Wednesday Newspaper Review - Irish Business News and International Stories - - October 15, 2014
By Finfacts Team
Oct 15, 2014 - 2:08 PM

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Irish Independent

Finance Minister Michael Noonan put more money in the pockets of almost every sector of society in his first of three planned giveaway budgets. However, many householders may not be much better off when their water charges bills start arriving in the post in January.

Budget 2015 marked the first time since the start of the economic collapse in 2008 when there were social welfare increases and tax cuts.

The Government began reversing some of the austerity measures that were introduced over the past six years with extra spending and tax cuts worth just over €1bn.

The Christmas bonus for social welfare recipients will be partially restored this year.

Child benefit will increase by €5 a month next year and another €5 in 2016.

This was a Budget with a little something for everyone. There was relief for workers and those on low incomes with some cash for water charges, while first-time buyers were given a boost by not having to return some of their savings to the taxman.

The end is nigh for the hated pension levy, and our EU neighbours will be happy that the 'double Irish' tax rule is going.

The Government will also provide a Christmas bonus, albeit very modest, while parents will enjoy a €5 hike in child benefit payments.

But while the Coalition insists that everyone is a winner in this Budget, not everybody will be happy. The self-employed, many of whom provide much-needed jobs, can feel rightly aggrieved that they're being hit with higher tax bills.

Many workers in the over-stretched health sector will feel some of the largesse should have gone their way, while students will be hit with higher tuition fees.

A married couple with two children earning €12,000 a year will query why they only get €5 a week, while someone earning €100,000 will get three times that.

THE country’s trade surplus bounced back in August to reach €3.34bn – the largest so far this year.

The value of exports increased 6pc to €7.4bn compared with the same month last year in a strong set of figures.

Analysts said the latest data from the Central Statistics Office (CSO) suggested an impressive performance for the crucial sector.

The value of imports increased by €147 million, or 4pc, to €4,12bn in August compared with August last year.

The trade surplus recovered from the €1.9bn gap in July, which was the lowest since the end of 2007.

Irish Times

The Government’s decision to end the controversial “double Irish” tax arrangement used by multinationals to slash their tax bills has received prominent coverage in the news and media around the world.

Most of the British broadsheets covered the announcement with the Guardian noting that Michael Noonan’s move may pre-empt crackdown measures hinted at by the UK chancellor George Osborne last month.

The Financial Times also saw the ending of the arrangement as a pre-emptive step to get ahead of a growing international campaign to clamp down on corporate tax avoidance.

Chris Johns: Some of the clearest messages of the budget were, amongst other things, deeply cynical. Anyone who earns €70,000 or more (or who merely aspires one day to earn that much) is on their own. As is anyone who is self-employed. The political calculation that allows Fine Gael to abandon this part of the electorate is where the cynicism is revealed. The government can still expect loyalty from higher earners and the self employed because the alternatives are so much worse: vote for us and we will merely torture you: the opposition, if given power, will seek to bury you.

A self employed person earning €100,000 a year now faces a USC tax rate that is almost the same as the maximum total rate of tax paid by any corporation that graces Ireland with its presence. That self-employed person, unlike the corporation, also faces a 40 per cent marginal income tax rate, not to mention PRSI. And one of the most glaringly inane parts of the tax code, the differential between PAYE and self-employed tax rates is, it seems, not worth mentioning, let alone addressing.

Minister for Finance Michael Noonan said if Permanent TSB, the 99.2 per cent government-owned lender, needs to raise capital after European stress tests this month, it can do so in the markets and not upset State finances.

“Permanent TSB is strong, very well managed and becoming profitable again,” Noonan told reporters in Dublin during questioning yesterday on the nation’s 2015 budget.

“If they require extra capital, they’re strong enough to get the small amounts of capital they require in the markets, so we don’t see any risk to taxpayers.”

Permanent TSB, the smallest of Ireland’s three surviving bailed-out lenders, is most at risk of failing European Central Bank stress tests this month, according to Merrion Capital and analysts including Ross Abercromby with debt ratings firm DBRS.

Irish Examiner

With the upturn in the economy, the minister for finance had a number of key objectives for Budget 2015.

These were as follows:

* Maintaining Ireland as an attractive location for foreign direct investment;

* Supporting our SME sector, in particular farming and construction;

* Reducing the income tax burden for low and middle income earners.

To preserve our tax reputation the ‘double Irish’ structure is being abolished and will be replaced by a ‘Knowledge Development Box’. This will be along the lines of the patent and innovation boxes which have existed for many years in other countries, and the intention is that it will be best in class and at a low competitive and sustainable tax rate. It is interesting to note that the phasing out period for the double Irish for existing companies will extend up to 2020.


Euro Topics: The Turkish army bombed positions of the Kurdish PKK party in south-east Turkey on Monday night, according to observers. Relations between the two sides had worsened recently over Ankara's reluctance to join the fight against the IS. President Recep Tayyip Erdoğan is more afraid of the Kurdish nationalists growing stronger than of the IS, commentators write, and fear the end of the peace process between Ankara and the PKK.

Erdoğan sacrifices Kobane: Turkish President Recep Tayyip Erdoğan would rather sacrifice the embattled border city of Kobane than allow the PKK to become stronger, the Catholic Italian paper Avvenire believes: "On the one hand Erdoğan wants to topple Syrian ruler Bashar al-Assad once and for all. To that end he's even willing to negotiate with the IS (which he's already done with the exchange of hostages). On the other hand he wants to prevent an all-too evident rise of the [Kurdish] Peshmerga from putting wind in the sails of Kurdish nationalism and once again giving the PKK a leadership role in Kurdistan. ... In short: better to have an IS caliphate on its doorstep than annoying Kurds at home. How else should the airstrikes on positions of the PKK within the Turkish border be interpreted if not as the threat of a potential civil war? Erdoğan and his Prime Minister Ahmet Davutoğlu have decided: Kobane can very well be sacrificed for the sake of cold-blooded, cynical reasons of state."

Madrid must let separatists vote: After cancelling on Tuesday the independence referendum which had been banned by the constitutional court, Catalonia's President Artur Mas plans to hold new elections of a plebiscite character instead. To prevent such escapades, Madrid should take the initiative and reach out to the Catalans, the left-liberal Madrid daily El País recommends: "If many Catalans still haven't withdrawn their support from the independence movement despite its unclear objectives and rebellious attitude, it is because they are united by a common cause: the will to vote. This affair can only be resolved by letting the people vote - in a responsible, unimpeachable, legal and non-controversial manner. ... It is up to the politicians to decide the how, when, on what and validity of that vote. Either the government takes the initiative on this matter or it too will be swept along by the incoherencies of the most impracticable visions."

France won't budge on budget row: The Eurogroup has upped the pressure on France to fix its budget. Eurogroup chief Jeroen Dijsselbloem said on Monday in Luxembourg that he expected the French government to present a "very solid and correct draft budget" for 2015. But France will not cede in the conflict over its budget, the left-liberal Dutch daily De Volkskrant suspects: "The French are convinced that Europe doesn't want an all-out confrontation. The political cost would be too high. You couldn't give Marine Le Pen a better gift. It would spur on the already rapidly growing Euroscepticism, and the position of pro-European politicians like Valls and Hollande would be further undermined. Moreover an open conflict between Germany and France would shake trust in the Eurozone. ... France is confident that it will get its way."

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