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Supplementary Budget

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Here are some suggestions for the Minister for Finance to consider when he is obliged by circumstances to present a supplementary budget early in the new year in response to the disastrous economic downturn which is still gathering momentum.

They should be implemented in the context of a realistic, attainable five-year plan for which the support of the social partners and opposition should be sought. Given that these are unlikely to acquiesce even though they offer no alternatives other than to strut, whine and oppose, the government should, for once, show real leadership and forge ahead on the grounds that there is no alternative and early action is crucial. Most people will accept pain provided it is seen to be fairly distributed and there is hope at the end of the tunnel. The alternative is much higher unemployment, cutbacks, emigration and extreme hardship which will take a decade to unwind.

As those who gained most from the Celtic Tiger should pay the most, the income levy percentages should be extended on a sliding scale from 0% for the lowest paid up to, say, 10% for those on the highest incomes. Alternatively, a new higher tax rate should be introduced for those earning more than, say, double the average industrial wage.

Given that payroll costs account for half of all public sector expenditure where salary rates are well ahead of equivalents in the private sector and internationally, the Government should roll back the first benchmarking exercise and plead "inability to pay" other than to the lowest earners under the new national wage agreement. It should only recommence payment of increases once major reforms have been confirmed by An Bord Slash.

Taxpayers can no longer be asked to subside "gold plated" pensions for politicians and public servants when the value of their own pensions (if they have one) is dropping through the floor. The Government should establish a realistically funded contributory pension scheme in lieu of the present prohibitively expensive and inequitable "pay-as-you-go" arrangement. As a stop gap, full PRSI should be applied across the public sector and, in recognition that PRSI is income tax in all but name, earnings limits should be removed for all workers in the private sector.

The foregoing measures will arrest the catastrophic deterioration in public finances and enable the new standard VAT rate of 21.5% to be reduced substantially. This will help the lower paid as well as assisting tourism and curtailing cross-border shopping.

Finally, the Dail should immediately start sitting for four full days every week for at least forty weeks a year. To ensure genuine debate and better decision making, backbenchers should be pressurised by constituents to exercise greater freedom of expression in Dail debates, and voting linked to constituents' needs rather than party loyalties should become the norm rather than the exception.

Lead letter published by Irish Times on 8th December 2008.

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1 Comment

Brian

Am somewhat surprised that your last comment in relation to this critical topic.

I think that many people are of the view that the state pension will more than cover them in their old age!!

Whilst we have had green papers and many reviews carried out by the Pensions Board-this topic in to be made simple and put in terms that we all understand.

Many factors need to be made simple/explained to people and the impact that it will have on their finances during this process

1. the retirement age which has recently been increased to 68 and then later to 70

for example if people retire at 60 they will have a hole to fill between the age of 60 and 68!!

2. Mandatory pensions-why not start them from the time people commence work until they retire.

Such mandatory savings would have to be cheap and ringfenced so that there are no shocks when people come to retire following 30 plus years of savings.

3. The whole public/private issue needs to be made into a level playing field. If nothing else it will mean that the probability of social disorder will be lessened.

4. Annuities-why must an annuity be purchased??

Give people the choice of managing their own funds.

5. It must be made clear whether or not the state pension is to be means tested.

The finances of the state are noted however having paid PRSI (and having got little or no benefit during a working life) it is surely unfair to change the rules at the last hurdle and means test the state pension.

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This page contains a single entry by Brian published on December 5, 2008 3:00 PM.

Waste in FAS & Dail was the previous entry in this blog.

Rescuing the Banks is the next entry in this blog.

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