Q: Considering the amount of road tax collected annually from motorists, mine being €582 for my car including in the new emmisions road tax rate the succumbed to the SIMI on imported cars, which were not allowed use this rate. It is only fair to expect that all national routes and to be fair secondary routes, which are widely used (and im not talking boreens) should be gritted?(Mick, Mullingar, January 2010)
A: I wish to refer to your email of 05 January 2010 regarding road tax collected annually. Unfortunately if we had to finance Local Authorities to ensure that every road (excluding boreens) was gritted during frosty spells road tax and every other tax would be considerably higher than it is. All Local Authorities grit roads by priority:
1) National Routes
2) Secondary Routes
3) Important Local and Regional Routes Arising from the recent weather conditions, I am asking all local authorities to review their gritting priority programme to see if it needs to be changes in light of new demographic or traffic information. Road tax policy is decided in the Department of Environment, Heritage and Local Government. They pay the money to us and we spend every penny we get from them, in road tax on the roads.
Q: You said one of your tests for the Budget was that it would be fair yet you reduced social welfare and child benefit. How is that fair?(Monica, Mayo, January 2010) A: Those who have been hit hardest by the recession are those who have lost their jobs. Our main priority in terms of fairness is to get them back in to work. We must not delay recovery and spread the pain out over more years. We did that in the 1980s and the unemployed became long-term unemployed; there was a lost generation. To repeat that would be the most unfair policy of all. And it would certainly not be fair to saddle future generations – our children - with more debt. By the end of this year, the National Debt will be about €76 billion, double the level at end-2007. Delaying action accelerates the increase in our National Debt and consequently the cost of funding it will rise substantially meaning less money for public services. For example, every extra €1 billion in interest on the national debt would be the equivalent of the annual salaries of 21,500 new teachers or a 6% reduction in general social welfare rates. Postponing action now would result in additional cuts of this nature in the years ahead – leaving future generations with the bill. The support provided by the Irish State to those on welfare is very substantially more generous than neighbouring jurisdictions. Welfare rates have doubled since 2000. What is most important is that we can sustain a strong welfare system into the future. If we do not cut back a bit now, there will have to be more drastic cuts in the future. And nobody wants that. Our principle has been to try to protect the purchasing power of social welfare payments so people are not made worse off. We increased welfare rates by around 3 percent in Budget 2009 and we are now reducing it by a little over 4 percent or just over €8 per week. Overall this amounts to a net reduction of just 1.1% and brings social welfare back to around 2008 levels. However, the cost of living has come down by around 6% and is back at what it was at the beginning of 2007. Child benefit is being reduced by €16 per month bringing it back to 2006 levels but those on social welfare will be compensated for the reduction in child benefit. Every effort has been made to ensure that there is no decrease in the spending power of people who receive welfare and/or child benefit. We have not touched the state pension. Older people do not have the option of going back to work to supplement their income. They have worked all their lives and should not have to rely on their children to live in dignity. In addition, there is no change in the threshold for medical card holders.Our tax revenues are at 2003 levels but we have left welfare rates at 2008 levels so, in cutting back on spending, we are still prioritising those on the lowest incomes. Even with this reduction in rates, almost all social welfare payments are more than 50 per cent higher than in 2003, when tax revenues were last at current levels. Q: Why can we not just borrow instead of cutting?(Sandra, Cork, January 2010) A: We cannot have a strong economy and get people back to work if we fail to make ends meet in our public finances and are saddled with debt. The package of measures in the Budget amounts to over €4 billion including a €1 billion reduction in day to day spending and a €1 billion reduction in public sector pay. It is very presumptuous to believe that the markets will just let us continue borrowing. We are already borrowing at high levels. We cannot just borrow more and more. Credit is in short supply globally. If we delay our adjustment, it is very likely international confidence in the Irish economy will be lost which will seriously impacting our ability to borrow and to secure investment and jobs. Q: Why didn't you tax the rich more in the budget?(Robert, Dublin, January 2010) A: We have hit the well-off. We increased the (marginal) tax rate on income at the high end from 43.5% in 2008 to 52% now. Those who are self-employed have to pay 55%. That means, for every extra one euro they earn, we are taking 55 cent of it to pay for state services and social welfare. Someone on the average wage pays 30% of every extra euro they earn. Another way of putting it is: - A single person earning €25,000 now pays €500 more in tax and levies than in 2008
