The politics.ie alternative 2010 budget

johntrenchard

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Since the budget to end all budgets is looming , which the prospects of the IMF knocking on the door, I thought it might be a good idea to kick off a serious discussion on what a politics.ie alternative budget would be, by harnessing the cumulative brainpower of politics.ie contributors, no matter what your political persuasion.




To kick off here's the 2010 estimates of receipts and expenditure as published by the government.

http://www.budget.gov.ie/Budgets/2010/Documents/whitepaperfin2010.pdf

Some overall highlights:

Total receipts for 2010 : 35.9 billion

Total expenditure for 2010: 57.8 billion

Balance : -21.9 billion

Government balance (% of GDP) : -13.5%

The pdf is worth reading , such as Note 1 on page 6 which breaks down tax receipts, and Note 2 on page 7 , which breaks down expenditure per department.

Of course more detailed reports and links are welcome , and if anyone contributes these to the thread I will add them to this opening post for reference.

So put your thinking caps on - what would you cut or protect from cuts? what taxation changes would you implement? what economic stimulus suggestions would you advocate? There are loads of questions to ask, but hopefully the discussion in this thread could be combined into a definitive "Politics.ie" alternative budget, which David could publish on budget day perhaps. ( or we cant agree perhaps a left, right and centrist budget )

The floor is yours.
 


He3

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Good idea.
 

roc_

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a. Cut the NAMA budget and any other budgets dedicated to trying to prop up the property market, and to providing salaries and contracts to the sector - let it recover in its own way, set real market forces free.

b. Cut salaries to the quango classes. Disband 90% of these quangos.

c. Put a cap on any and all public sector salaries to a limit of 80,000 per year.

d. Cut out completely all tax breaks, subsidies, and most grants, and instead allow the open market to regulate business activity without government interference.

e. Implement a land value tax on any resident of the state who owns total assets of value above two million euro - Then, develop a land value taxation system from these beginnings to be able to encompass the whole island within five years. Let this kind of taxation gradually assume the burden from taxation on productive activity.

f. Cut all politician wages (national and local level) to average industrial wage so that there is some chance of them reflecting the real interests of the people.
 

johntrenchard

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Some interesting reading here.

Department of the Taoiseach , foreign travel costs

October 2010 Report
Car Hire : Taoiseach's visit to Atlanta , 13th-15th July : €2724.69
Air travel: Dick Roche, 10 Oct-13 Oct , Copenhagen return: €864.04
Air travel : Private secretary to Minister Roche, 24 Oct - 26 Oct , NYC return: €822.20
Source:
http://www.taoiseach.gov.ie/eng/Publications/Publications_2010/Foreign_Travel_Costs_October_2010.rtf


More :

September foreign travel:
http://www.taoiseach.gov.ie/eng/Publications/Publications_2010/Foreign_Travel_Costs_September_2010.rtf

August foreign travel:
http://www.taoiseach.gov.ie/eng/Publications/Publications_2010/Foreign_Travel_Costs_August_2010.rtf

July foreign travel:
http://www.taoiseach.gov.ie/eng/Publications/Publications_2010/Foreign_Travel_Costs_July_2010.rtf

June foreign travel:
http://www.taoiseach.gov.ie/eng/Publications/Publications_2010/Foreign_Travel_Costs_June_20101.rtf

May foreign travel:
http://www.taoiseach.gov.ie/eng/Publications/Publications_2010/Foreign_Travel_Costs_May_2010.rtf

April foreign travel:
http://www.taoiseach.gov.ie/eng/Publications/Publications_2010/Foreign_Travel_Costs_April_2010.doc


Suggestions:

i) All trips which are a legal requirement because of EU treaties , such as visits to Brussels for the council of ministers, should come out of the EU budget.

ii) A ban on all other foreign trips for the next 4 years as part of the 4 year budgetary plan. Foreign relations can be managed by our embassies, or via the EU Diplomatic Action Service.


iii) The above ban would be exempted for the Taoiseach in the case of unforeseen "acts of God" that are world changing e.g. the funeral of an assassinated President Palin, memorial service for the victims of the nuclear attack on Paris... etc etc.. HIGHLY unusual events which will require a presence from our Taoiseach for international solidarity reasons.
 

Barnacle

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On tax issues, these are some of the areas that I would look at.


Its going to be a savage budget, some of the areas I would look at are:-

Stop giving Tax Relief at source to those who do not pay tax. E.g. Artists get tax relief on their mortgage payment even though they do not pay tax. I think this also applies to Health Insurance.

Enforce collection of outstanding PRSI

Abolish or cap earning limit on a joint basis for Home Carers Credit

Harmonise PRSI (34 classes of PRSI is crazy) and abolish PRSI ceiling. Complex and difficult to bring in immediately. In the meantime, charge the appropriate rate of PRSI to all rental income rather then applying only the levy to some

Abolish or reduce Exemption Limits for tax purposes or have one flat rate (no distinction for age)

Abolish Age Tax Credits

Introduce a third rate of Tax - Not sure what rates I would apply as I think this should be incorporated with adjustments to the tax banding's, would need to think about this one further

Cap Mortgage Interest Relief on privately owned Commercial Properties in the same manner that applies to RIP's.

