Irish Budget 2010 Ireland, Lenihan, Cowen, Tax, Taxes, Irish economy, 2009, December, 9, date, spending cuts, borrowing, McCarthy, Bord Snip, Cutbacks, economic : Finfacts Ireland

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IRISH BUDGET 2010

IRISH TAX SUMMARY 2010

FINANCE BILL 2010

Summary of main provisions here.

Reactions from accountants, economists and other vested interests to Budget

Examples of the impact of the changes on taxpayers and welfare beneficiaries

Tax revenues have reverted to 2003 levels, but day-to-day-spending on services has risen by 70% in the meantime.

The top 4% of earners now pay 48% of all income tax;
The top marginal tax rate is now effectively 52%
50% of earners pay no income tax at all.

The Department of Finance Budget website provides access to support documents.

See complete table of links at lower end of page.

Irish Budget 2010: Interest payments on the national debt will increase by €2bn to €4.6bn in 2010

Irish Exchequer Returns for November show deficit of €22 billion

Irish Live Register total increased 900 to 423,400 in November; Unemployment rate remains unchanged at 12.5%

Ireland 2009: People of the Year, Brass Neck and Golden Fleece Awards!

SUMMARY OF BUDGET
The detail is as delivered from the bottom up:
- Our plan is working, the Minister concluded
- Minister says the innate advantages that brought the boom have survived the downturn
- The economy has turned the corner and export figures are healthiest in Europe
- The tourism budget to be increased to boost number of visitors to Ireland
- €50m of carbon tax yield will be used to help those at risk of fuel poverty and €130 million allocated for energy efficiency measures
- A VRT exemption for electric vehicles; reliefs for hybrid vehicles extended to 2012
- Corporation tax rate of 12.5% is not to be changed and the Three-year corporate and capital tax break for startups to be extended
- VAT to be cut by 0.5% from January
- Excise duty on alcohol to be reduced, must be passed on to consumer; 12 cent per pint of beer and cider; 14 cent per half glass of spirits; and 60 cent per standard bottle of wine
- Financial regulator to examine 6 month moratorium on proceedings arising from arrears to 12 months for all lenders
- Mortgage interest relief to abolished entirely by 2017
- Launch of a medium-term national savings product as an additional source of funding for capital investment; a product of this kind would enable ordinary citizens to provide money to the State to stimulate economic recovery and create employment. "I am announcing today the Government’s intention to introduce a National Solidarity Bond aimed at small investors. The National Treasury Management Agency and my Department are working on the details of the Bond and I expect it will be open for investment early in the new year."
- Lenihan said the Government has accepted the recommendations of the Commission on Taxation on the need for a property tax
- €9½ million is being made available as support measures for the food industry to enhance the competitiveness of this key indigenous industry; and €36 million will be allocated to an Employers Job Incentive Scheme giving PRSI exemption to encourage employers to take employees off the dole. Further details will be announced by the Minister for Social and Family Affairs
- €14 million is being made available, in addition to €26 million from the EU, for supports to redundant workers in eligible companies under the European Globalisation Adjustment Fund
- Fás to get €56 million for short term courses
- €136 million to be allocated to provide 26,000 training places for the unemployed
- Roads, housing and education among investment priorities
- Public services spending to be reduced, mainly through efficiencies rather than cuts
- Rates of payment will revert to 2006 levels in child benefit
- Child benefit to be reduced by €16 per month
- No cut in State pensions planned
- Further cuts for younger claimants
- Jobseekers and supplementary welfare allowance to be reduced to €150; for persons aged 20 and 21 years of age who have no dependent children is being reduced to €100 per week and for those aged between 22 and 24 to €150 per week; and for all other cases, the rate will be reduced to €150 per week where job offers or activation measures have been refused.
- Social welfare to be cut 4.1%
- A 50 cent charge is to be introduced for every medical card prescription item from next April
- The Minister said the Government wants high earners availing of tax incentive schemes to contribute more in the current difficult times
- The effective rate of income tax for those benefiting from reliefs will increase from 20% to 30% on top of which they will also pay PRSI levies
- He said represents a significant tightening of the restriction which will yield approx €55m in a full year. The entry point to the restriction will now occur at adjusted income levels of €125,000 will the full restriction applying at €400,000.
- The Government has provided for an adjustment of €1bn in capital spending, and has also pencilled in an adjustment of about €2bn in day-to-day spending for 2011.
- Hospital consultants will see their pay cut by up to 15% under the Budget measures.
- Review of the current arrangements and consideration linking pensions to increases in the cost of living; pending that review, "I do not intend to apply the pay cuts I have already outlined to existing public service pensioners"
- Pensions for new public staff to be calculated on career average; the minimum pension age for new public servants will also be increased from 65 to 66 and then linked to increases in the state pension age.
- The State's pension bill to grow to 13% of GDP by 2050
- Public sector pay to be cut by 5% on first €30,000 salary; 7.5% on the following €40,000 of salary and 10% on next €55,000
- No pay increase for judges during lifetime of current Government as it is not possible to impose a pay cut because of the Constitution
- Taoiseach's pay to be cut by 20%; Ministers by 15%; 8% for Public staff with salaries from €125,000 to €165,000; 12% for those earning between €165,000 to €200,000;
- Permanent pay reduction of 12% for earners over €200,000
- Savings of over €1bn on public sector pay bill is provided for; €760m on social welfare; €980m on day-to-day spending programmes and €960m on investment projects.

