Unsuprisingly capital gains tax has fallen off a cliff now down 40%.
Stock Market -50%, property market -20%
I’m suprised CGT is above zero.
I’m finding this part of the statement difficult to understand.
So, if income tax is down by €1 billion now to €5.9 billion, then I guess that they must have predicted that it would originally have been at about €6.9 billion (=€5.9 billion + €1 billion).
The % fall is approximately 14.5%.
I’m guessing that since they were hoping that the economy would have grown this year then that accounts for roughly 4.5% of the income tax shortfall, leaving 10% to account for.
So where is this 10% made up from?
Is it from a reduction in the number of persons employed?
Is it from a reduction in the pay of those presons who remain employed?
Is it from a failure to collect and gather in the revenue from employers who may be holding that income tax for the Revenue Commissioner to come around and collect it?
Overall, this 10% mismatch is probably the most shocking one to me and points to unemployment , “outward migration” and future employment growth prospects much worse than the current CSO employment statistics are currently displaying.
Please help me to understand this if my points above are incorrect or poorly described.
Let me preface this by saying you would really need to dig into the data. But just conceptually:
Think of tax receipts as a function of a tax base - total taxable income and an effective rate - the weighted average of all the rates paid.
What you have identified is the fall in the base. It will produce a one for one drop in receipts- a 1% fall in taxable income produces a 1% fall in tax receipts.
But the income that is being lost will not all incur the effective rate. The effective rate over the entire tax base might be 30%, but the effective rate on the income being lost might be 41%, because higher rate income is mostly being effected. The effect on tax receipts in this case could be muvh greater. Say the effective rate falls from 30% to 27% because the amount of income taxable at the higher rate falls, then receipts could fall by 10% - which is 3% divided by 30%.
so the national debt will reach its highest amount ever by year end. I’m not the biggest fan of quoting it as a percentage of gdp. Equally borrowing 3% limit of gdp is probably not the equivalent of other eu countries due to our special tax system.
Looks like the gov don’t have a clue what to do. I’d like to see how they get 2% growth next year. This would suggest they have a plan in place, so why wait til next week to reveal the details.
Ivan yates on matt cooper said that local councils will also be in trouble due to their dependency on new developments as a source of revenue. There really are a lot of property bubble parasites.
Brian Lenihan was on the News at 6 blaming everyone else on the planet but accepting absolutely ZERO blame for his government or any of the Fianna Fail Governments who fed and encouraged the unsustainable bubble.
Not too surprising really.