Toronto has done it the other way round - property tax first, now stamp duty! (”Land Transfer Tax”)

I’ve no objection to a property tax as long as it actually pays for services and also that it is proportionate to land use rather than a flat assessment of real estate value - a 300,000 euro apartment should be assessed at a lower rate than a 300,000 suburban semi-d which requires more roads/sewerage connections etc per hectare of urban form.

You pay VRT and VAT when you purchase a new car. You pay motor tax annually and you pay duties on the fuel you use in the car.

The argument that you can only tax something once doesn’t really add up.

I’d don’t see any inevitability about falling into the clutches of the Troika, or other apoplectic scenarios. With better government, and more hard-headed policies, it is still possible to find a road back to prosperity.

Just some quick thoughts. I suppose I am most interested in the long view of matters. What I see on the ground here in Ireland is a population who are looking for a radical break from their past. That is no doubt a healthy aspiration. Many, many of the people on the island of Ireland do not look back at our national history, with much degree or pride, fondness or approval. The last decade of the Celtic Tiger was only the icing on the cake for a lot of people. There is a huge sector of the population in Ireland today, who would welcome Troika or whatever else is coming down the track also. They just want to get it over and done with - and get back to their lives. People often make the mistake in Ireland that people are only reacting to recent history, recent turmoil, ebbs and flows to use the words of An Taoiseach, Brian Cowen. But with or without the bond markets, I believe we would still see pressures for much social change in Ireland. With or without the Celtic Tiger, we would see it anyhow.

The biggest danger I see at the moment in Ireland, is that the encumbant Fianna Fail government hangs around for too long. And that society in Ireland becomes radicalised, to move over to the far left. I can quite easily see that happening in the next decade, and I am preparing myself in my small existence to live in that kind of Ireland as best I can. I don’t take away from the idea that Ireland is harmonize-ing itself to European norms. That is all very nice. We have a minister for finance who can speak in French. That’s cool. But I believe the next decade in Ireland will be more about the fellows, who cannot even speak good English. Not to mind the people who can speak French and English as well as minister Brian Lenehan can. I think there are a whole raft of deals which need to be struck in Ireland in the next decade, which have been bubbling away underneath the surface for 50-100 years. Not to mind stuff, which only relates to adjustments post-Celtic Tiger abuses. I wish it was only the last 10 years of abuses in Ireland that have to be acknowledged. The problems is wider and deeper than that. BOH.

- legislated future increases in retirement ages;

- the taxation of pensions and pensioner benefits (already extraordinarily generous in some respects compared to the rest of Europe);

I agree with Ciaran Daly that this is not credible.We have all paid property taxes up front in the form of stamp duty and hitting pensioners is a soft option that would likely create a new political/financial crisis.

Merci.

‘With better government, and more hard-headed policies, it is still possible to find a road back to prosperity’

As Michael H puts it, however in his doggedly empirical way:

‘Despite the crash, there isn’t a constituency for change among the political class and the vested interests from the trade union congress ICTU on the left to the business group IBEC on the right are prisoners of conservative vested interests, afraid change would impact the benefits from existing closed shops and insider cronyism’

“Is minic an fhírinne searbh.” Vraiment.

A day in the life of Paddy Ivan’taStitch ………. Good post Ciaran …..

There is neither appetite for, nor experience of, the type of radical changes in Irish poitical economy called for here ……….. by either the present Gov or the salivating Gov in waiting. Expertise is available. A strong national gov ‘might’, and I stress, might - be capable of a more equitable management of this National Emergency ………… and based on some lessons from the madness of past decade …….. when powerful interest groups oppose change, and change is essential to survival of an entity, the radical dictatorial transformation is the only option ………

At EU level Ireland is now perceived as a potentially dangerous catalyst with the potential to set off further domino effects at EU level ……….. and EU call the shots to a large extent ………… the fall guys an gals are Irish citizen/serfs ………. bent to within a foot of the floor with the weight of socialised debt …….. ‘kick the debt can down the road into the next admin and screw the supine serfs’ is the ’strategy’ (sic) of yesterday, today, and tomorrow ………

@Paul Hunt

Set up the Troika Party ………….. cannot do worse for the serfs than the present lot …………. Anglo Irish is not ‘the most distressed Irish institution’ - the most distressed Irish Institution over the past 10 yrs and up to the present day, is the Political System which has failed in its primary democratic duty of care for the Irish Citizenry …….

