Which govmin steals from the poor to give to the rich?

In Economy on 30/11/2010 at 5:17 am

No, not the governing PAP here, with its recent bonuses to the civil service or past ministerial pay rises, and increases in VAT by 40% a few yrs back. Remember VAT is the most regressive tax ever devised, the poor paying more of their income for the basics of life (like food and transport), than the rich.

But at the very most, at a stretch, it could be reasonably said that the PAP is pro business, and tight fisted when it comes to welfare. The latter partly moral grounds: “Work makes you free” seems to be its motto.

The governing party in Ireland, Fianna Fail (The dominant party in Ireland ever since the country’s independence in the 1920s, and  in power for most of the last three decades makes the PAP look wimpy ) is the antithesis of Robin Hood: stealing from the poor to give to the rich.

Last week it announced an austerity budget. It had in 2008 guaranteed the deposits and bonds of Irish banks. Investors are afraid that the banks are in serious trouble and that the government does not have the money to pay them. So they are selling Irish bonds, bank shares or avoiding them. As you will be aware bondholders are usually financial institutions i.e. those with money.

Very few other countries have cut spending by 20%, but Ireland is planning to

Cuts in public sector pay will account for 1.2bn euros. New entrants to the public sector will get a 10% pay cut. Jobs will be lost – more than 24,000 of them. There will be cuts in public sector pensions.

The minimum wage will be reduced by 18%.

Over the next four years, 2.8bn euros will be cut from the social welfare bill. There will be cuts in services. Students will have to make a new contribution to their studies.

The numbers paying the upper rate of income tax will go up. There will an increase in pension-related taxes, an increase in VAT from 21% to 22% in 2013, and to 24% in 2014, and a new “site value” property tax to raise 200 euros from most homeowners by 2014

The purpose of all this is to pare Ireland’s deficit from 32% now (taking into account this year’s one-off support for the banking sector) down to 3% in 2014.

But corporation tax will not be increased. This tax  which remains a “cornerstone of industrial policy” will remain at 12.5%. Yes, some places tax companies even less than S’pore or HK.

But the funny thing is that the Opposition agrees that the corporate tax must remain at 12.5%.

So the people are suffering because the government promised the bondholders to compensate them and because it wants a low corporate tax rate to keep Ireland attractive to MNCs. Both bondholders and MNCs have money.

“That “bailout” for Ireland mostly seems to be about the government imposing even more pain on its people, in exchange for a credit line. It’s not a workable strategy,” writes Paul Krugman, a past winner of the Nobel prize for economics.

The FT, a highly respected financial newspaper says objectively: “The Irish politicians are betting that a global recovery will save the Irish economy which the government measures are shrinking because no one wants to willingly lend Ireland any money.”

The case for taxing the MNCs so little. As paying the bond holders, even the investor-friendly FT and Economist, have had qualms abt the original “leave no bond holder behind” policy.

The PAP is mean to the poor but I doubt that the PAP would even dare dream of stealing from the poor to give to the rich.

  1. followed you back from your reply on yawningbread.

    i like this blog. admittedly, i snickered a little at the nazi reference.

    pls drop me an email, could be a thing or two i like to check with you in private.

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