The Minister for Finance on Thursday Nov 23, 2009 published the Pre-Budget Outlook report, which says "the worst of the decline may have passed." Taxes are back to 2003 levels while current spending is up more than 70%.

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These are grim days for the Irish economy; a feast has become a famine and for the second time in a generation, the trustees of the democracy have been responsible for monumental economic mismanagement.

Some of us warned about the risks of casino economics and it may be galling today that the same people who were cheerleading Irish investors as leaders of commercial property investment across Europe, have belatedly adopted a new mantra on the "smart economy" and the ambition for Ireland to become the European Silicon Valley.

There are no easy options and developing new industries and markets, is always a challenge, even at the best of times. It's a pity indeed that political leaders and much of the population, fell for the delusion that the the free lunch had been invented.

There is reason for hope; a broken political system of limited accountability where the buck stops nowhere, which remains virtually unchanged from the time of British rule, can be changed and despite the negatives in recent years, Ireland remains an attractive location for foreign direct investment.

Property related taxes accounted for 17% of total tax receipts in 2007 - - up from 4% in 1995 and this manna from heaven fuelled ridiculous salary levels for a small economy.

The special public benchmarking award of an average of 9% was the greatest misuse of State funds in the history of the State.

Many in the private sector also gained through public spending largesse and professional cartels.

On the positive side, more than 85% of the workforce are employed and for those who have secure employment, the saying: "I was sad because I had no shoes, until I met a man who had no feet," should be kept in mind.

In the modern money economy as tens of thousands of people struggle with broken lives, wonder how you would cope and try to adjust children's' expectations at Christmas time to grim times when the consumerism of plenty is in your face, at every turn.

It's hard for an unemployed person not to feel a failure while the people who so negligently left an economy experiencing a temporary boom, so unprepared for a downturn, will never be in want, including a senior minister who has kept temporary workers doing his teaching job for 20 years.

Those who are unemployed are enduring a double whammy.

Unlike public staff who have pensions linked to current salaries, many of the unemployed can only look forward to the basic old age pension.

The ESRI (Economic and Social Research Institute) says current revenue will be €33bn in 2009 compared with €48bn in 2007.

Current spending rises from €41bn to €46bn.

The net General Government balance will be a deficit of €21bn in 2009 and €20.5bn in 2010, giving a deficit/GDP (gross domestic product) ratio of 12.9% in 2009 and 12.8% in 2010.

The €400m shortfall each week is a reality.

