The possibility of renegotiating Ireland’s approach to fiscal policy in the short term

Reduce the threshold? WTF?

Tax cuts paid for by the Haddington Road blackmail…

Scrap the TV license. It’s a regressive poll tax that directly funds the lifestyles of a wealthy elite. It is also exactly the type of household charge that is driving the electorate insane.

You could fund a news/local sports/arts channel from direct taxation.

@tull

Without these degrees how will we educate the public that being poor is unpleasant? I suppose that we will have to continue to rely on Joe Duffy.

“let’s not give any credence to headbangers talking about renegotiating the MoUs, etc.”

The mood music really has changed. I can recall the time when it was sometimes acceptable to characterise non-headbangers as ‘economically illiterate’.

re: The Minister of Tax Bands:

“If I have the money that is where I will go. I would like to reduce the threshold at which people hit the higher rate.”

Based on what the minister says, that will benefit ALL taxpayers at the 41% rate by €210 euros for every rise of €1,000 in the low band.

An extension of the 20% band will be worth nothing to any person earning below €32,800, the vast majority of taxpayers. (953,000, from the above comment by Dan McLaughlin.)

IMHO, there is no room for tax cuts, but buckets of room for removing tax breaks, including the 4% PRSI tax break lavished on some of our elderly statesmen.

@stephen kinsella

I agree with you the vast majority of the time (not particularly comforting I am sure, I try to keep my agreement quiet) so sorry for the offence. The cut in taxation is a terrible idea.

I think however that it is easy in a situation where you are being victimized to start to thinking like the person who is victimizing you and so with political struggles too. Our government apparatus is now utterly focussed on measuring and meeting criteria that we should never have been subjected to and which hurts the long term well being of the Irish people.

The MOU and the SGP were terrible, terrible mistakes and they have to be confronted and reversed. Until these awful manifestations of European Union political and economic failure are dealt with the Eurozone crisis will continue. Without public and government opposition to the terms of the MOU and SGP they will never be undone so regardless of how hopeless it now seems we have to try.

@Ernie Ball

The Stability and Growth Pact, where the 3% deficit limit (on pain of further public suffering) is set EU wide.

Here is a suitably Orwellian Euro-edict: The corrective arm

The various pacts do not have anything about unemployment or poverty targets as far as I know. That is what the market is for. Obviously the problems go further back but the single mandate of the ECB is when the decision to go the full ordo was completely set, that is when we decided that politics would be replaced by financial and monetary rules.

@ Stephen Kinsella

If favourable economic and taxation trends allow the government to meet the 3% deficit target without further austerity, what is there to re-negotiate?

http://www.finance.gov.ie/sites/default/files/LOI%20to%20EU%20Signed%20Nov%202013.pdf

At this point, I think the government’s only hope of avoiding being fried at the next election is if there is a significant upturn in economic activity. Whatever they do in terms of juggling taxes and spending within a slow-growth 3% of GDP ceiling will not save them. Really the only lever they can plausibly push to boost growth that much that soon without heavy borrowing is to collaborate with other non-core EU governments to bludgeon the ECB into high volume quantitative easing.

Irish workers on average incomes still pay very little tax on their income (USC, PSRI etc included, once benefits are taken into account), and recent tax increases in this area should not be reversed. The same applies for water charges and local property tax – these remain at low levels in international terms and the country will benefit from bedding down these charges as the new normal.

It’s not going to save them, but it might actually be a good idea for the government to reverse policy, ditch water charges, and continue to pay for water out of general taxation. Ireland is one of the few countries where there’s no real need to conserve the raw material – untreated water.

For a lot of the population, most of the costs of delivering water are fixed. They are about providing the infrastructure, not about the volume of water that flows through it. So, while charging by volume sounds like a good idea, in the Irish context it really is not that great. Add in the cost of meters, meter reading and billing – maybe 20% of total costs – and we end up paying a lot more for our water because we pay for it separately from our taxes without significant compensating benefits.

Just because almost every other country in Europe has a shortage of fresh untreated water doesn’t mean we have to behave as if we do too. In Ireland, metering water is electorally dumb, and economically hard to justify.

