken, so a general election could be in the offering before the summer.

However they must be aware that the more ridicule the LP gets from economists will not aid their master plan.

As for taxing tax exiles, some things do not add up. Back in February / March, Gilmore stated that 200M could be raised from taxing the exiles. Again it was unclear if this was a definite calculated figure or sums done on the back of a fag packet. Now it is down to 100M, again source unclear. Something must have changed in the meantime. Either these exiles have little money or the possibility of obtaining the money is not feasible due to double taxation treaties. Another possibilty is maybe they are thinking of reintroducing the Foreign Earnings Deductions scheme which was scrapped in 2002 /03. Hence the reduction from 200 to 100M.

Maybe we were just been had, used to wip up a frenzy (a hate meeting) by the LP against something which was not really there at all.

Another point, suggesting to cut relief on contributions for Union membership? Is this not a swipe at the Unions? I find it strange that they would have a go at a group they are most aligned with! Unless of course they have no intention of acting on this when obtaining the reigns of power.

The who? The wha?