Tuesday, July 26, 2011

Ireland:€100 household charge in place for two years-26/7/11

Today  Minister for Environment, Community and Local Government  Phil Hogan announced the  introduction of a €100 household charge  as an  interim measure for two years pending the introduction of a property tax.  A property  tax is mandatory under the terms of the IMF/EU deal negotiated by the last FF government.

Mr Hogan said the charge was separate to water charges, which will be payable by 2014 and would yield some €160m.
Those in receipt of mortgage interest supplement will not have to pay the charge, nor will those living in social housing or so-called 'ghost estates'. Commercial property would be exempt too, as would premises owned by a charity.
The usual political neanderthals were out to condemn the measure. Socialist Party TD Joe Higgins said that the planned household charge would face massive opposition and a  boycott. Perhaps it is time for the likes of Joe Higgins to just grow up and to drop the pavlovian responses.
The government is taking in €33 billion  and spending  €52 billion. It is borrowing  €19 billion  to make up the difference. So it is borrowing  €36.5 in every €100 spent. Incidentally President Obama is borrowing $42  for every $100 spent.
State services such as Health and Education, Social Welfare and Pensions cost  €52 billion  to provide. The government is only taking in  €33 billion. So foreigners are providing  €19 billion  to plug the gap.

Social Welfare costs  €22 billion  out of a total of  €52 billion spend. That is 42.3% of the total government spend. This is something for Joe Higgins to ponder very carefully.  Joe Higgins wishes to pursue  economics of  delusion. He is seeking a Trotskyite Nirvana. The man is living in cloud cuckoo land.
The new charge amounts to €1.92 per week and is part of the IMF/EU deal negotiated by the last government. It has to be implemented if we are to draw down the IMF/EU funds to pay for government services. In addition it is ring  fenced for local authotities which are underfunded. It is much better to give a little than to lose the lot.

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