Categories Uncategorized Shifting tax burden and investment is way forward Post author By Alan Ahearne Post date October 4, 2014 24 Comments on Shifting tax burden and investment is way forward My thoughts on budgetary policy in the run up to Budget 2015 are here in today’s Irish Times. Related ← The Irish Case for LTV and LTI Caps on New Mortgage Lending → Dublin Economics Workshop 2014 24 replies on “Shifting tax burden and investment is way forward” @Alan You mention tax ‘cuts’ & spending ‘increases’ ….. Employers’ contribution to ‘social insurance’ is an area where Ireland is ‘bottom’ of the EU class ….. and too regularly ignored …. IBEC’s Myth Debunking is Just Bunk September 30, 2014, Michael Taft IBEC has published a paper entitled ‘Debunking Irish income tax myths’ At its core it contains misleading, highly selective and ultimately disingenuous arguments. In short, it is bunk. Let’s go through one of their main arguments and see where they are misinforming the debate.What IBEC Doesn’t Want you to Know – the ultra-low-tax on Employers IBEC bangs the tax-cutting drum because they want to keep out of the debate the fact that employers and businesses (their members) pay ultra-low tax rates compared to other EU countries. […] Irish employers pay the lowest rate of social insurance in the EU – only ahead of Denmark which doesn’t have a social insurance system. Employers’ PRSI would have to nearly treble to reach the EU-average – or an extra €8 billion. Now you know why we don’t have the public services and income supports that other countries have. http://www.irishleftreview.org/2014/09/30/ibecs-myth-debunking-bunk/ Important in terms of upcoming budget …. and the dominance of ‘Capital’ over ‘Labour’ around here …. Two items of interest! http://www.irishtimes.com/business/economy/murphy-points-to-central-bank-budget-warnings-1.1951590 http://www.irishtimes.com/business/economy/high-tax-country-debate-is-increasingly-juvenile-1.1948039 Juvenile is too kind a word. Vacuous and/or inane might be more appropriate. @docm Lobby groups lobby. And another from another country with the euro as its currency. http://www.leparisien.fr/economie/le-projet-de-budget-francais-risque-d-etre-retoque-par-bruxelles-04-10-2014-4187479.php @ UFC And the result is as I describe. There is something called objective assessment. In this instance, it might be described as the commonsense view of a majority of the electorate. I actually believe to be there. Of course, I may well be mistaken. UC, Lobbyists lobby. Docm is not averse to a bit of it. He is clearly in the first class carriage of the Euro Gravy Train. Professor Sinn on the state of the Euro Area countries. http://www.telegraph.co.uk/finance/economics/11140221/Hans-Werner-Sinn-eurozone-doomed-to-decade-of-crises.html The idea of a currency union as a kind of Lanigan’s Ball puts a bit of a dent in his general thesis. Sinn is really a lobbyist. Even if Leo Varadkar’s estimate that workers could be in line to gain by €5 or €10 a week, the governing parties, in particular the Labour Party, will likely get little thanks given the reaction to water and property charges. Meanwhile seizing over €2bn from pension funds was done with ease. Income tax is only 1.2% above target compared with total tax receipts at 2.5% – one third of the jobs added since 2011 are employee positions. Last Friday in its latest bulletin, the Central Bank noted on the change in national accounts standards that “goods owned by an Irish entity that are manufactured in and shipped from a foreign country are now recorded as Irish exports.” Obviously the suggestion that tax or employer PRSI might justifiably be raised has touched a nerve. How else to explain DOCM’s 4 content-less posts linking to various media propaganda. Meanwhile, Michael Taft’s demolition of IBEC’s misleading hokum goes entirely unanswered, because it’s unanswerable. Ireland is, as he irrefutably demonstrates, a low-tax country particularly when it comes to income taxes on the wealthy and employers’ PRSI contributions. But rather than criticise the piddling rate of employer PRSI contributions (which has everything to do with the poor pension arrangements for many), DOCM’s game is never to mention it and, instead target the remaining pension arrangements that are not (yet) inadequate, as though their very existence were some sort of scandal. The French minister for finance has a flexible view of the new budgetary rules. http://www.capital.fr/a-la-une/actualites/sapin-balaye-les-speculations-sur-la-reponse-de-bruxelles-concernant-le-budget-966065 The oddest feature of the debate in Ireland is summed up in this quote from yesterday’s IT leader; “The Central Bank, Irish Fiscal Advisory Council (IFAC), European Commission, Economic and Social Research Institute – to name but some – have all recommended making a €2 billion fiscal adjustment.” It suggests that the new role assigned to the Commission has simply not percolated