Wednesday, January 28, 2009

Government's Plan for Ireland: Exclusive... Part 3

Continued as before, italics are my:

Part 2

Framework for a Pact for Stabilisation, Social Solidarity and Economic Renewal

3. Stabilising the Public Finances

The Government and Social Partners are agreed on the necessity to progressively reduce the level of Exchequer borrowing over the next five years in order to reduce the General Government Deficit to below 3% by 2013 through an appropriate combination of expenditure and taxation adjustments.

Public Expenditure

The adjustment to be achieved through reductions in expenditure will be based on the following criteria:
  • ensuring a fair and equitable spread of the burden of adjustment
  • maximising the level of sustainable employment
  • solidarity with those now losing their jobs
  • maintaining high-priority public investments
  • careful forward priority planning
  • increased efficiency, effectiveness and a focus on outcomes
(Recap the above bullet points: if the new Framework were to deliver careful forward planning, does the Government now admit that such was not used in the past? Can anyone explain to me how any of these bullet points constitute any sort of a forward-looking programme to deal with the crisis?)

The scale of the necessary adjustment requires scrutiny of all areas of public expenditure including agreeing measures on how to constrain growth in public sector pay and pension costs.
(Don't hold your breath - when we get to these in a second, you'll see that there is scarcely any change in Government's traditional modus operandi on public expenditure...)


The adjustment to be achieved through further taxation measures will be informed by the following principles:

  • Changes to be fair and equitable with a higher proportion falling on higher incomes while minimising distortionary effects between different forms of tax
(No details are given, but given that a further tax increase on those earning €100K pa are going to yield only a modest, if not negative, revenue increases to the Exchequer, expect ‘higher incomes’ to mean middle class – i.e. YOU! Of course, notice that the above means everyone’s taxes will go up.)

  • Support the productive sector of the economy to keep Ireland competitive
(How can this be achieved? This Government, has been blabbering about this objective since the beginning of this century and has managed to do nothing to deliver on it. Do any of us believe they can do any better this time around? With Mary Coughlan at the helm of ETE?)

  • Ensuring that tax expenditures are fully evidence-based
(This a pure case of political ‘gibberish’. What does ‘evidence-based’ mean in relation to tax expenditure? Evidence of the money being spent? Of efficiency? When no one, neither in the Government, nor in the civil service is made accountable – with their jobs, pensions, perks – for any failure in delivering on promises made, who cares if their spending decisions are ‘evidence-based’ or ‘we-just-feel-like-doing-it’-based? Does anyone care if Mr Cowen has evidence to support his lofty Building Ireland's Smart Economy ideas? It simply cannot work - evidence or none (see here)!)

  • Broaden the tax base and make changes that are straight forward, easily understood and easy to administer
(Broadening tax base means finding new taxes to pin onto us. Oh, but the above is not enough, so…)

  • Additional progressive tax measures consistent with the social solidarity approach

Additionally, given the urgency of the situation and the role that taxation will have to play in bringing stability back to the public finances, the Government is asking the Commission on Taxation to identify appropriate options to raise tax revenue and to complete its report by September 2009.

(So, recap – general taxes will go up, new taxes will be thought up and then there will be more progressive tax measures. And in return, the over-worked civil servicemen and underpaid ministers are going to give us ‘evidence’. And compassion.)

Stay tuned for more...

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