Ireland received a significant boost in its bid to seek an extension to the maturities of its bailout loans last night after finance ministers of the countries that share the euro currency backed the deal.
Yum. Tasty carrot.
While agreement has been reached in principle to extend the maturities, the scope and technical detail of how the extension of maturities will be implemented have yet to be worked out. If agreed by European finance ministers today, it will fall to the bailout troika to devise the technical details of the proposal.
Thwack! Keep moving debt-donkeys.
HOUSEHOLDERS have now reached a point where they cannot bear more tax hikes in the Budget, experts warn.
A family with one income of €55,000 and two children is paying an extra €3,400 a year in taxes and levies since 2008.
A sixth austerity Budget next month will be too much for large numbers of people to cope with, the Irish Tax Institute said.
But next month’s Budget is expected to see the introduction of a property tax that is expected to cost a family with a €350,000 home €875 in tax in a full year. The charge is likely to be set at a rate of 0.25pc on the value of the home.
President of the tax body
Martin Phelan said more taxes would mean people will spend less, some will work less, while there will be a growth in the black economy.
“A small base of people are contributing vast amounts of revenue for the Government. It is getting to a dangerous level with fewer people paying more and more taxes with less income,” Mr Phelan said.
And an additional €2.25bn is expected in expenditure cuts. But the tax body said there should be an even greater emphasis on spending cuts, as it would be too damaging to the economy to tax income earners even more.
There is a limit to how much more can be imposed, the tax
body said. Changes to income tax, the introduction of the universal social charge, the removal of tax reliefs and child benefit cuts have meant those still in a job are paying vastly more tax since the economic downturn hit in 2008.
There are now 1.8 million income taxpayers, down 300,000 from 2007, the tax institute said.
Plans to introduce water charges and a property tax will mean there will have been 10 new taxes imposed on households in the last four years.
These include the income levy and the health levy, which became the universal social charge.
Also included are carbon taxes, the second-homes tax, the household charge, the domicile levy on high earners, the pensions levy on private sector retirement funds and the insurance levy.
IRELAND’S dramatic success in getting back into the bond markets threatens to cost us a deal on our debt.
But this won’t disguise the fact that he is coming back empty-handed.
Mr Noonan likes to remind listeners that his country is meeting 120 out of 120 conditions imposed under the bailout.
Jean Claude Juncker was speaking in Nicosia after the first session of an informal meeting.
He said the question of securing a deal on the reduction of Ireland’s banking debt would be discussed again in upcoming meetings.
EU Commission Vice-President Olli Rehn said that the quality of the outcome of those negotiations is more important than the time schedule.�
Mr Rehn said Ireland is going through an economic rebalancing which was necessary.
The government will probably fail in its bid to secure an accord to reduce its legacy banking debt by the end of October, two people with direct knowledge of the talks said.
European Economic and Monetary Affairs Commissioner Olli Rehn said in July that concrete proposals on the Irish question would be presented to euro-area finance ministers in September before a final decision in October. The details are unlikely to be on the agenda when ministers meet in Cyprus next week, said one of the people, who asked not to be identified because the talks are private.
His comments follow a clamour from some Irish politicians and economists who believe the letters sent to Mr Lenihan contained threats that somehow forced him into a bailout. They now want the letters published.
Weekend media reports also suggested the letters contained threats but did not provide any quotations or evidence to back-up the assertions.
Without seeing the letters, it is impossible to know whether the ECB was simply expressing concern about the safety of the tens of billions of euro the bank pumped into the Irish economy or something more sinister. No media outlet, government minister or ECB president has ever published the letters and the Department of Finance and ECB’s freedom of information units have declined to release the letters.