A little quote from the Irish Times:
“Prof FitzGerald, who prepared a paper with ESRI colleague Edgar Morgenroth on Irish Water for the Department of the Environment in February 2012, and who has been a member of a review group in Northern Ireland looking at the water utility there, said the economic argument for metering was questionable, given the €500 million plus cost of installing meters.”

@ otto

That would be just too simple! The ideas you suggest are all on the list of general recommendations from the Troika. The two that really hurt politically are, however, the property tax and water charges. These were on the list of things that had to be done and are difficult, well nigh impossible, to renege on, even if the capacity to make a mess of their introduction has been amply demonstrated. The fact that they are simply bringing the country into line with other countries of the EU is seldom mentioned. Or that the Troika never set out to micro-manage any of the programme countries.

The USC is home-grown but it has the inestimable value of being levied on all income in a country where many are of the view that they should pay no contribution whatsoever to the cost of the benefits they receive and quite a few get away with it. However, it is a blunt instrument and some changes there may be in the offing.

@ TMD

I am still waiting for a reply on what needs to re-negotiated with the Troika.

As to the famous letter, in case you missed it, the MOF commented recently in the Dáil that it was like the Third Secret of Fatima; it may prove to be a bit of a disappointment.

@Otto

Comparing the tax burdens of workers in different countries only makes sense if you consider the public services they receive for those taxes. What does someone on 70k a year get in return for a marginal tax rate well north of 50%?

Re water, there is one great reason for having water charges – we can’t afford to supply water without them.

That the Troika insisted on water charges should make ditching them all the more attractive to a government desperate to placate the electorate.

@JF,
The alternative is paying for water through our taxes, which in the Irish context is likely to be cheaper.

@Johnny Foreigner

Here’s how the game you’re playing works:

1) Cut public-sector spending to the bone;
2) Complain about how bad the public sector is;
3) Goto (1)

What you seem to be insisting on is that the public sector improve to, say, Scandinavian levels while being funded at levels way below that. Only then do you think it worthy of investment.

Meanwhile, a look at this graph shows that, at least in education, the Irish public service is delivering Scandinavian outcomes at a fraction of the cost.

@ Ernie

All you ever wanted to know about the USC and were afraid to ask!

http://www.revenue.ie/en/tax/usc/

@Ernie
SGP?

Believe or not,
The S stands for stabilty. We haven’t any.
The G stands for growth. We haven’t any.
The P stand for pact. A pact that that does not deliver.

@DOCM

All income subject to DIRT is exempt. Therefore the so-called Universal Social Charge is universal in name only. Which means that when you said it was “levied on all income,” you were misstating things.

Meanwhile, Piketty comes out swinging at the Financial Times: http://www.nytimes.com/2014/05/30/upshot/thomas-piketty-responds-to-criticism-of-his-data.html?hp

Off topic:

I want to get in touch with Brendan Walsh. His UCD address no longer works. Any ideas? Merci.

@DOCM
But is the exceptions that weight most heavily on the psyche of the masses.

@ All

Off topic but of interest the election to the European Parliament of a representative of Die Partei.

http://en.wikipedia.org/wiki/Die_PARTEI

“In the European Parliament election 2014, the PARTEI won 0.6% of German voters and thus one of the German seats. Top candidate Sonneborn announced that all candidates from their list, starting with him, would take the seat for one month, then retire and thus get the most money out of the European Union. He also said he believed that they were “not the craziest party in the European Parliament”.”

Who said the Germans do not have a sense of humour.

It may be worth mentioning that the reason the party gained a seat is because of a decision by the Constitutional Court that the normal 5% hurdle did not apply no doubt because in its view in an earlier ruling the European Parliament lacks the requisite democratic legitimacy of being based on the principle of one man one vote. It seems to have overlooked the fact that neither is the election to Bundesrat in Germany as is normal in bi-cameral systems. Indeed, the structure of EU institutions is strongly influenced by that in post-war Germany. Go figure!

http://www.hertie-school.org/blog/germanys-hurdle-race-bottom-abolition-3-hurdle-european-elections-germany/

Fiddling while Rome burns comes to mind …

Angela’s Fiscal Corset & Promissory Note ‘commitments’ need to be tossed in the bond-fire …. the flatulent systems of money and corporate power can easily bear it …. and, thankfully, the wind direction is favourble …

… simply figure out the needs of the Irish Citizenry and act accordingly. This is basically what leadership in a functioning Republic does …

@DOCM

Not in my experience of other European countries. They seem to have a citizenry capable of making informed decisions based on facts and figures.

