Of course taxes can be spent better, i.e., on education or healthcare, than on TRS, who would argue otherwise? Still, the effects are difficult to estimate due to a possible multiplier effect as people who are extracted lower amounts presumably have more optimistic consumer sentiment and spend more, more economic activity would result, more VAT paid, etc etc. The outcome paradoxically could be more tax money to be spent on healthcare or education. Hard to say, may be not though but there are way too many people on SVR in Ireland to make it probable.
But whatever the policy tool we discuss and reject over and over, it is simply oxymoronic when half of the population pays circa 1-1.5% and another half circa. 4.5% and everybody know about it and it has been going on for more than 3-4 years now. And we should tolerate it as if unfair contracts make it somehow OK. When I pay taxes, I expect that my taxes would be spent on education and healthcare not only of my kids but of other people. Maybe not everybody pays taxes but it is OK since I also get something out of it. But when I pay 4.5% because the bank does not make enough profit from 1% tracker mortgages - as opposed to all types of customers paying 2.5-3% on average - it almost feels like some kind of "bank re-capitalisation" tax that all mortgage customers including those on trackers benefit but only those on SVR have to pay and I am sick of it. And there is also something fundamentally fishy when the U.S. banks that equally had enormous losses are still in the position to offer below 2% fixed mortgage products for the lifetime of the mortgage, similarly to many banks in the Eurozone while the Irish banks can only for 3.8% for 10 years. How do they expect to make profits over there when rates are set to go up in the future, possibly above their mortgage rate offerings at the moment? If they can, why the Irish banks can’t? What is so different about the Irish banks? Even if they have somewhat higher losses on non-performing mortgages, the difference is still too high. Hence the urgent need for government regulation, there is no other way. And they rejected regulation in June when FF proposed that bill I believe.
But whatever the policy tool we discuss and reject over and over, it is simply oxymoronic when half of the population pays circa 1-1.5% and another half circa. 4.5% and everybody know about it and it has been going on for more than 3-4 years now. And we should tolerate it as if unfair contracts make it somehow OK. When I pay taxes, I expect that my taxes would be spent on education and healthcare not only of my kids but of other people. Maybe not everybody pays taxes but it is OK since I also get something out of it. But when I pay 4.5% because the bank does not make enough profit from 1% tracker mortgages - as opposed to all types of customers paying 2.5-3% on average - it almost feels like some kind of "bank re-capitalisation" tax that all mortgage customers including those on trackers benefit but only those on SVR have to pay and I am sick of it. And there is also something fundamentally fishy when the U.S. banks that equally had enormous losses are still in the position to offer below 2% fixed mortgage products for the lifetime of the mortgage, similarly to many banks in the Eurozone while the Irish banks can only for 3.8% for 10 years. How do they expect to make profits over there when rates are set to go up in the future, possibly above their mortgage rate offerings at the moment? If they can, why the Irish banks can’t? What is so different about the Irish banks? Even if they have somewhat higher losses on non-performing mortgages, the difference is still too high. Hence the urgent need for government regulation, there is no other way. And they rejected regulation in June when FF proposed that bill I believe.