GO. National Gov or Troika …

That is endemic in Ireland at a certain level. It will not disappear of its own accord and as it is useful, to others outside of Ireland, the IFSC for example, Shannon Airport for another, it will resist every attempt; as heads roll, they will be replaced easily, with counter attacks likely.

BPW
Yes! We seem to agree on this and we are not alone.

The benefit is that the absence of the western scourge of FRB will now allow development in the rest of the world. For a while….

The development of certain countries, going for gold, may suggest that they are sick of FRB. Imagine the increase in wealth they will experience, when the fiat currencies collapse! Admittedly, while the USA, those naughty boys and girls, who doa ll the dying for us, hold so many weapons, that may not happen, but it might get very nasty? Economic war can degenerate very quickly?

I’m compelled to agree with your observations. Following on from these, since no government anywhere will willingly invite administration by the IMF or any other multinational institution, we are probably facing a white-knuckle ride until either Ireland is forced into the arms of the Troika or international pressures ease. And the institutional EU will probably do all it can to avoid the former outcome as it would prise open a can of worms on which it is struggling to keep the lid. The Government, of course, knows this and is well-skilled at exploiting the scope it provides for kicking the can down the road.

The institutional EU has moved too far without the informed consent of the EU’s citizens and it is now hostage to the interests of voters in the core EZ countries. The Irish Government seems determined that Ireland should take the pain to avoid exposing governments in these countries to the wrath of their voters - irrespective of the costs to Ireland’s economy or its citizens.

This combination of can-kicking while enduring economic pain may be politically astute but it is economically disastrous.

Not all readers will be aware that the phrase “legal tender” has a specific meaning common to all jurisdictions. Arrived at after centuries. Proffer more than a certain number of copper coins in EZ and they can be refused. About 50, or so. Details vary from jurisdiction to… S0o, the coins are being accepted!

They are therefore a parallel currency! Malaysia had Mahathir Mohomad an economist, who advocated the gold standard. His ideas are being tried therefore. The national government presumably desires to keep face and is allowing the experiment in two provinces. When it goes awry, they can step in. After a whi;le if it still works, the proportion will increase from 25%.

This is not an issue of lack of faith in the Ringgit, as you know, Michael. This may be a slow adoption of the gold/silver standard that is in fact still the legal regime in the USA. It is ignored in practice, as a result of presidential decree. Likewise with the wars in Somalia, Afghanistan Iraq and elsewhere. They are merely fiat dictat and not legislated for as provided by the USA Constitution.

China has told its subjects, not really citizens in fact, to save gold and silver too. It is not merely Malay, nor Islamic.

I would be taking the coins out of Malaya if their value suggested it. If it is legal, which it probably is. Tourism may magnify!

Effectively, while this experiment is in operation, the currency is no longer fiat.

http://www.ft.com/cms/s/0/b11d2732-b915-11df-99be-00144feabdc0.html

Well said. Don’t forget the other element of the neoliberal model that is unsustainable- 58% of all income growth in the US between the 1976 and 2007 went to the top 1% of the population. The top 0.01% or 15000 households had 1.7% of all income in 1976 and 6.04% by 2007. By 2004 the top 1% of wealthholders in the US held 42% of all financial and real assets, the most unequal distribution since the 20s. The top quintile held 93% of such assets.

http://polymer.bu.edu/hes/articles/psnis08.pdf

The changes required to avoid this are too radical for the parties to contemplate.

Besides we’re now - what - three years in to the Irish crisis (which started in 2007, really) and the Croke Park deal ink is still wet, AIB is still limping, and the DAA is putting its prices up. GUBU

Paul,

Saving face can be a potent factor and it can be too late when a government decides to put on the hairshirt.

Mrs. Thatcher used to call Denis Healey, the hire-purchase chancellor, for calling in the IMF!

There is likely still some fat to cut from the system and it’s striking that there has been little evidence of a community spirit from those who can afford it.

There was a very unusual situation in respect of the Commission on Taxation, which incurred €13,000 in costs per meeting — not counting catering costs. The total was more than €500,000 and two members, Brendan Hayes of the trade union SIPTU and Feargal O’Rourke (son of Mary O’Rourke and first cousin of Brian Lenihan) of PricewaterhouseCoopers, did not accept fees.

A Trinity economist collected over €46,000. It was not clear if any was offset against his main salary.

