How will the government bridge the gap?

[zakalwe]

print more money like zimbabwe?

seriously, either raise taxes or increase borrowing. or sell some of the gold and other assets that the central bank hold.

maybe raid the national pension reserve a la maxwell.

cutting expenditure (on public sector wages/pensions etc) are a stop gap measure.

the cutting of tax is an interesting proposal, when cgt rates fell, tax take increased massively as people actually declared their gains on selling of assets. perhaps a decrease or abolishment of stamp might facilitate people moving houses (esp young families moving out of 1 bed apartments in lucan to houses with gardens) and increase associated revenue.
e.g. do you prefer stamp at 9% or income tax on solicitors and estate agents fees at 12.5% to 40%?

[zakalwe]

how about "auction" politics?

see how much sarkozy really wants us to ratify Lisbon?!!!!
would 10,000,000,000 reasons be enough for libertas, sf and jim corr?

[White Horse]

As usual government will take the easy option, borrow a few billion, cut capital expenditure by a few billion, and cut health and education expenditure by a few billion. It'll all be done on the back of a fag packet.


Its quite predictable.

[rockyracoon]

X

[junketman]

print more money like zimbabwe?

seriously, either raise taxes or increase borrowing. or sell some of the gold and other assets that the central bank hold.

maybe raid the national pension reserve a la maxwell.

cutting expenditure (on public sector wages/pensions etc) are a stop gap measure.

the cutting of tax is an interesting proposal, when cgt rates fell, tax take increased massively as people actually declared their gains on selling of assets. perhaps a decrease or abolishment of stamp might facilitate people moving houses (esp young families moving out of 1 bed apartments in lucan to houses with gardens) and increase associated revenue.
e.g. do you prefer stamp at 9% or income tax on solicitors and estate agents fees at 12.5% to 40%?

Anything at all to stimulate house-buying. Cut the 9% stamp duty to 4.5% for two years or something like that. Or else cut it to 4.5% for one year on a trial basis and roll it over yearly after that depending on how it's working out. We need to get all those builders off the dole queues, 50,000 builders at 10,000 dole a year, that's 500 million social welfare. If they start paying tax again, it could be a 1 billion gain to the exchequer.

The government have to stimulate the economy and since we don't seem to have any alternative to house buying that would be a good place to start. We might lose a billion in stamp duty in the short term, but I am sure it will be made up by extra houses bought and more builders and other services working again.

I think solicitors and estate agents shouldn't be helped, they are/were doing grand as it was. But I do think estate agents need to act more resonsibly in the future because they inflated the bubble and caused it to burst.

[kerrynorth]

Ok so we are already 7 Billion behind in our tax take on last year, and heading into the fourth quarter, does that mean we will be 10 billion behind by the time of the budget, which would be approximately 20% of the total budget gone up in smoke.

Added to that the expected pay rise demands of public sector workers and we can expect a budget maybe 5% larger than last year.

So there will be a gap of 25% between what we intend to spend and what we receive in tax, probably about 12 billion euro, to make up.

Where are the government going to get 12 billion euro from? Are they going to borrow it?

Anyone else worried about this? Or is it still an abstract concept to most people, ie so much money, people cannot associate with 12 billion.

And it this happens again next year, and possible for the next five years, we will be 60 billion in debt. We took years to control our national debt and now its been run up once more.

First off we are not €7billion behind last years tax take, it is €2.4billion. The tax take will be over €4billion off projections by year end meaning a deficit of circa €9billion compared to the budgeted for €4.9billion. What this means is that the government are going to have a 2009 opening deficit on the existing level of services criteria of circa 4.5% of GDP on the EU's GGB measure. But it is worse than that. The economy looks set to weaken further next year. Housing output will decline from circa 45k this year to circa 25k next year. Commercial property development will grind to a halt and the services sector will crumble. Maufacturing and exports may be the only areas to hold up reasonably well. All this means is that tax revenue looks set to fall another circa €4billion next year assuming no budget changes.

Therefore, in reality, the government is looking at a circa 6-6.5% deficit, more than double the EU limit, before it makes its budget for next year. Assuming a circa €500million Social Welfare increase, the government is looking at a circa €16billion deficit next year - that is about 9% of GDP.

Accordingly, there is going to serious slash and burn taken to the budget. The scraping of the NPRF contribution will save €1.6billion (does not count in GGB measure). I am sure a couple of billion will be knocked off capital spending (despite protestations to the contrary) plus a billion or so in current spending. This brings the deficit down circa €11billion or 5% of GDP on the GGB measure. However, this slash and burn to public spending will also cripple the economy into 2010. Not a nice picture I grant you but this is the picture that is facing the country for the next 2+years to get the public finances on track yet the government seem oblivious and would rather stick their head in the sand of some foreign climes.

[rockyracoon]

X

[ibis]

Why don’t we just kill everyone in the public service?

It’s patently obvious we don’t need them? I mean with all the combined wisdom on this thread I’m sure those advocating the eradication of Public services could do a far better job.

Honestly, this stuff is beyond laughable at this stage, it's pathetic.

[size=7]*predicts apoplectic rage from those who know better about value for money, competition, privatisation blah blah blah yaaaaaaaaaaaaaaaawwwwn*[/size]

Who would carry out the killings? We would have to employ Civil Servants to do this.
And once they are done, who would kill them?

Pft. Obviously we'd contract it out to the private sector - Blackwater, PWC, Ryanair, whoever.

Your idea is also uncosted, with no timeframe, and no method of delivery.
Poor.

Competitive tendering, one year timeframe, delivery up to the contractor. This stuff is easy - unlike the Green plan for eradicating the farmers, or the EU plan for eradicating dissenters.

[Squire Allworthy]

How many fools are there in Ireland that can not figure out that you can't pay people if you don't have money.

I thought I was missing part of the plot.

Forget the borrowing for anything other than short tern liquidity. It is very simple you either cut back spending or raise tax or a combination of both. The easiest to axe or reschedule are large capital projects but obviously in the long run they will not make much difference as you can only not spend that money once.

Increasing tax will really be popular but inevitable.

Cutting the Civil Service is always like trying to cure cancer. I would set senior management (civil servants) a target saving (what you need plus some) and advise them that they need to propose how they can be achieved or they will be in the soup kitchens themselves. At the same time the government should come up with a list of services it intends to cut. Get management in department by department and go through their proposals in detail. It just needs firm management.

Should have put a bit away during times of plenty. As I have said over and over you don't just control an overheated economy with interest rates, tax does the same thing and can be directed at the problem sector. Really sloppy government.

[eyeSpy]

Well here's my suggestion and the government can take it for free.

They need to stimulate the economy somehow. If the people in the EU say its against the rules they can take a hike.

The US central bank and government regularly stimulate the economy with packages to get it going again and the Irish government need to do the same.

The reason for a stimulas package is to get economic activity going again to the level it was.

My suggestion for a stimulous package is to cut stamp duty in half for a number of years, this would encourage more home buying and get economic activity up and running again.

yes until it all happens again in 3 or 4 years.
we can't keep basing our economy on one virtual sector.
it's just not sustainable.
we've seen how much of a pyramid scheme it is with the people in last getting badly stung.

our government is very selective about what EU rules they adhere to and those they dont.
If it's economic they are whipped. Unlike larger member states who often do what they like.
If it's environmental it's a case of we'll get around to it eventually.
They are only now implementing a 1979 Birds directive for example.
I'm not saying one is more important than the other, only giving an example.