The Irish Independent reports that
householders are set for a reprieve of at least a year on the payment of
Although the water tax is scheduled to come in next year, there are strong
indications the introduction will be delayed until at least 2015.
Ministers are concerned about a possible backlash from the public about the
new tax coming so soon after the introduction of the controversial property tax.
Two ministers yesterday indicated water charges would be postponed.
Junior Finance Minister Brian Hayes told the Irish Independent it was up to
the Government -- and not the bailout team -- to decide when water charges would
come into effect.
He said there was "quite an amount of work" to be done before the charges
were applied, including:
* The level of free allowance.
* Exemptions from the charges.
* How the regulator consults with the public.
The primary concern is the rollout of water meters to every home to avoid
having to bring in a flat-rate charge, which would be regarded as unfair.
Mr Hayes's comments were backed by Tanaiste Eamon Gilmore last night.
The Tanaiste is currently visiting Turkey on a four-day trade mission and it
was reported last night that he said the meters will not be installed in time
for charges to be introduced next year.
"There will not be sufficient metering done by January to allow a charging
regime to come in."
Mr Hayes said he was not second-guessing what approach the Coalition would
"There is quite a lot of work that needs to happen between now and then. But
ultimately it is a matter for Government and I think the Memorandum of
Understanding makes it clear that we will have the introduction of water rates.
As to when it is going to be is really a matter for the Government," he said.
Mr Hayes said he would also be concerned about water charges coming in before
meters were installed.
"I think it's important that the system is clear, it's transparent for
everyone, that the issue of the free allowances is resolved before that happens.
So there might be quite some time between that actually happening and a decision
being taken," he said.
Environment Minister Phil Hogan said last week the official date
for the introduction of water charges still remained January 1 next.
But he also indicated there may be further discussions with the
EU-IMF bailout team about deferring the introduction.
Mr Hogan said the exact date was an issue for Finance Minister
Michael Noonan and Public Spending Minister Brendan Howlin to discuss with
the bailout team.
In the intervening period, the minister said he was operating on
the basis water charges would start on January 1, 2014.
But water charges are expected to be delayed until the end of 2015
as concerns mount that making people pay before meters are installed could
lead to a repeat of the household charge fiasco.
Government sources admit there was a view substantially more than
50pc of water meters must be installed before people are billed.
Ministers want to avoid assessed charges -- based on estimated
water usage -- which will be paid by houses without meters when the water
tax is introduced. Assessed water charges are likely to be based on house
size, and they would be hugely damaging politically.
These bills would be a precursor to full metering. The installation
of meters begins this summer.
Meanwhile, the Government is cranking up the pressure on
public-sector workers voting on the Croke Park II deal with a minister
warning cuts to premium pay and overtime will be back on the table if the
agreement is rejected.
Junior minister Brian Hayes says these "unsustainable elements" of
premium pay and overtime rates will be looked at again if the Government has
to unilaterally cut pay.
"I think union leaders should not pretend to their membership that
in any unilateral decision that the Government may have to take, if this
thing is not accepted, that there will be better terms and conditions," he
The Irish Independent also reports that the Revenue has issued over 2,000 more letters to pensioner demanding tax
repayments in an operation that has already netted €6.4m.
However, the same operation also discovered that some pensioner were paying
too much tax and €1.1m was refunded, reducing the amount clawed back to €5.3m.
There was controversy last year when more than 100,000 pensioner were issued
with letters warning them that they might owe tax if they had not declared their
state pension of up to €230 per week for tax purposes.
Even though they were all receiving another private pension, it turned out
that many of them had no tax liability at all.
But the Revenue switched to a more targeted approach and went after 2,600
older people with personal pensions worth over €50,000 as well as the state
It has now moved on to another group of 2,200 older people with personal
pensions worth between €30,000 and €40,000 as well as the state pension.
The Revenue told the Irish Independent it had already recovered €6.4m in
taxes and penalties from the first batch of 2,600 pensioner.
And it insisted that it could still reach its €45m tax target, as it
continued to work its way through the list of liable pensioner.
Many concerned pensioner have been contacting their local TDs to ask them
about the Revenue tax demands.
It is understood that in many cases the repayments are around €1,000 and that
Revenue is allowing people to pay back the money over a number of years.
The campaign kicked off as a result of the first comprehensive exchange of
pensions information between the Revenue and the Department of Social
The Revenue realised from looking at the information that many pensioners
with a personal pension had not declared their state pension for tax purposes.
But of the 115,000 pensioner contacted by the Revenue last year, it emerged
that around 20,000 had paid too much tax. The Revenue has confirmed that they
were given refunds worth €1.1m -- an average repayment of around €55 each.
The Revenue has not yet revealed if its operation will soon move on to
pensioner with personal pensions worth under €30,000 as well as social welfare
pensions. It said the results of the latest trawl would "inform our approach
However, the Revenue is expanding its operation to include not just
retired PAYE workers but also retired self-employed business people who have not
declared their state pensions.
The Irish Times reports that
Ireland’s high income-tax rate is hindering inward investment and the
development of new businesses, Minister for Jobs, Enterprise and Innovation
Richard Bruton has said.
Commenting on the Forfás Costs of Doing Business in Ireland report, which found
Ireland’s marginal rate of income tax, at 52 per cent for employees and 55 per
cent for the self-employed, higher than most of the State’s competitor
countries, Mr Bruton said the Government must begin reducing the income tax
burden “as soon as possible”.
