Who speaks for the squeezed middle in the pre-budget submissions?

[gnf_ireland]

We vote this shower in,, so only have ourselves to blame.

What is the alternative ?

As a higher earner, I would forgo 3-5 years of 'hand outs', to fund a proper investment plan in infrastructure, housing etc. I would also support initiatives that encouraged fiscal responsibility at a personal and government level, including encouraging people to save etc up to a reasonable point.

What I struggle with is the populist positions the political parties take around increasing 'hand outs' for votes ....

I definitely do not agree that someone who is over 70 should pay less tax on the same income as someone in their 30's, and get more benefits as well. Surely someone in their 30's have higher costs of living than someone in their 70's, but should be taxed the same.

 

[dub_nerd]

I don't understand the arithmetic here. 6,400/month x 12 = 76.8k which is 70% of 2 x 55k. Where does the 49.5% tax figure come from? -- it looks like only 30%.

Apologies, I should have said marginal tax rate of 49.5% - I was quoting too quickly from the Institute of Taxation's summary findings.

I am guessing from your comment, you believe 30% is an acceptable amount of tax to pay in general on this sort of salary. I probably would agree with you on this

The issue, as other people have said, is not what absolute tax you pay but a) what you get in return for it, and b) how the tax burden is shared among all tax payers. In my opinion the tax base is way too narrow with high tax payers paying way too much a share of the total income tax take. But then the overall tax take seems high too, so we seem to be getting incredibly bad value for the money we spend.

If a couple earning 110k is not middle by any count, can you help me in understanding who is able to purchase houses in Dublin in this climate? The average cost of a 3 bed semi is 400k odd, and assuming a 10% deposit and 3.5 times Loan to Income, they barely make the cut. Surely a couple who purchase an average sized house in Dublin are middle in some regard ???

It's no secret that the demand for housing is much higher than the available supply. In that scenario you get price rationing so no, those who can afford new housing are the comparatively rich. If you want to find the "middle" when it comes to housing you have to include not just all those who buy houses but also those who want to and can't.

 

[gnf_ireland]

but high speed rural broadband seems an excellent idea to me. It would mean that parts of the country which are today almost cut off from the modern economy could become realistic locations for many types of employment. No manufacturing MNC is ever likely to set up in Longford, but many services business could locate anywhere with adequate broadband.

I agree with this to a degree. I believe every 'population centre' should have access to reasonable speed broadband. Lets define a population centre as 500 people living in a village. This would cover a reasonable percentage of villages within the country.

This would enable most villages in Ireland support a level of service businesses, and potentially breath some life back into rural Ireland


But this is a very different proposition to every house in Ireland being able to support high speed broadband. The cost of rolling out high speed broadband to every premises in Ireland is massive, especially when you look at the amount of one off housing in rural Ireland. Where my parents live in East Galway (for example), there are 6 houses in a 2km stretch to the one village (would not make the 500 cut) and 11 houses in a 3km stretch on the other side which would make the 500 person cut. This is a 5km stretch of road, with 17 houses on it, some back off the road down by roads. The cost of rolling out and maintaining fibre to these houses must be massive, and the take-up might be 25% if they are lucky.

If this is to be done, then there should be an increase in the levys associated with one off housing to support the rollout of services such as fibre to them, or an increase in the property tax to support these services in rural areas. Urban housing costs a premium because of the services available to them, as this is paid when buying the house, the associated stamp duty and ongoing in property tax.

I am all for supporting industry in rural Ireland (coming from there myself), but it has to be viable. If I have to travel 5km down the road to get to an office pod to support a business venture, then that is not a long commute in rural Ireland. You see a few of these popping up in Dublin now, so surely they can pop up elsewhere in Ireland. I accept some people want the flexibility to work from home and set up a business from there, but its not always possible. Maybe those people can pay to have fibre broadband installed from their local population centre, supported by a grant from the local Enterprise Office or similar?

 

[gnf_ireland]

If you want to find the "middle" when it comes to housing you have to include not just all those who buy houses but also those who want to and can't.

Surely everyone wants to buy a house, even if they have no income at all

If you take 2013 or 2014 prices, someone on 55k would still struggle to purchase a 3 bed semi in Dublin

I do understand what you are saying and I do agree that a couple on 110k should not be the 'squeezed middle' - but they are squeezed and many are struggling to get 'established' in this country, especially in Dublin. They also pay relatively high taxes for the benefits they receive...
And I fully accept an individual earning 110k is taxed much heavier, but the reality is also they are earning double

 

[Brendan Burgess]

I believe every 'population centre' should have access to reasonable speed broadband. Lets define a population centre as 500 people living in a village. This would cover a reasonable percentage of villages within the country.