The Irish people would like to collectively apologies to you for our ignorance and irrationality.

Is there anything we can do to win your approval? We know that the results of the European elections and the general atmosphere of rebelliousness among the EU’s great unwashed is very painful for you so please just let us know how we can help.

@ All

As a footnote to the off-topic item above, the German foreign minister, Steinmeier, and head of the – junior – SPD party in the governing coalition, has now opined in a wide-ranging interview in the FAZ that consideration should be given to an agreed common EU-wide minimum threshold for elections to the EP. This has little or no possibility of being agreed and simply serves as a distraction to the source of the German difficulty viz two more idiosyncratic decisions from the country’s constitutional court. It remains to be seen what influence the rather negative public reaction, given that the consequences have been multifarious – including, possibly, the very poor showing by the CSU in Bavaria – will have on the pending decision by the court on OMT (when it has the decision of the ECJ on the points referred to it which should, in principle and in law, be the final one).

DOCM,

A post in a couple of installments.

A)
Steinmeier’s musings didn’t appear anymore on the FAZ main page when I was looking around noon, probably due to the very negative reactions to it.
Instead the headline was loud mouth Habermas was ranting what a totally undemocratic thing it would be if the next EU commission president would be selected according to the written rules : – )

Steinmeier is probably mostly sour grapes and to a lesser part a typical represent ant (this wording is a suggestion of my word program : -) of those (predominantly in Germany left/green) “elites”, who think they represent the “true” people, despite having no majorities, and then go jurisdiction shopping. If they lose their case repeatedly at the German Supreme Court, why not try to get some EP law. If Green party folks loose public referendums, try the Unesco, rare species, false claims of cheaper alternatives , to topple majorities …… : – )

In contrast to most other European countries the majorities parties in Germany have been pretty stable.

To characterize a 40.5% CSU vote in Bavaria, more than twice than for the next party as “very poor showing”, in the 4th and most irrelevant election this year, probably depends very much on a very specific point of view, or shall we just say bias?

Especially if you count the rest of the decisively “conservative” or more right parties to a total of 61%

A typical non-city voting district looks like this: http://www.bundeswahlleiter.de/de/europawahlen/EU_BUND_14/ergebnisse/kreisergebnisse/l09/k09471/

The CSU has an inherited iron lock on the direct mandate

DOCM,

I think you missunderstood something. Where was there any negative reaction to the Supreme Court decision on the removal of the hurdle beyond the enemies of the constitution at the Spiegel?

The reaction in the comments at the FAZ was uniformly negative against the “enemy of the constitution” Steinmeier, who wants to overturn the Supreme Court Decision.

I think the majority of Germans is very aware that the endless alien attacks on the Bundesverfassungsgericht come from people who try to break treaties and steal from their neighbors, and therefore do not like the rule of law : – )

But the times of “Germany must” are over : – )

@ronan

Well that’s the best I have to go on so far! 🙂
I tried an outfit called publicpolicy.ie that he seems to have some association with but no joy from their info address.

@ francis

I am no fan of Steinmeier or Schaeuble trying to solve a domestic problem by extending it to the rest of Europe. Attacking the bona fides of sources that you happen not to like is not an argument. I am only interested in the actions of Germany that impinge on the EU and the interests of all member countries, especially those sharing a common currency. I have hazarded the view that a constitutional court wedded to idiosyncratic judgments loses credibility and this will deter it from pulling the house down when it “reviews” the decision of the ECJ on OMT (which it has no right to do unless all the constitutional courts in 27 other member states have an equal right).

Time will tell!

@francis

.

@DOCM

.

@all

Negotiating with Germany at the mo is a lot like the IRA negotiating with Thatcher. Waste of time ….

Time for some ‘ballzy unilateralism’ of a genuine Hibernian variety.

Ireland is neither part of Schengen nor NATO.

As of now all anti German Terrorists are dead or in / through prison.

Or do I miss somebody?

Schäuble and Merkel have been repeatedly to Greece ….

DOCM,

on this we can agree, that an open conflict between the ECJ and the BVG s very unlikely.

Just for completeness for some other folks, the wordings were “within our mandate, …. whatever it takes”

and “strict conditionality”