“Tax rates of over 50 per cent on average incomes damage inward investment and
entrepreneurship, and make too many people question whether they would be better
off not working at all,” he said.
Marginal tax rates (the tax paid on an individual’s last euro of income) are in
excess of 50 per cent for single individuals earning €32,800 per annum,
according to the report published today.
Mr Bruton said the Government must look carefully at the burden of labour
taxation on competitiveness, if it wants to sustain and improve the levels of
investment and jobs.
“If we are to sustain and accelerate the transition in our economy and the jobs
recovery that has begun, then this Government must continue to keep its promise
to avoid any further increases in the burden of taxes on work.”
The report found Ireland’s tax wedge on labour (the gap between what the
employer pays and what the employee receives) has widened for all income
categories as a result of changes to tax bands and credits and the universal
social charge. The wedge is significantly higher for higher income earners – a
financial disincentive for skilled internationally mobile workers.
“The tax wedge is important from a competitiveness perspective for a number of
reasons – it affects the cost of labour for the employer, it partly determines
labour supply, and it can impact on Ireland’s ability to attract high-skilled
labour,” the report said.
Forfás said a competitive tax regime was essential for attracting and retaining
individuals in Ireland and for encouraging people to remain. It concluded the
increases in personal taxation in 2010 and 2011 have eroded cost-competitiveness
and the incentive to work.
The report also found the cost of legal services had increased since the boom,
despite a significant reduction in other business costs. Solicitor fees are now
11 per cent higher than they were in 2006.
The report said the drop in business costs was driven by dramatic reductions in
property-related costs and falling prices across a range services.
The cost of constructing a prime office unit fell by 32 per cent over 2007-2011,
while the cost of renting an office unit has fallen by 45 per cent. The price of
computer programming and consultancy services, and advertising and media
services are almost 5 per cent lower than in 2006.
Notwithstanding the reductions, energy costs remain a cause for concern,
according to Forfás, as Ireland is the fourth most-expensive location in the
euro area for electricity and diesel.
The price of legal services has proven sticky and not adjusted downwards to the
degree expected given economic circumstances, Forfás found. Legal service prices
(excluding barrister fees) were 11 per cent higher in 2012 than 2006, despite
Forfás said there was potential for further legal reforms including the creation
of a single-tier counsel system and the opening of conveyancing to suitably
qualified professionals other than solicitors. In addition to enacting the Legal
Services Bill, it said reform of court procedures would offer significant
potential for costs.
While Ireland’s cost competitiveness has improved since 2008, over half of the
improvement is accounted for by favourable exchange rate movements (ie a weak
euro making Irish exports cheaper in non-euro markets).
Forfás chief executive Martin Shanahan said structural reform is required to
ensure that the improvements seen to date in cost and competitiveness
performance are embedded in the economy and enable Ireland return to strong
economic and job growth.
The Irish Times also reports that the recent bad weather could be to blame for a 14 per
cent drop in the number of new homes and extensions being built.
The national housing construction index also found a 3
per cent fall in planning applications made between January and February
compared to last year.
Data showed commencement notices, which record when a
building project starts, rose in five counties including Dublin, where there
was a 17 per cent rise.
There were 624 new builds at the start of 2013
nationwide, compared to 726 a year earlier.
Danny O’Shea of Link2Plans, which issued the figures,
said the largest growth was in
Monaghan (20 per cent), Mayo (60 per cent) and Roscommon (78 per cent),
while some counties plunged below the national average including Westmeath
(-79 per cent), Waterford (-55 per cent) and
Cavan (-52 per cent).
But he did not see the falls as cause for alarm.
“In the January/February analysis period, I believe that
a key factor at play was the bad weather, explaining why many projects have
yet to get off the ground,” he said.
Elsewhere he said the outlook is positive despite the
decline in planning applications from 1707 in early 2012 to 1664.
“Offaly, Limerick and Wexford exhibit the largest
percentage application drop, but with increases in eleven countries, the
outlook for coming months is potentially positive,” he added.
The Irish Examiner reports that the Government
could be looking at €16bn in fresh losses through its stakes in the banking
system and Nama, according to the IMF.The
potential losses, which would be the equivalent to 10% of GDP, are based on the
economy failing to grow over the next few years. The IMF report was carried in
yesterday’s Sunday Business Post.
The IMF’s ninth quarterly review of the economy, released on Wednesday, raised a
number of concerns about Ireland’s ability to make a sustained re-entry to the
market when it exits the bailout programme later this year.
The banks face a mounting mortgage arrears crisis. It is not yet clear the scale
of these losses as they work their way through their distressed loan portfolios.
As part of the troika review, the Central Bank is scheduled to conduct a series
of stress tests of the banks to determine the losses likely to incur.
Finance Minister Michael Noonan wants the tests to coincide with EU-wide bank
stress tests scheduled for next March. However, IMF mission head to Ireland
Craig Beaumont wants the tests completed before Ireland exits the bailout in
November. Central Bank chief economist Lars Frisell said on Friday the date of
the stress tests still has to be finalised.
It is unclear who will supply the capital if the banks need to be recapitalised
following the stress tests. The IMF wants funds from the European Stability
Mechanism to be used. Germany, Finland, and Holland are opposed to this.
The biggest uncertainty is growth. If the growth rate averages 0.5% over the
next few years, then debt will grow to unsustainable levels.
The unemployment rate would rise, worsening mortgage arrears, and Nama losses
mount as the property market fails to recover.
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