- A single person earning €100,000 now pays €5,500 more in tax and levies, 11 times what the person on €25,000 pays
- A single person earning €250,000 now pays €17,000 more in tax and levies than in 2008, 33 times what the person on €25,000 pays Nearly half of all people are not in the tax net at all (excluding levies). Those on or below the average industrial wage will contribute just 60 cent out of every €10 euro that is raised in tax whereas the top 4% of earners will pay nearly half of all the tax so we are getting the well-off to pay for most of the States services. We are increasing the amount that high earners have to pay when availing of tax incentive schemes. We are levying a charge on all Irish nationals and domiciled individuals whose worldwide income is in excess of €1 million and whose Irish-located capital is €5 million or more. However, we cannot just keep increasing tax. We need jobs to be created and if we put more tax on working in Ireland, jobs will just go to other countries. And we need those jobs here as many other jobs depend on them. And we need the taxes here otherwise everyone else will have to pay more. Q: How is it fair on nurses, Gardaí and other public sector workers that they have had their pay cut by so much already? Not everyone in the private sector has had their pay cut, why is this?(Aoibheann, Meath, January 2010) A: We have to cut the public pay bill so that we don’t drastically cut much needed services to the public. I know it is difficult for some but, even with those adjustments, those in permanent public-sector employment are a lot better off than those who have been made unemployed. And our focus has to be on getting those who have lost their jobs back into work. However, I do think some of the commentary has been a bit unfair to public service workers in the last few weeks. They do fantastic jobs in our hospitals, on the beat and helping people hit by the floods. During the good times, public sector salaries increased significantly. The unfortunate reality is that we just can’t afford that with 2003 tax levels. I know it will be hard for some to take, but we have tried to be fair. Those who earn most give back most (up to 15% for the highest earners on top of the pension levy already introduced) and those on the lower salaries are not cut by more than the drop in the cost of living. Q: What is the Government doing for the unemployed and other vulnerable people? (David, Sligo, January 2010) A: The measures in Budget 2010 mean that 180,000 individuals will receive training or supports in 2010 at a total cost of over €1.1 billion. · Through Budget 2010:
- 80,000 jobs will be supported through the Employment Subsidy Scheme;
- Over €900 million will be invested in 2010 protecting jobs and providing training and activation supports;
- Over €200m will be invested in enterprise supports;
- More than 73,000 people will be helped to maintain part-time jobs or casual work. We are also helping those who bought their homes at the peak of the market such that those whose entitlement to mortgage interest relief would have expired in 2010 or after will continue to receive it up to 2017. We are making €70 million available to help those affected by flooding and to reduce future risk. We are not reducing the state pension. Q: What is the Government doing to help businesses and reduce cross-border shopping?(Tom, Dublin Retailer, January 2010) A: We are reducing excise duties on alcohol and reducing VAT to assist the Retail Sector. 12c of excise duty should be taken off the price of a pint. Combined with the 2.5% increase in VAT in the UK, this will reduce the flow of shoppers to Northern Ireland. Q: Is this the worst Budget or is there more to come?(Caroline, Meath, January 2010) A: The Irish economy has undergone a major contraction this year, however, there are there are promising signs that the world economy has bottomed out and Ireland can expect growth in 2010. When we stabilise our finances, it creates a situation where confidence can return to the economy. When we stabilise our banking system, credit flows and businesses can survive. Prices are falling at the fastest rate since 1933 which will help to improve competitiveness and lessen the impact of the budget. The increase in unemployment has slowed and is close to reaching its peak. The expert assessment is that, as the world economy recovers significant momentum, the Irish economy, as long as it regains competitiveness, can be expected to grow quite rapidly in the 2011-2015 period, recovering some of the lost ground of the current recession. So, it is important that, as we face into difficult and painful decisions, we look forward with confidence that, having taken these decisions, if we stay the course, we will come through the worst global recession in our lifetime.
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