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  1. #1
    patslatt patslatt is offline

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    Redundancy payments a major barrier to public sector reform,so tax them

    The government recently refused to implement a number of identified public sector redundancies,apparently because of the high cost of lump sum payments of six weeks pay for each year of unemployment. As well,many long service employees are close to retirement,so maybe a financial inducement to take an early retirement would be more economical.

    In the case of long serving employees,these high redundancy costs are a major barrier to public sector reform that requires rationalisation of the public sector workforce . Even if everyone agrees on the need for rationalisation,the redundancy costs will largely preclude it.

    The solution is to tax redundancy payments at marginal income tax rates that capture a substantial portion of the payments. Maybe the first 20,000 or so could be tax free or taxed at standard rates as a concession for the loss of employment. To those who will say that this is unfair,it is more unfair to tax low and moderate income people to support highly paid public sector jobs that shouldn't exist. And why should redundancy payments be uniquely untaxed in Ireland? Most countries apply taxes to redundancies as far as I know.
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  2. #2
    anlkestony anlkestony is offline

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    Here we go again... Blah Blah Blah Blah Blah
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  3. #3
    revereie revereie is offline
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    Quote Originally Posted by patslatt View Post
    The government recently refused to implement a number of identified public sector redundancies,apparently because of the high cost of lump sum payments of six weeks pay for each year of unemployment. As well,many long service employees are close to retirement,so maybe a financial inducement to take an early retirement would be more economical.

    In the case of long serving employees,these high redundancy costs are a major barrier to public sector reform that requires rationalisation of the public sector workforce . Even if everyone agrees on the need for rationalisation,the redundancy costs will largely preclude it.

    The solution is to tax redundancy payments at marginal income tax rates that capture a substantial portion of the payments. Maybe the first €20,000 or so could be tax free or taxed at standard rates as a concession for the loss of employment. To those who will say that this is unfair,it is more unfair to tax low and moderate income people to support highly paid public sector jobs that shouldn't exist. And why should redundancy payments be uniquely untaxed in Ireland? Most countries apply taxes to redundancies as far as I know.

    Redundancy payments, in excess of statutory redundancy, is taxable. Statutory redundancy is capped at c€600 per week. Furthermore, an employee is entitled to €10,160 plus €765 for every year of service tax free of the excess over Statutory Redundancy.
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  4. #4
    adamirer adamirer is offline
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    Quote Originally Posted by patslatt View Post
    The government recently refused to implement a number of identified public sector redundancies,apparently because of the high cost of lump sum payments of six weeks pay for each year of unemployment. As well,many long service employees are close to retirement,so maybe a financial inducement to take an early retirement would be more economical.

    In the case of long serving employees,these high redundancy costs are a major barrier to public sector reform that requires rationalisation of the public sector workforce . Even if everyone agrees on the need for rationalisation,the redundancy costs will largely preclude it.

    The solution is to tax redundancy payments at marginal income tax rates that capture a substantial portion of the payments. Maybe the first 20,000 or so could be tax free or taxed at standard rates as a concession for the loss of employment. To those who will say that this is unfair,it is more unfair to tax low and moderate income people to support highly paid public sector jobs that shouldn't exist. And why should redundancy payments be uniquely untaxed in Ireland? Most countries apply taxes to redundancies as far as I know.
    The point of redundancy payments is to soften the blow of losing a job. The reason its higher as the years go on is that its harder for a 50 year old to get a new job than a 25 year old.

    See the other thread re early retirement.

    And do you ever start a thread on anything bar public service bashing? Ever? You have major chip on the shoulder.
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  5. #5
    adamirer adamirer is offline
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    and you never stated a) where these cases are (news to me) or b) how this is a reform?
    Sounds like you just want to get rid of more staff...
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  6. #6
    seabhcan seabhcan is offline
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    Redundancy payments are surely an excellent economic stilumus, and plenty of the money will go directly into the banking system in the form of deposits and mortgage repayments.
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  7. #7
    wexfordman wexfordman is offline

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    If an employer cannot afford to pay above statutary, then the employees get statutary, and thats it!! Should be no differnt irrespective of who your employer is. Now I would have genuine sympathy for anyone haveing served well in a job for anumber of years, getting nothing more than statutary.

    What proposed redundancy packages were looked at in the ps ? How may weeks service per year etc ?
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  8. #8
    selfemployedmar selfemployedmar is offline

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    Quote Originally Posted by revereie View Post
    Redundancy payments, in excess of statutory redundancy, is taxable. Statutory redundancy is capped at c600 per week. Furthermore, an employee is entitled to 10,160 plus 765 for every year of service tax free of the excess over Statutory Redundancy.

    Thats fine and dandy but most companies cannot pay anything more than the statutory in this present economic catastrophy.. If the PS are seeking redundancy they the gov are in the same boat the money is just not there for any extra, that is the same thing that is happening every employer!! The banks wont lend the money to help with the shortfall for employee entitlements, it is just a vicious circle and the circle keeps widening..When employers give redundancies its not out of being heartless, they just cant continue to trade,,the same goes for the government, we cant keep borrowing our way out of situations. It is just bad management, if a small company went to a bank with a business plan to seek money to pay for redundancies, pensions etc we would be laughed out of it...
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  9. #9
    patslatt patslatt is offline

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    Quote Originally Posted by revereie View Post
    Redundancy payments, in excess of statutory redundancy, is taxable. Statutory redundancy is capped at c€600 per week. Furthermore, an employee is entitled to €10,160 plus €765 for every year of service tax free of the excess over Statutory Redundancy.
    €765 for each year of service amounts to 7,650 for 10 years and 15,300 for 20 years;adding the €10,160 this is 17,800 and 23,000 rounded.

    To this must be added the tax free statutory redundancy payment,600 a week,31,200 a year.
    Last edited by patslatt; 1st April 2009 at 10:35 PM.
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  10. #10
    patslatt patslatt is offline

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    Quote Originally Posted by adamirer View Post
    The point of redundancy payments is to soften the blow of losing a job. The reason its higher as the years go on is that its harder for a 50 year old to get a new job than a 25 year old.

    See the other thread re early retirement.

    And do you ever start a thread on anything bar public service bashing? Ever? You have major chip on the shoulder.
    So our overpaid,inefficient public sector shouldn't be subject to tough criticism?
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