Minister for Health Mary Harney in Sept 2009 referred to the price differential on flu vaccines at a conference in Dublin, pointing out that GPs in Ireland get paid €38.95 to administer the seasonal flu vaccine to patients. In the UK GPs get paid £7.51 (€8.30) for doing the same job.

Has much changed since 1859?

“The scene was sickening and all the Irish were there, most of them vying with each other in eagerness to plunder the public purse,” William Ewart Gladstone, British Chancellor of the Exchequer, wrote in an 1859 letter to his wife concerning a House of Commons debate, on the cancellation of a subsidy for the mail steam-packet service between Galway, Ireland and Newfoundland. Gladstone was facing a budget deficit of £5m.

What better illustrates the resistance to change in Ireland than tribunal lawyers becoming multi-euro millionaires, sometimes chasing up small value bribes paid to politicians and after a tribunal on planning corruption sitting since 1997, and a devastating property crash, the land rezoning system remains unreformed?

To cap it all, tribunal lawyers investigating corruption, who were paid an extra €1m due to a typing error won’t have to pay back the extra sum.

The Irish Independent reported in Feb 2009: ” The Department of An Taoiseach says the tribunal had saved €1m elsewhere by paying other staff less in salaries and fees.”

Soap opera or Gilbert and Sullivan?

Thanks again.

Well, let’s get to the point:

What would you guys do if you had UT2 Anglo bonds? I guess there’s only a few sub bondholders left, and the options look like i) ARB does nothing and keeps paying, ii) they call on another tender at, say 35 cents (bonds are now ca. 25 cents) or iii) they do outright default.

In my view, another tender is the most probable scenario -it makes sense for the bank- …

I would appreciate any comment. Tx a million

“Unfortunately, it will be ‘muddle’ through…”

Do you think there is a widespread and deep-seated masochistic resignation to losing another decade like the GUBU decade from ‘77 to ‘87?

We should all know the routine: Make an appointment with the Troika - “My name is Ireland and I’m a creditoholic. The local supply has dried up and I’m doing my best to curtail my consumption of the foreign stuff. But this unquenchable thirst is paralysing me. I can’t beat this on my own. I need help.”

That is, plenty of accessible credit, at reasonable rates (you can repay borrowings), plenty of accessible fossil fuel (especially the liquid sort and its chemical offspring), a gently expanding population, with accompanying increases in paid employments, surplus cash to spend and access to credit (I did mention this!).

So what is the current reality then, and what are the consequences that will flow?

Note: I am assuming that commentators hold the paradigm of Permagrowth (annual, incremental increase in aggregate economic activity), together with the process of ‘cyclicality’ (sic) from trend line. The notion of a permanenant change away from Permagrowth is considered most improbable. That is, a permanent Regression of aggregate economic activity to a previous, lower level, is not entertained.

1. Credit and FF availability are significantly constrained. The former is obvious, the latter is not so easy to grasp. You need to understand the economic impact of the Export-land Model of Fossil Fuel Production, Use and Depletion.

2. Paid employment opportunities - in western developed economies - are significantly constrained and show no signs of betterment. Of concern is that the cohorts of job seekers is still increasing. Just because a person is not on the un-employment register, it should not be assumed that they would not want to work. Perhaps there is no paid employment opportunities available for them. This is a very contentious matter.

3. The commentators may, or may not know, nor understand the significant differences between a traditional, pre-1970 Production Consumption [PC] economy and the parasitic, post-1970 Finance, Insurance and Real Estate [FIRE] economy. This latter is failing - it is a Ponzi scheme constructed on the paradigm of an annual, incremental increase in debt - a completely unsustainable exponential process - since real, aggregate economic growth has to be based on real finite resources, not virtual financial resources. Hence our current economic and financial predicament.

Conclusion: I have formed the opinion that our western developed economies (UK, US and parts of EU) must Regress economically. I believe in the logical arguments of mathematics and the immutable laws of chemistry and physics. If you start here your not likely to stray too far from real reality as opposed to the virtual sort I encounter in some commentaries.

Brian P

The important word is grow.

Without serious growth Ireland is screwed.

Not the NAMA/FF/Anglo growth where paper is moved around till favoured people are released from their debt obligations and consultancy fees are earned by cronies.

Real growth, where stuff is produced here and sold around the globe.

