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An Bord Snip Nua

Posted by Senan

So, as the An Bord Snip Nua report seeps into our subconscious through the media, what difference will it make to Joe and Jane Bloggs out there? Is it time to flee the country, just like our forefathers? Should we drop the keys back to the bank or fake our own funerals? Well, first off, for a few months at least, there will be no material difference; as the various experts (or otherwise) digest the recommendations (not to mention the Dail recess...). Then the ruling class will decide what to introduce during the next budget. The current consensus seems to be that further tax hikes, particularly income tax, are unlikely. As Charlie McCreevy put it, we're at a 'tipping point' now. Further stress on the earners who are keeping the country afloat would be hugely negative. The report itself is far too voluminous to go into detail here, but it's fair to say that very few (even taboo) stones have been left unturned, from educational cuts, to social welfare cuts, to public sector reform. Of course as soon as it came out (and possibly before), there were the usual outcries from certain public sector departments that their interests should be exempt from the chop. While this is of course expected (who would blame someone for fighting their corner), it is somewhat disheartening as it reminds us once again that some individuals may have more power and influence than they should. The chair of the An Bord Snip group did come out and shoot down any naysayers yesterday, but I wonder if it will stick.

Then at the end of this month the Commission on Taxation will report. Again, just recommendations, but they will feed into the next budget too. Points that could be discussed are: 1) Income tax changes, 2) VAT, 3) Pension taxation (or lack of). A decision to remove tax relief on pension contributions would have a devastating effect on the Pensions industry already reeling from lower volumes and the 1% life assurance policy levy. I know I would seriously consider dumping mine. Also there is talk afoot of a tax on the lump sum receivable. I must say I think this would be a very unfair course of action. Consider a public sector worker with 40 years’ service. For 40 years they have had a 'legitimate expectation' of receiving this money, and so...for whatever reason (perhaps good financial planning), their mortgage left to pay = the lump sum. Now if the lump sum is taxed, the person is looking at continued mortgage payments into retirement. I know that would scare me! I want to retire to the beach...not to continued financial responsibility.

Comments (0)20 July 2009

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