through the political and media establishment in Ireland or anywhere else in the Euro Area; notably in France and Italy. The comments of the Commission – for the first time – on an Irish budget, post its presentation on budget day (!), are evidently not at the top of the political concerns of the coalition parties fighting over its details. This raises the question as to whether the new system has any real substance. At what point will DOCM’s posts be treated as the spam that they are? Ernie, how do you argue your slander of DOCM’s posts as “spam” ? And why are you so intent to infringe on free speech, trying to silence DOCM and others ? DOCM, The new system as you call it has no substance. No govt in Europe is going to keep to the fiscal rules in the face of a deepening recession. Hopefully, this will lead to a slump in the euro and a widening of spreads. Then the question can be put to the Axis powers…QE or not? Of course The likes of Francis will object but it is a fait accompli. @DOCM ‘This raises the question as to whether the new system has any real substance.’ No; it doesn’t. Angela’s Fiscal Corset has ‘zero’ empirical validity. There is not a sinn_gle social scientist on the planet who could provide sufficient empirical evidence on its ‘fictive numbers’ to grant it any cred whatsoever …. [nor is there one anywhere in The Federation h/t Seven_of_9] It results from Power – the flawed ideological faith of the OrdoLiberals …. who, as we know, have no respect whatsoever for empirical evidence; blind faith in the cultish creed is all. It is nonsense, an annoying nuisance, louzy law, and damaging to the EZ Citizenry …. Burn Corsets – burn, Burn, BURN! The answer to the question that I posed above seems to be yes, to the extent that the French government is – finally – taking some radical steps (if not enough in the eyes of Berlin). http://www.ft.com/intl/cms/s/0/e89df860-4c66-11e4-90c1-00144feab7de.html#axzz3FGZHVmwF The French finance minister denied in his earlier radio interview that France “was breaking any rules”. The argument, as possibly in Ireland’s case, will hinge on the definition of the “structural deficit”, a rather arcane concept on the calculation of which there appears to be considerable dispute between economists. “La discussion avec la Commission portera en particulier sur l’effort de réduction du déficit structurel, qui n’a pas été et ne sera pas aussi importante que prévu. La notion de déficit structurel, qui gomme l’impact du cycle économique, est désormais au coeur de l’examen des budgets par la Commission. Au lieu d’un ajustement structurel de 0,8 point promis par la France en 2014 comme en 2015, l’ajustement ne sera que de 0,5 et 0,6 point selon l’ancienne méthode de calcul et de 0,1 et 0,2 point selon une nouvelle méthode.” Ireland does not do draft budgets! Meanwhile, Schaeuble ploughs on with a balanced German budget at precisely the wrong historical moment. David, who in the real world cares one cent about the alleged gut feelings an unnamed “a sinn_gle social scientist”, or some deluded cicero text producer, sitting in a cafe in Brussels and looking for a job in advertising? The fiscal compact and its deficit reduction rules are the LAW. As far as I can see, I am the only one in this blog, who can and does comment on technical merit or not of papers. Very repeatedly, I don’t see people questioning my judgement, or …. evidence, links, arguments, data, …… where are they ? http://www.irisheconomy.ie/index.php/2014/10/01/presentation-of-geneva-report-thursday-october-2-at-noon/#comment-1369772 I do not only try very hard, but actually do provide arguments, based on pretty detailed links, simple to understand but correct and non-misleading calculations. @francis OK. Provide some empirical/theoretical social scientific evidence to support the ‘numbers’ in the Fiscal Compact. Francis, Anybody in small countries knows that some laws are not moral. In 18th century Ireland it was illegal for Catholics to own horses. We won’t talk about Germany 1933-45 or the legality of slavery in the USA up to 1863. Francis, You’re right that when it comes to silencing others, I’m just an amateur compared to your people. I have every reason to believe that DOCM is actually paid to post here. That changes everything. “The fiscal compact and its deficit reduction rules are the LAW.” When the facts change, Francis, the law often changes. TFC didn’t work. Does Germany really want to iterate its logic to the final conclusion ? Earnie, I believe you but if I was his paymaster, I would be worried about VFM. Seafoid, I was on a CC once when someone pointed out to a member of the Axis powers that adhering to the rules would destroy the system. The reply was along the lines that rules had to be obeyed irrespective of outcomes. You could hear a pin drop. The IMF documents from May/June are also pertinent to this thread. http://www.imf.org/external/pubs/ft/scr/2014/cr14165.pdf Comments are closed.