2009 to-do list, 1: Cut taxes, 2: double national debt?

[feargach]

So the commission on taxation wants to cut taxes heavily, even though we have a collapse in revenue. We have been coasting along on income from taxes on house transactions and purchases of vehicles. Both have collapsed, and there is no replacement for this source of funding. Yet the COT thinks we have room to cut more. Uh huh.

We are also going to double the national debt by doing NAMA. Unfortunately, the people who will be lending over €50,000,000,000 to us are going to be crass enough to demand that we repay them!

Am I seeing a bit of a disconnect between these two policies? Is there some slight deviation from perfect equilibrium here?

When you take on debt, aren't you supposed to arrange things so you will have more money in the future, rather than less?

[SamVimesBoots]

Depends.

If some taxes that currently exist are acting to prevent or reduce investment in potential future areas of economic activity then they need to be cut to get the productive economy moving again.

We need to be skewing taxation and spending policies away from property scams and bailouts and towards building a cost-effective indiginous industrial base. Some of that may involve cutting taxes in certain targeted areas, and raising them in others.

[feargach]

Depends.

If some taxes that currently exist are acting to prevent or reduce investment in potential future areas of economic activity then they need to be cut to get the productive economy moving again.

We need to be skewing taxation and spending policies away from property scams and bailouts and towards building a cost-effective indiginous industrial base. Some of that may involve cutting taxes in certain targeted areas, and raising them in others.

It looks to me that the last point which I bolded, will need heavy emphasis. Bear in mind that the cost of NAMA is equivalent to seven or eight benchmarkings, all happening at once, not over a decade.

It leaves us horribly exposed, if we only tax just enough to pay the NAMA bills.

If another global crisis happens five years from now, we will be in a terrible position, as our credit will be utterly maxed out. We will be looking at closing hospitals and schools, and abandoning road projects.

And by, "another crisis" I only mean one that is maybe a third to a quarter as bad as the current one. That would easily be enough to push us into default.

We are like a factory that has taken on a massive mortgage, and is considering a promise to cut prices to its customers in half in perpetuity. Looks to me like a one-way ticket to Insolvencyville.

[SamVimesBoots]

Current FF Government policy is indeed a one-way ticket to Insolvencyville.

I suppose I was talking about what we should be doing instead, and maybe some of the members of this tax commission actually have a clue and are proposing sensible policies for long-term growth and to encourage the areas of the economy we should be encouraging.

They'll be ignored, of course. FF are hell-bent on NAMA and on taxing the productive economy to death in order to bail out their mates and artificially prop up overvalued land and property prices.

[feargach]

They'll be ignored, of course. FF are hell-bent on NAMA and on taxing the productive economy to death in order to bail out their mates and artificially prop up overvalued land and property prices.

If they are so hell-bent on taxing, why did they appoint a Commission that is going to announce hefty tax cuts in tandem with the biggest debt increase in peacetime? Funny way of going about it.

[Wakeupcall]

Is there a link to this tax decrease idea / report?

Thanks!

[wysiwyg]

It looks to me that the last point which I bolded, will need heavy emphasis. Bear in mind that the cost of NAMA is equivalent to seven or eight benchmarkings, all happening at once, not over a decade.

It leaves us horribly exposed, if we only tax just enough to pay the NAMA bills.

If another global crisis happens five years from now, we will be in a terrible position, as our credit will be utterly maxed out. We will be looking at closing hospitals and schools, and abandoning road projects.

And by, "another crisis" I only mean one that is maybe a third to a quarter as bad as the current one. That would easily be enough to push us into default.

We are like a factory that has taken on a massive mortgage, and is considering a promise to cut prices to its customers in half in perpetuity. Looks to me like a one-way ticket to Insolvencyville.

up.. one simple hike in oil prices in the next few years... and we're screwed

Again

[sparkey321]

So the commission on taxation wants to cut taxes heavily, even though we have a collapse in revenue. We have been coasting along on income from taxes on house transactions and purchases of vehicles. Both have collapsed, and there is no replacement for this source of funding. Yet the COT thinks we have room to cut more. Uh huh.

Where did you get this idea ?

What they are doing is looking at how this tax is raised and some areas of taxation will be reduced and others increased. There is a suspicion that there will be a reduction in income taxes and increases in other areas but this has not been confirmed.

I can pretty much guarantee that the COT will not recommend a reduction in the overall tax take...

[feargach]

I can pretty much guarantee that the COT will not recommend a reduction in the overall tax take...

But seeing as we are apparently locked into a massive, unprecedented rise in debt costs, even a flatline in the overall tax take puts us in the extreme red end of the default potential spectrum.

Sorry lads, but we are committing to the biggest public debt in Irish history: there's no way of safely being in that position without expanding the tax take. It is a really serious thing if you default on debt.

[Wakeupcall]

But seeing as we are apparently locked into a massive, unprecedented rise in debt costs, even a flatline in the overall tax take puts us in the extreme red end of the default potential spectrum.

Sorry lads, but we are committing to the biggest public debt in Irish history: there's no way of safely being in that position without expanding the tax take. It is a really serious thing if you default on debt.

If people dont spend their money then we have no tax take. If people regain confidence through lower taxes and start spending more we can potentially gain more tax revenue this way than simply raising taxes. Finding the correct balance is the key, not simply raising taxes as doing what seems most obvious, could be our downfall.