• Due to a glitch in the old vBulletin software, some users were "banned" when they tried to change their passwords at the end of February. This does not apply after the site was converted to Xenforo. If you were affected by this, please contact us.




Servicing State debt 'costs each worker €3,400 in tax a year'

SPN

Well-known member
Joined
Feb 2, 2004
Messages
16,895
This is a topic I have been highlighting for nearly ten years, especially in relation to the nonsense we hear from the Left about "Austerity".

Ireland has seen the biggest Keynesian Stimulus ever tried, per capita, since 2007, and it is the complete opposite to "Austerity".

Now we need to look closely at implications of what we have done, and the costs we are storing up for the future whenever the Draghi Put sees interest rates return to normal, possibly after a period - a crippling period - of very high interest rates as the system rebalances from the extremes the Central Bankers are forcing at the moment.

Servicing State debt 'costs each worker €3,400 in tax a year'


The interest on the national debt is costing each worker in the State €3,400 in tax per year, the head of the National Treasury Management Agency has revealed.

That compares with €900 in 2007, NTMA chief executive Conor O'Kelly said.

The debt pile is €207bn, the equivalent of €102,000 per employee, he added. "That is easily the highest in Europe, by a mile," he said. "It's one of the highest ratios in the world."

Ireland's debt is now four times the size it was in 2007, when it was €47bn, and while the debt-to-GDP ratio is falling as a result of the growing economy, the level of debt is not, he added.

[.....]

"It is an extraordinary environment and that leads people to believe that the crisis is over and we can move on," Mr O'Kelly said.

[.....]

"It's like saying to a household who has a very big mortgage, some credit card debt, 'why don't you go out and borrow some more money'. It's very difficult no matter how cheap it is for us to access funds at the current time," he said.

"We have to recognise that we are still a very indebted nation."

Here is the chart.




To focus the mind, just imagine a scenario where the €20 Billion that has to be rolled over in 2020 was to command a modest 4.5% interest rate, and that we could find lenders who would lend to us at that rate.

Now do the same exercise at 6%.
 


SamsonS

Well-known member
Joined
Oct 22, 2009
Messages
4,737
The work that has been done "flattening" our Maturity Profile has been good. This is what it was like at the end of 2014 for the three cliff years.


2018 9,284 1,372 10,656 3,900 14,556
2019 14,543 3,753 1,776 20,072 20,072
2020 20,998 3,755 2,427 27,180 27,180

This is it now.
2018 9,280 (48) 9,232 3,900 13,132
2019 14,492 (77) 1,889 16,305 16,305
2020 19,548 (48) 2,436 21,936 21,936

The average interest rate we pay is around 3.3%, and while this average is going down due to the lower interest rates, it still costs close on a 7b a year, or 15% of tax income in 2015, admittedly down from 19% of tax revenue in 2013, but it was less than 4% in 06/07.

Its hard to know what should be done at the moment that's not being done. Persoanlly, I thought the NTMA should be borrowing more this year while rates are low in anticipation of whats facing us in 18-20.

Do you think that trajectory of our GGD has improved? Based on the various forecasts, it seems to be coming in below those year on year.
 

ManUnited

Well-known member
Joined
Nov 16, 2009
Messages
5,221
This is a topic I have been highlighting for nearly ten years, especially in relation to the nonsense we hear from the Left about "Austerity".

Ireland has seen the biggest Keynesian Stimulus ever tried, per capita, since 2007, and it is the complete opposite to "Austerity".


Now we need to look closely at implications of what we have done, and the costs we are storing up for the future whenever the Draghi Put sees interest rates return to normal, possibly after a period - a crippling period - of very high interest rates as the system rebalances from the extremes the Central Bankers are forcing at the moment.

Servicing State debt 'costs each worker €3,400 in tax a year'





Here is the chart.




To focus the mind, just imagine a scenario where the €20 Billion that has to be rolled over in 2020 was to command a modest 4.5% interest rate, and that we could find lenders who would lend to us at that rate.

Now do the same exercise at 6%.
Stupid.
 

GDPR

1
Joined
Jul 5, 2008
Messages
224,089
I find it incredible that we are still borrowing to fund day to day spending and talking about tax cuts in the same breath. Borrowed money at all time low rates, is still money that's down to be repaid at a future date, when the old two card trick of rolling over at lower interest rates is not likely to be available. There have been substantial efforts in recent years at paying down private debt, politicians of all hues need to cop the fook on and follow the lead of their highly indebted citizens, and learn some bloody lessons.
 

SamsonS

Well-known member
Joined
Oct 22, 2009
Messages
4,737
I find it incredible that we are still borrowing to fund day to day spending and talking about tax cuts in the same breath. Borrowed money at all time low rates, is still money that's down to be repaid at a future date, when the old two card trick of rolling over at lower interest rates is not likely to be available. There have been substantial efforts in recent years at paying down private debt, politicians of all hues need to cop the fook on and follow the lead of their highly indebted citizens, and learn some bloody lessons.
Tax cuts in isolation is not the issue really, as sometimes tax cuts can lead to more tax being collected, but in the context of an annual budget we could get to a balanced budget sooner, but with a weak government that's less likely.
For Ireland, assuming we do balance our budget in 17 or 18, and then begin to run a surplus, the issue will be will we use the surplus towards our debt, or spend it, and if we spend it more likely to go on current rather capital expenditure unfortunately.
 

Accidental sock

Well-known member
Joined
Nov 19, 2013
Messages
4,184
I find it incredible that we are still borrowing to fund day to day spending and talking about tax cuts in the same breath. Borrowed money at all time low rates, is still money that's down to be repaid at a future date, when the old two card trick of rolling over at lower interest rates is not likely to be available. There have been substantial efforts in recent years at paying down private debt, politicians of all hues need to cop the fook on and follow the lead of their highly indebted citizens, and learn some bloody lessons.
Tis the world we live in...