Apply a total cap on employer and employee contributions for the purpose of tax relief not just on the employee element.

Allow Pension Tax Relief at basic rate at source. Application for further tax relief made and averaged on average tax paid with upper limits.

Alter the rules on Special Contributions to only allow the contribution to be an average of the past three normal employee contributions excluding the company year of payment

Abolish the three years averaging rule Final Salary Calculations.

Change the uplifting scales for calculating service to a minimum of 20 years for Pension and 30 for Tax Free Cash.

Property Tax I believe is inevitable but should not be introduced until such time that it can be applied on a fair basis (same with Water Rates). Those living in a property on their own should get a 25% reduction in the property tax charge.

Reduce Retirement Relief to €250k per person or even abolish it

Reduce the relief given under the Cycle to Work scheme or abolish it

Restrict losses which can be offset against Company Profits

Abolish or revisit Flat Rate Farmers VAT and reclaims on construction for unregistered farmers

Reduce Business Relief and Agricultural Relief to 50%

Close down the unviable hotels and do not introduce a cut off point for clawbacks of Capital Allowance

Capital Expenditure on items such as Computers, Phone Systems, Computer Software (end use software), etc. to have an immediate capital write off

Public Sector pay to be reduced but it has to come from the top down.

Charge to existing Public Sector Pension in payment

Close existing DB PS pension schemes and introduce new DC Scheme with employer and employee contributions ring-fenced

Wealth Tax of 1% on all wealth with the exception of PPR above €1m (including Discretionary/Family Trusts – apart from trusts for disability)

Reduce limits for Capital Acquisition tax or increase the tax rate to 30%

Means Test Child Benefit although difficult under current system

Apply unilateral tax relief on Medical Insurance (obviously with the exception of those who do not pay tax)

Charge retired Public/Civil Servant a premium where they are re-employed within the service or those who sell their knowledge outside, i.e Retired Teaches being re-employed, Frank Daly retired Revenue Chairman on massive pension being employed by NAMA.

Abolish Added Years of Service in the Public/Civil Service in all cases apart from Ill Health or Death

Abolish non application of Actuarial Reduction prior to age 60 in all cases apart from Ill Health and Death

Abolish Stamp Duty Relief on transfer of assets between spouses apart from cases such as Divorce or other bona fida reasons

Leave Corporation Tax as it is but close loopholes which allow profits to be taken off shore or offset against factitious losses such as lease companies
 

johntrenchard

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Didn't realise the defence budget was so large.
I would cut that over the duration of the next 4 years, by withdrawal of all defence forces from overseas operations.

To compensate, negotiate a fast track citizenship program with the Americans for any Irish national who wishes to join the United States military.

For extra revenue in the defence sphere, I would lease out harbours for military purposes to NATO, with lease arrangements to provide a guaranteed income over the course of the next 20 years, if not further. ( and no , i'm not talking about a Gitmo level of $1 a year.. we could easily lease out in the hundreds of millions)

NATO harbours would obviously have spin off benefits to the local communities in terms of supply of basic products, security cleared work, construction etc etc., and possibly long term, the development of an indigenous defence manufacturing industry.


I would also look at the €1.5 billion being paid to the European Union - I would cut that to zero for the duration of the 4 year plan, thus saving an estimated €6 billion over 4 years.


Apologies if the above sound radical to folks. But we are in a hole and we need to get out of it.
 
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I would cut that over the duration of the next 4 years, by withdrawal of all defence forces from overseas operations.

To compensate, negotiate a fast track citizenship program with the Americans for any Irish national who wishes to join the United States military.


I would also look at the €1.5 billion being paid to the European Union - I would cut that to zero for the duration of the 4 year plan, thus saving an estimated €6 billion over 4 years.
You do realise that when Irish forces are serving abroad for UN or anybody else are actually paid for by UN.
 

dotski_w_

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You do realise that when Irish forces are serving abroad for UN or anybody else are actually paid for by UN.
Interesting (I didn't know that).

Perhaps we should increase the size of the army and send them off to any mission that'll take them - we'd sort the deficit out in no time! ;)
 

dotski_w_

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I would also look at the €1.5 billion being paid to the European Union - I would cut that to zero for the duration of the 4 year plan, thus saving an estimated €6 billion over 4 years.

Apologies if the above sound radical to folks. But we are in a hole and we need to get out of it.
More barking mad than 'radical', I'm afraid. If you think we could just stop paying our transfers from the EU and expect the transfers from them to keep rolling in....
 

johntrenchard

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On tax issues, these are some of the areas that I would look at.
some good ideas there.

one area i would disagree with would be relation to tax credits - i would abolish the tax credit system entirely, thus eliminating a layer of bureaucracy in the government and saving millions.


Would move back to a benefits system that is entirely means tested.


To compensate for the abolition of tax credits, I would force the banks to renegotiate the terms of mortgages for folks , so that the mortgages are extended , and thus this would result in lower per month outgoings which should compensate for the withdrawal of tax credits.