Absolutely no problem with that. And if anyone wants high speed broadband at the top of a mountain, let them pay for it themselves.

The only issue would be to what degree should I subsidise the broadband for these villages?

Brendan

 

[gnf_ireland]

The only issue would be to what degree should I subsidise the broadband for these villages?

A coordinated investment plan for infrastructure is needed for Ireland for the next 5-10 years. This should take into account both urban and rural needs. We cannot have a full population migration to the cities - they cannot handle the volume as it is, so we need to invest in small urban centres. How small we go, will depend on the funding that is available

The subsidy you pay should be the same as the subsidy a rural person would pay for the LUAS cross city or Metro North projects, or the M20 motorway connection between Cork & Limerick. We all have to pay for projects we will never personally benefit from (but they need to be somewhat viable)

 

[Firefly]

But the bad news is that it's going to get worse

We are living in a golden period which can't continue. Corporation Tax rates are artificially high. Exports are booming. The government is paying virtually nothing for its borrowing. This is the time when we should be generating tax surpluses to pay down our national debt, but in fact, we are borrowing to run the country.

I fully agree with this. We have been spending far more than we have earned and now we have no wiggle room or funds to pay for desperately needed infrastructure such as social housing. We're much happier to vote for and strike for wage increases. Madness..

 

[T McGibney]

And if anyone wants high speed broadband at the top of a mountain, let them pay for it themselves.

The paradox here is that practically every major mountain top in Ireland has broadband and phone network coverage. It's the villages in the valleys between them, from where the mountains block out the signals, that don't.

A further paradox is that it's usually arbitrary and often illogical planning rules that block the provision of cheap broadband to such areas.

My own locality suffered poor phone and non-existent broadband coverage for years because a few malcontents objected almost 20 years ago to the siting of a mast on a hill that was being simultaneously being damaged by quarrying. (Nobody ever objected to the quarrying.)

We finally got our broadband a few years ago on a State-subsidised scheme. No subsidy would have been necessary had common sense prevailed in the first instance.

 

[Leo]

The government appear to have no clue about the impact of robotics and automation and the impact this will have on jobs in the country. You just have to look at bank branches where the move to automation is pretty evident.

The roll out of ATMs and automation in the US has led to an increase in the number of tellers employed there. Same happened in the 18th century as the textile industry embraced automation, the number of weavers actually grew as prices plummeted and demand soared.

 

[PMU]

My parents earn 49k approx, and pay under 10% direct taxes.
They are undertaxed compared to other countries, and compared to the benefits they get.

No they aren't. They are liable to income tax the same as everybody else and pay income tax at the same rates as everybody else. So you cannot say they are undertaxed. If they are, everybody with similar earnings is also undertaxed. There is no special tax regime. However, over 65s do get (a) a tax exemption of threshold of 18,000 pp and an age tax credit of 256 pp. The tax exemption threshold and associated marginal relief only benefit those on very low incomes, i.e. to 18,000 pa, so basically your parents get an age tax credit of 256 pp that others don't. It difficult to see how this can be regarded as contributing to undertaxation.

 

[T McGibney]

No they aren't. They are liable to income tax the same as everybody else and pay income tax at the same rates as everybody else. So you cannot say they are undertaxed.

He said they were undertaxed compared to other countries.

 

[PGF2016]

If a couple earning 110k is not middle by any count, can you help me in understanding who is able to purchase houses in Dublin in this climate? The average cost of a 3 bed semi is 400k odd, and assuming a 10% deposit and 3.5 times Loan to Income, they barely make the cut.

If they barely make the cut they are not trying hard enough. It will take time to save for a deposit but the couple in the scenario you present should easily be able to 'make the cut'.

If a couple on 150-200k cannot afford to live in a decent neighbourhood, send their kids to creche, go on a holiday a year and generally live while saving for the future/pension, then we have serious problems in my view.

Who is on 150-200k and cannot afford the items you mention? What are they doing with their money? That is easily possible.

 

[Firefly]

If they barely make the cut they are not trying hard enough. It will take time to save for a deposit but the couple in the scenario you present should easily be able to 'make the cut'.

If the couple in question do not have any children (and associated costs!) on a joint income they should take home just under 6,500 a month according to the Deloitte income tax calculator. Let's say for argument's sake they are renting an apartment costing 1,800 per month (which is quite high I would imagine). This leaves them 4,700 per month which is AMPLE to save for a deposit. Saving 2k per month should be easily attainable.

