October 15th Early Evening: The Recession Diaries
Well, at least the business sector was happy. Not that there wasn’t the odd whinge - business spokespersons are forever whinging. ISME, especially, was in ‘bemoan’ mode.
‘The decision to increase excise duties, particularly on petrol is deplorable and will further add to business costs. Taken together with the increase in VAT, inflationary pressures will still be evident in the economy, which will negatively impact on consumer demand.’
Negatively impact on consumer demand - that’s a bit rich coming from an organisation which demanded all means of reducing consumer demand: wage freezes even more severe than what is contained in the proposed pay agreement, public expenditure cutbacks, job losses (no better guarantor of reduced demand than cutting jobs), etc. Sometimes its best to just shake your head and read on.
But more measured (and intelligent) business commentary was favourable. Mike Hayes of KPMG, for instance: he welcomed the confirmation of the low corporate tax rate, as if that were ever in any doubt; the increase in the R&D tax credit, the remission of tax for start-up companies, the cut in commercial property stamp duties, etc. He even seemed relieved that the capital gains tax was only increased by 2 percent (as opposed to a ‘knee-jerk reaction of imposing a significant increase’). The only thing that bugged him was increasing the betting tax - apparently ol’ Mike thinks that gambling is an important indigenous growth sector.
What does the business sector have to ‘give up’ for this? Not much. No recognition of the rights of their workers to bargain collectively, no commitment to provide universal pensions to all employees, no profit-sharing schemes, no commitment to transparency (as in publishing profit statements). All in all, a pretty sweet deal.
But there’s always a but: the Indo is concerned about the double whammy that owners of holiday homes will be facing. The 2 percent increase in Capital Gains Tax and the €200 a year ‘annual property tax’ is going to hit and hit hard. The Irish Auctioneers and Valuers Institute is particularly up in arms: ‘a stealth tax on investment properties’ is how they described this act of radical redistribution. Good grief: those selling their property will still experience a lower marginal tax rate than someone on low pay (22 percent as opposed to 27 percent). A €200 levy is not a stealth tax: it’s pretty visible, and pretty meagre. Still, given that the Institute of Professional Auctioneers and Valuers has called the tax ‘penal’, maybe the low-paid could take up a collection for the hard-pressed, hard-working owners of investment properties. It’s only fair.
Still,there is one group who have escaped all sacrifices - penal or otherwise: the indolent off-spring of the indolent rich, those young men and women who lay about in their underwear all day strumming their guitars, getting stoned, watching Star Trek reruns and waiting for mumsy and daddy to pop their clogs so they can get their inheritance and buy ever more top-brand underwear. Inheritance tax wasn’t touched at all. No 1% levy, no increase in the tax rate; while personal tax credits were cut in real terms, the thresholds for gifts and inheritances were indexed by the rate of inflation (it’s now over €500,000 tax free). That most unearned of incomes is now one of the least taxed of incomes.
And that’s the way it is in Fianna Fail-land.
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