20% of tax take to pay debt by 2014

[DCon]

AT least 20 cent of every euro paid in tax will be used to pay interest charges on the country’s national debt by 2014, according to new Department of Finance projections.

The Government borrowed €70 million a day to help run the country in 2009, which was last night branded by the opposition as "a dismal year for the Irish economy".

Finance Minister Brian Lenihan admitted that "the challenges we now face are great".

He warned: "The Government has maintained a tight control over public spending and this will continue given the reduced resources of the state."

Read more: 20% of tax take to pay debt by 2014 | Irish Examiner

The national debt has spiralled from €25bn in 2007 to €50bn in 2008 and €75bn in 2009.

The Government spent €2.5bn in the past year servicing this debt, meaning that 8c of every euro taken in by the state is used to pay off interest.

This will rise to a fifth of all tax by 2014.

Mr Lenihan said the impact of rising debt levels "is clear evidence of the need to take action to achieve long-term sustainability of the public finances".

Read more: http://www.examiner.ie/ireland/20-of-tax-take-to-pay-debt-by-2014-109086.html#ixzz0brybq5cL

[HanleyS]

It's OK! The economy is bottoming out! Recovery is on the way tomorrow in the form of the second coming in a tree stump in Leitrim!

It's shocking the lack of awareness around the country that this is a correction and not a blip.

[PaddyJoe McGillycuddy]

And I assume that these figures do not include the future costs of bank recaps and NAMA?

[Cassandra Syndrome]

Well, seeing that receipts will probably be 27- 28 Billion Euro this year and that National debt will hit nearly 150 Billion excluding NAMA before the end of the year, 2011's interest will be near 8 Billion and thats over 30%.

That's unsustainable. If our Bond yields were to go over 15% in 2011, which is possible our interest alone would totally consume our receipts.

[Digout]

Well, seeing that receipts will probably be 27- 28 Billion Euro this year and that National debt will hit nearly 150 Billion excluding NAMA before the end of the year, 2011's interest will be near 8 Billion and thats over 30%.

That's unsustainable. If our Bond yields were to go over 15% in 2011, which is possible our interest alone would totally consume our receipts.

This is correct, we will end up issuing a debt service bond....thats if we get that far.

[Cassandra Syndrome]

This is correct, we will end up issuing a debt service bond....thats if we get that far.

Next thing we will be appearing on one of those Ocean Finance ads!

[Digout]

Next thing we will be appearing on one of those Ocean Finance ads!

SCAMA is the nail in the coffin. This country is finished.

[hammer]

DigOut & Cassandra - On the button.

If our rating falls further which it will or if interest rates rise again we will be unable to repay interest on National Debt.

The problem is this will be 2014 and FG / Labour will be "hammered" by the adjustments they need to make due to the mis-management by FF / Green / Failed PDs.

[Digout]

DigOut & Cassandra - On the button.

If our rating falls further which it will or if interest rates rise again we will be unable to repay interest on National Debt.

The problem is this will be 2014 and FG / Labour will be "hammered" by the adjustments they need to make due to the mis-management by FF / Green / Failed PDs.

They will just issue a debt service bond, essentially this will buy more time. All this does is putt off the day or reckoning. We are now caught in a debt trap.

[Scorpio]

Did the Department of Finance just steal it from this guy?!
What will Ireland's government finances be like in 2015? A five-year view on the Budget

So, what is the picture like for 2015? This is an Ireland where the government drives 5% annual productivity improvements in its day-to-day operations, introduces a land-value tax to replace stamp duty, gets €1.5bn in NAMA-levies from the banks and where the economy grows by about 2% a year on average. In that Ireland, servicing a national debt of €150bn – up from €35bn in 2006 – will be costing us €8bn a year, meaning one in every five euro raised in taxes will be going to pay off our debt.

Also predicts Debt-GDP ratio of 100% and a 4% government deficit by 2015, even with big productivity improvements every year in the public service.