 

[cremeegg]

While I barely know Dublin, this thing of people on good wages unable to buy houses seems like nonsense to me.

Daft has 435 houses for sale with 3 or more bedrooms at the moment for less than €300,000 There is a house offered in Seskin Road in Tallaght for €290k that would go for more than that in Cork. And its closer to the city centre than Dalkey.

All this talk of unaffordable homes in Dublin is just middle class kids who cannot afford to buy in the affluent areas where they grew up. Too proud to live in Tallaght, too poor to buy in Mount Merrion.

 

[odyssey06]

While I barely know Dublin, this thing of people on good wages unable to buy houses seems like nonsense to me. Daft has 435 houses for sale with 3 or more bedrooms at the moment for less than €300,000 There is a house offered in Seskin Road in Tallaght for €290k that would go for more than that in Cork. And its closer to the city centre than Dalkey.

(1) 435 houses... in a city of 1+ million?
(2) And how many of them are in desperate need of fixing up?
(3) And how many of them will go for more than the asking price?

If you think all this talk is just middle class kids, try to buy a home in Dublin, then come back to me.

 

[gnf_ireland]

While I barely know Dublin, this thing of people on good wages unable to buy houses seems like nonsense to me.
....
All this talk of unaffordable homes in Dublin is just middle class kids who cannot afford to buy in the affluent areas where they grew up. Too proud to live in Tallaght, too poor to buy in Mount Merrion.

Are you saying a couple earning 150k a year with two kids in creche should not be able to afford a more affluent area? If it is not a couple earning 150k, who should be able to afford it? How many couples in Ireland earn 250k or above?

So if it takes 150k to purchase in one of the lesser affluent areas, where can those earning 75k purchase? Are you proposing they move to Longford and commute up each day?

Leaving the 'premium' areas to one side for the moment, what salary would you expect someone to earn to live in the likes of Mount Merrion, Rathfarnham etc? Surely a professional working couple with 2 kids should be able to afford an area like this?

Back in our parents time, a single income could support the purchase of a house and the likes of Mount Merrion was the area of choice for senior civil servants - I am wondering how many could afford to live there now?

 

[gnf_ireland]

Let's say for argument's sake they are renting an apartment costing 1,800 per month (which is quite high I would imagine). This leaves them 4,700 per month which is AMPLE to save for a deposit. Saving 2k per month should be easily attainable.

And lets say they have two kids in creche - that 2k is easily gone on creche fees. Our old creche has just increased its fees to 1200/month from September 1st...


Out of curiosity, how long should people be expected to save for a house on average? Is it 2 years hard saving, 4 years hard saving, 10 years hard saving... what rule of thumb would be used on average historically to save the deposit for a house?

 

[PMU]

He said they were undertaxed compared to other countries.

Then everybody or at least all couples earning 49k are undertaxed. OK they have a 256 pp age credit, but otherwise everybody pays income tax on the same basis as everybody else. So if you believe Protocol's parents are undertaxed, everybody at this level of income is undertaxed. The 'other countries' bit is spurious; we live in Ireland, not in 'other countries'.

 

[cremeegg]

If you think all this talk is just middle class kids, try to buy a home in Dublin, then come back to me.

This looks like it would make a very nice home and should be affordable to a couple on €75 k between them. Loan repayments €1,300 per month based on a 10% deposit.

http://www.daft.ie/dublin/houses-for-sale/tallaght/113-seskin-view-road-tallaght-dublin-1518250/

 

[Purple]

I guess my question is who is speaking on behalf of the contributors, and I know in theory it is meant to be Fine Gael, but not in practice

Only the top 30% of earners (on average) are net contributors.
The "Squeezed Middle" are net recipients when things like child benefit, the cost to the State of providing education to their children etc are taken into account.
The top 5% of earners pay half of all the income tax (and have about 30% of the income). They are paying for everything. Are these the people who should have someone speaking for them?
People are struggling because the State is doing such a bad job when it comes to providing services, planning infrastructure and generally bribing people with their own money instead of acting in the medium to long term interests of the people.
We have a very bad value for money health service, a populist and damaging welfare system, sprawling cities which makes the provision of public transport very expensive and inefficient and because of the high wages and inefficiency of the State sector levies on building are very high (someone has to pay for it).

Basically we are getting bad value for money from the taxes we pay. That results in lots of knock-on costs.

We have the wrong discussion; it should be about value for money and efficiency, not increasing taxes and spending.