Sunday 17 December 2017

Dan White: How the budget is going to hit you hard in the pocket

The Government now needs to find at least €4bn in tax rises and spending cuts. The taxpayer will be fleeced. Here are the 10 ways Brian Lenihan is going to hit you in the pocket in December

1 Scrap the Croke Park pay deal: With public-sector pay gobbling up almost €20bn a year, a third of day-to-day spending, the Government is going to have to tear up the Croke Park deal which guarantees no public sector pay cuts or compulsory redundancies until 2014. Expect further pay cuts and serious cuts in public sector numbers in the budget.

2 Tax children's allowance: Paying children's allowance to every family in the country, regardless of their wealth, has never made any sense. Fearful of alienating female voters, the Government has shied away from grasping this political nettle. Until now. Expect children's allowance payments to be made taxable in the Budget.

3 Increase road tax: Anyone who has bought a low-emissions car since 2008 has ended up paying a fraction of the annual road tax which they used to pay, with many motorists now paying a third or less of the road tax that they used to. With the Greens, whose idea this largely was, on the way out, expect this gap to be significantly narrowed.

4 Raise company tax: For years Ireland's 12.5pc tax rate on company profits has been sacrosanct. This has annoyed the hell out of the European Commission and other EU member-countries. Now that we are so utterly dependent on the EU, the introduction of a higher company tax rate in the Budget, probably to either 15pc or 17.5pc is an absolute no-brainer.

5 Put up "carbon tax": Last year the Government introduced a new "carbon tax" of €15 a tonne. Expect this to be at least doubled on December 7. As a measure which can be dressed up as saving the planet, it has the double political benefit of being something that can be blamed on the Greens while at the same time being used to placate the junior Government partner for removing the road tax advantage enjoyed by low--emissions cars (see 3).

6 Cap public sector pay: As it tries to secure public support for yet more tax increases and public spending cuts, the nonsense of senior Irish public sector employees being among the best-paid in the world, Brian Cowen earns more than David Cameron, cannot be allowed to continue. Expect the budget to introduce a cap on public sector pay of €150,000 per individual per year or less.

7 Introduce a flat-rate property tax: The desperate situation in the public finances means that the issue of a property tax, something which every other developed country has, can no longer be avoided. The success of the second-home tax shows that this is a relatively easy source of new revenue.

8 Introduce water charges: Like a property tax, this is another new tax whose time will come on December 7. Forget all of the Blarney about smart-metering and water being a scare resource -- in Ireland where it rains up to 300 days a year. This is about money.

9 Tax the lower-paid: Almost half of those in employment pay no income tax. This might have been an affordable luxury in the good times but not now. Expect all of those in employment to be brought into the PAYE net on December 7, possibly through the introduction of a new 10pc income tax rate for those on low incomes.

10 Bring forward the date of the Budget: With the Government now effectively locked out of the bond markets, we can't afford to wait until December 7. We have got to end the uncertainty as quickly as possible. The only way this can be done is for Brian Lenihan to bring forward the date of the Budget and get the pain out of the way as soon as possible.

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