I think the point on budget policy is well made.
The idea of a reveal all budget day with only rumors and kite flying leading up to it serves no one.
What is needed is multi-year budgets with detailed explanation of what will be done. Down to the individual cuts and tax increases to allow people to plan and give confidence to the markets than we have a plan.
Unfortunately I think politics gets in the way of what is sensible financial planning.

The government also needs to recognize that growth is unlikely to be as optimistic as the budget planning had hopped. The global economy isn’t rebounding with great vigor and we will need to adjust our planning to account for this.

While we have got plenty of positive coverage for the tough austerity measures taken so far, and deservedly so IMO, the underlying reality is that all this has barely reduced the deficit.
And Ireland will still have the largest deficit in Europe by quite some margin for a few years.

So for all our talk of being past the worst we still have several very tough budgets to get through. And in some ways the later budgets will be harder as more of the easier cuts/taxes are enacted we will be left with far more difficult options that are harder for the public to stomach.

IMO the government banking policy has been crisis driven from start to finish. We have jumped into decisions without thinking through the consequences. The latest announcement looks like it has been put together at the last minute.

The idea that senior bondholders should not suffer losses has been a mistake.
Regardless of whether people think that this is fair distribution of losses I think the reality sinking in is that Ireland may not be able to afford it.

Provinces in Malaysia are now issuing 25% of civil servants pay in gold…

Dinar coins which have been issued by the state of Kelantan, are not legal tender.

This is an Islamic issue rather than lack of faith in the ringitt.

Much private wealth remains in Ireland and a property tax would be useful in tapping into this without impacting the job creation side.

It strikes me that an air of reality prevails in Ireland about the challenges ahead.

A small number of the 216 members of the Oireachtas can competently speak on economic issues.

The Labour Party in government will be reluctant to alienate the unions; Fine Gael will try and avoid imposing a property tax.

Oh for the days when the goose could be plucked without any hissing!

Ireland’ system of slow-motion government and the lingering death of Anglo Irish Bank:

http://www.finfacts.ie/irishfinancenews/article_1020529.shtml

Despite the crash, there isn’t a constituency for change among the political class and the vested interests from the trade union congress ICTU on the left to the business group IBEC on the right are prisoners of  conservative vested interests, afraid change would impact the benefits from existing closed shops and insider cronyism.

The entire strategy - if it could be graced with that name - is based on postponing the quantification of the banking system losses and avoiding recourse to the ‘Troika’ - EC/ECB/IMF. (We have had to rely on the good offices of Eoin to get a hint of what the Anglo split might look like: (see below)

“FBk:
Liabilities = c.56bn deposits (23bn cust, 26bn centr bks, 7bn interbank - assume all stay)
Assets = c.15bn NAMA bonds (36 x 0.45%), ARB bonds of 31bn, promissory note of 10bn

ARbk:
Liabilities = Fbk 31bn, Seniors 14bn, subs 2.5bn
Assets = c.37bn in loans with MV 31bn, 7bn in interbank loans, 8bn in promissory note”)

The fear of being forced into the arms of the Troika is the only thing maintaining backbench discipline, but political exhaustion is diminishing its efficacy and it is an entirely inadequate basis on which to contemplate tackling and implementing any of the measures you outline - not to mention the more deep-seated reforms required. Any alternative government will be composed of parties with strongly opposing views on these measures and the further reforms required, so this provides no salvation.

I acknowledge the cogent points you make about Greece’s experience, but I would contend that it is down to an unwillingness on the part of the governments of core EZ countries to allow losses to be imposed on their banks and pension funds that invested in Greece without due diligence. In addition, it appears that the IMF is making good progress on the internal reform programme (which, in many respects, resembles the measures you outline).

No resolution will emerge until the core EZ governments accept the need to impose some losses from investments in periphery on their banks and pension funds. Ireland’s current government is, and any alternative will be, incapable of implementing the internal reforms required. It is for these reasons I believe Ireland should opt for the Troika.

Bob tells us about the exchange rates. Making money in a market was never so easy ….
Bob went short real estate in NY in 2003 or so…. We all underestimate how long the high jinks can go on.

Please, friends and adversaries, get rid of your pieces of paper and keep what you own close by. Ireland is one of the worst markets for this. You know the options…..

Provinces in Malaysia are now issuing 25% of civil servants pay in gold and silver coin ….. Strangely the reports do not say they are being hoarded.