There's more debt in the world than money. Someone's gonna call in a debt eventually.///

Me? I've got a bunker, 6 months supply of tinned beans and pot noodle, and an AK47 for shootin' squirrels and such.

I also have a prototype wind powered solar panel...it's crap, but allows me to feel twice as smug as regular hippies.
 

SamsonS

Well-known member
Joined
Oct 22, 2009
Messages
4,737
Tis the world we live in...

There's more debt in the world than money. Someone's gonna call in a debt eventually.///

Me? I've got a bunker, 6 months supply of tinned beans and pot noodle, and an AK47 for shootin' squirrels and such.

I also have a prototype wind powered solar panel...it's crap, but allows me to feel twice as smug as regular hippies.
Witb that diet, think I'll take my chances on the outside.
 

Socratus O' Pericles

Well-known member
Joined
Oct 12, 2009
Messages
33,624
We should set about clearing all that debt immediately, we may have to live on beans, pot noodles and squirrels whilst we do it and also run out of trolleys but its the prudent thing to do............lets have some "real" austerity.
 

irishpatriot

Well-known member
Joined
Jun 12, 2014
Messages
392
Yes it does cost every worker but costs the corporations and wealthiest individuals nothing as they can choose not to pay tax.
 

HarshBuzz

Well-known member
Joined
Feb 28, 2008
Messages
11,936

HarshBuzz

Well-known member
Joined
Feb 28, 2008
Messages
11,936
Yes it does cost every worker but costs the corporations and wealthiest individuals nothing as they can choose not to pay tax.
More than 50% of all income taxes are paid by the top 5% of earners.

That's highly progressive by any measure.

The real issue is actually that low to average paid workers don't pay enough tax.
 

dresden8

Well-known member
Joined
Feb 5, 2009
Messages
14,937
More than 50% of all income taxes are paid by the top 5% of earners.

That's highly progressive by any measure.

The real issue is actually that low to average paid workers don't pay enough tax.
The real problem is that the top 5% are creaming all the money and low paid workers aren't paid enough.

If they were paid enough they'd pay more taxes.
 

HarshBuzz

Well-known member
Joined
Feb 28, 2008
Messages
11,936
The real problem is that the top 5% are creaming all the money and low paid workers aren't paid enough.

If they were paid enough they'd pay more taxes.
Your narrative is an attractive one. After all, who doesn't think they pay loads of tax and some nebulous 'rich' should pay more?
The problem is accuracy, or more correctly, the lack of it.

Low to average earners genuinely don't pay enough taxes to fund the service level that people want and expect.

Take Paddy and Helmut, both 30k earners in Ireland and Germany respectively.

Paddy pays 4483 in taxes.
Helmut pays 10167. More than twice as much.

To compare at the upper levels, take two comparable 100k earners. Call them Enda and Angela.

Enda pays 39482
Angela pays 43944
A very close correlation.

The Irish income tax is completely skewed away from low to average earners paying any reasonable levels of tax. Then people act all shocked when our services are underfunded.
The two are completely interdependent.
 

statsman

Well-known member
Joined
Feb 25, 2011
Messages
56,265
Tis the world we live in...

There's more debt in the world than money. Someone's gonna call in a debt eventually.///

Me? I've got a bunker, 6 months supply of tinned beans and pot noodle, and an AK47 for shootin' squirrels and such.

I also have a prototype wind powered solar panel...it's crap, but allows me to feel twice as smug as regular hippies.
You're going to eat good money? Fool!
 

Congalltee

Well-known member
Joined
Nov 10, 2009
Messages
6,210
Your narrative is an attractive one. After all, who doesn't think they pay loads of tax and some nebulous 'rich' should pay more?
The problem is accuracy, or more correctly, the lack of it.

Low to average earners genuinely don't pay enough taxes to fund the service level that people want and expect.

Take Paddy and Helmut, both 30k earners in Ireland and Germany respectively.

Paddy pays 4483 in taxes.
Helmut pays 10167. More than twice as much.
...and €3,400 of Helmut's tax take isn't siphoned off to banks to repay interest of borrowed money to pay for the 2008-16 lifestyles.
 

SamsonS

Well-known member
Joined
Oct 22, 2009
Messages
4,737
...and €3,400 of Helmut's tax take isn't siphoned off to banks to repay interest of borrowed money to pay for the 2008

Why did you start with 2008? You forgetting about all the increased expenditure from 2000 based on unsustainable taxes?
 

HarshBuzz

Well-known member
Joined
Feb 28, 2008
Messages
11,936
...and €3,400 of Helmut's tax take isn't siphoned off to banks to repay interest of borrowed money to pay for the 2008-16 lifestyles.
Doesn't that make the discrepancy even more stark?
 

statsman

Well-known member
Joined
Feb 25, 2011
Messages
56,265
We should set about clearing all that debt immediately, we may have to live on beans, pot noodles and squirrels whilst we do it and also run out of trolleys but its the prudent thing to do............lets have some "real" austerity.
Let's close a few hospitals and a university or two, while we're at it.
 

Uganda

Well-known member
Joined
Aug 17, 2013
Messages
9,633
More than 50% of all income taxes are paid by the top 5% of earners.

That's highly progressive by any measure.

The real issue is actually that low to average paid workers don't pay enough tax.
If you take two individuals - on on €25,000 pa, and the other on €125,000.

The latter earns 5 times the former.

The latter pays over 15 times as much tax as the former.
 

New Threads

Popular Threads

Most Replies

Top