So the Government's €4bn plan of new taxes and spending cuts for 2010, are only the start of a process to reach the 3% deficit/GDP Euro Stability and Growth Pact target by 2013.

The ESRI says in 2004 total unemployed averaged 88,000; this figure could be as high as 324,000 in 2010. The longer-run cost can be seen in the increase in the General Government Debt, rising from 25% of GDP in 2007 to 75% in 2010.

20% of total tax revenues will go on interest on the national debt by 2013.

Every vested interest that have pleaded for exemption from the McCarthy/Bord Snip public spending proposals, have not found it necessary to propose alternative cuts.

It's a fantasyland world that will take time to adjust from.

In future weeks we will update this page with with information relevant to the Budget:

	Irish Exchequer Returns for November show deficit of €22 billion
	Irish Budget 2010: Economy is heading back to 2004/2005 size; Household spending model may be in process of permanent change
	Irish Budget 2010: Interest payments on the national debt will increase by €2bn to €4.6bn in 2010
	Ireland 2009: People of the Year, Brass Neck and Golden Fleece Awards!
	Irish Live Register total increased 900 to 423,400 in November; Unemployment rate remains unchanged at 12.5%
	Retail Ireland says cross-border shopping in November will cost 1,700 jobs; Cheap alcohol biggest attraction
	Employment in Irish industry fell 21,300 in 12 months to Q2 2009 despite rise in pharmaceutical production; Private sector unit labor costs also dipped
	Irish Income/Living Conditions 2008: State benefits accounted for more than 22% of household income; More than 20% of households were in arrears on payments
	Statistical Yearbook of Ireland 2009: Population, labour force, education, crime, the economy, agriculture, industry, services and much more
	Pre-Budget Outlook says "worst of...decline may have passed"; Taxes back to 2003 levels - - current spending up 70%+
	European Commission extends period for Ireland's fiscal adjustment by one year to 2014
	Irish Economy: Goodbody says recovery will be U-shaped; Private sector debt levels will increase to 225% of GDP in 2009 - - among highest of developed world
	Eurozone will return to gradual growth in 2010 and Ireland by 2011 when Irish debt/GDP ratio will rise to 96%
	Irish Economy: Ernst & Young says Irish fiscal deficit will remain above 5% of GDP until at least 2014
	IBEC delivers Irish tribal conservatism not needed radicalism
	ICTU calls for return to 1980s era Irish income tax rates with combined top rate of 65%
	Public pensions accrued liability over €108bn; Irish trade union leaders' pay/benefits top €200,000
	Half of Irish adults under the age of 45 have no occupational pension
	Sick leave in Irish civil service almost doubled since 1980s; Average employee absent for over 11 days in 2007
	ESRI paper confirms Irish public/private pay premium for comparable jobs jumped from 14% to 26% in 2003/2006
	Irish Economy: ESRI says modest growth will return in H2 2010; Budget deficit will be -12.8% of GDP in 2010 despite big cutbacks
	The Central Bank forecasts slightly smaller contraction of the Irish economy in 2009
	Commission on Taxation Report 2009 - - Proposals on Irish tax overhaul
	Goodbody says recovery will be U-shaped; Private sector debt levels will increase to 225% of GDP in 2009 - - among highest of developed world
	Davy forecasts GNP growth of 4% in 2011; Ireland to exit recession in Q1 2010
	Irish "Budget Perspectives" 2010 Conference: Property tax could account for fairness/ability to pay; Social partnership is interest/pressure group model of decision making
	ESRI paper confirms Irish public/private pay premium for comparable jobs jumped from 14% to 26% in 2003/2006
	NAMA Business Plan: Government forecasts Irish “bad bank” profit of €4.8bn by 2020; €15bn worth of loans will default; Adviser fees of €2.64bn expected
	Some Irish land will have to be dezoned says planning board head; Ireland has 88 planning authorities for population of 4.4m
	Political and economic reform in conservative Ireland and the promise of an "everlasting boom"
	The Waste Land - - Bord Snip, Irish Public Spending Transparency and the motto "Never do anything for the first time"