Secondly , via the data collected by NAMA, I would find out the average mortgage on various types of homes , and write off the surplus.

For example, if the average for a 3 bedroom house mortgage comes to €300,000, and somebody has one for €400,000, i would force the banks to take a hit on €100,000 and reduce that 400k mortgage to 300k.

( Of course that example is HIGHLY simplistic , but it could be calculated depending on region, house size etc etc... not forgiving all of the mortgage, but at least getting it down to something manageable )
 

Gobuchul

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just looking at the figures and I googled the total budget for 2008. Now maybe I got the total figure from the wrong site, but it appeared to be in the order of 53 billion.

Assuming I'm wrong (which i probably am) but in 2 years with pay cuts accross the board an cuts saving us billions, how has the total budget gone up to 57.9billion.


If the figures are wrong then ignore, or ridicule at your leisure, otherwise genuinely confused.
 

johntrenchard

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You do realise that when Irish forces are serving abroad for UN or anybody else are actually paid for by UN.

if our defence budget is 700 million, and the UN is giving us €1 billion, then obviously we're in surplus. And that would be a good thing.


If you have figures for that UN contribution, please do let the thread know.
 

johntrenchard

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More barking mad than 'radical', I'm afraid. If you think we could just stop paying our transfers from the EU and expect the transfers from them to keep rolling in....
Negotiating strategy. I said it would be part of the 4 year plan.

I didn't say that it would be permanent.

It does not make any sense for us to be giving out 1.5 billion a year to the EU , while the ECB is bailing us out.

The 1.5 billion effectively means nothing because of the scale of the ECB bailout.

If we could slash that to zero for 4 years, it would be part of a strategy to get us back to growth and become a net contributor to the EU once again.

The 1.5 billion could be ringfenced and incorporated into an EU managed capital projects program for Ireland, for example. We could then end up with real tangible assets , rather than NAMA green fields.
 
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johntrenchard

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just looking at the figures and I googled the total budget for 2008. Now maybe I got the total figure from the wrong site, but it appeared to be in the order of 53 billion.

Assuming I'm wrong (which i probably am) but in 2 years with pay cuts accross the board an cuts saving us billions, how has the total budget gone up to 57.9billion.


If the figures are wrong then ignore, or ridicule at your leisure, otherwise genuinely confused.
One answer - social welfare. Bear in mind that unemployment has shot up hasnt it? Plus tax revenue has collapsed since 2008.

The day-to-day expenditure for 2009 is 45.5 billion, for 2010 , 50.2 billion

However capital expenditure has been slashed from 14 billion in 2009 to 7.6 billion , thus showing a total decline from 60 billion to 57 billion

http://www.budget.gov.ie/Budgets/2010/Documents/whitepaperfin2010.pdf

table 1.
 

dotski_w_

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Negotiating strategy. I said it would be part of the 4 year plan.

I didn't say that it would be permanent.

It does not make any sense for us to be giving out 1.5 billion a year to the EU , while the ECB is bailing us out.

The 1.5 billion effectively means nothing because of the scale of the ECB bailout.

If we could slash that to zero for 4 years, we would be part of a strategy to get us back to growth and become a net contributor to the EU once again.

The 1.5 billion could be ringfenced and incorporated into an EU managed capital projects program for Ireland, for example.
LOL! If there's a grown adult who can read that without laughing out loud, we're all fecked!
 

roc_

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One answer - social welfare. Bear in mind that unemployment has shot up hasnt it?
How much is full dole benefits for, say, 250,000 people?

250,000 x 195 x 52 = 2.5 Billion... Not much in the scale of things really is it? Certainly doesn't account for the figures like you say it should.

And if you want to include things like rent allowance, medical cards, legal aid , in that figure, well then I think it should be clarified that this component really should be referred to as landlords' dole, doctors' dole, lawyers' dole ... and that the high levels of these are really down to other underlying factors such as cartelism and rent-seeking and high cost of doing business and sense of entitlement of certain classes (not the welfare classes).

Also, it should be noted that the high level of budget for welfare also includes a large component that goes to pay for high salaries and inefficient work practices.

You know - if you just transfered 150 euro a week to every man, woman and child in the country (basic income idea), the bill for that would be 30 billion.

There's something wrong somewhere - but I think that heaping the blame on welfare recipients or at least making the implication, is the wrong way to think about it.
 

dotski_w_

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What are your suggestions, besides trolling?
its not trolling to point out that you're proposing things that would actually cost us money. You said this was for Budget proposals - if the M/Finance "announces" in his Budget speech that Ireland was going to stop making these transfers, that's not "negotiations", it's financial suicide. We'd lose greater transfers in, would be in breach of EU rules, and bond prices would go through the roof.

As for even considering it in the medium term following "negotiations" that really stupid. If the Commission were to propose this to the Council. and the Council were to accept it, why not for Greece? For Portugal? For Spain? For Hungary? And for net contributors like the UK who've been trying to get out of their transfers would jump on it like a shot.

How would you "negotiate" this at the European Council, exactly, and get them all to just be nice to us?

There is no chance of it working, and you call into question your sanity in thinking that it would.
 


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