Some Comments on the ULA Pre-Budget Submission, December 2011

Couple of quick comments relating to the ULA Pre-Budget submission and the VB progamme during the week – proposals of the establishment parties (and SF for that matter), are short-term proposals based on the current plan to reduce the deficit this year by €3.8billion. The ULA proposals outline a five year plan of economic development. The ULA document clearly points out that it is outlining an alternatve route that goes outside the limitations of capitalism  

The ULA is calling for a change in direction…The ULA believes there can be no just or sustainable solution to the current crises by bowing to the dictatorship of finance and the markets. There is no solution,only worse crisis, on the basis of ‘satisfying the markets.’ We favour democratic public control of key economic resources as the only way to ensure that peoples needs are put before the profits for the few. There can be no reliance on private investors to create jobs.  (page 1)

The ULA proposals use numbers based on reports from CSO, Revenue Commissioners, Credit Suisse and TASC. Both VB and Vadaker admitted on the programme that they hadn’t actually read the full document (its four pages long) and consistantly misquoted the numbers from the document. Furthermore the fact that both VB, Varadker and the Indo journalist refused to accept the numbers and as a result then distorted them, is their problem – not a problem for Joe Higgins. For example Varadker completely misread the document about the effective tax rate for earners on a income over €100,000 – Varadker claimed 78% the actual figure from the document is 58%. VB also attempted to claim that the ULA job creation proposals were similar to FG, stating that the ULA wanted to create 150,000 jobs over five years while FG’s proposals were for 100,000 jobs. Two points on this one 1. FG’s proposals are based on providing ‘incentives’ for the private sector and hope the private sector will create the jobs – but the private sector are on an investment strike and during period of economic crisis have never created jobs – and – 2. The ULA proposals involve creating 150,000 immediately over a three month period through public investment and providing the fund to ensure these jobs are maintained for at l]east five years. Varadker claimed that the ULA would need to find €20billion to implement their proposals because the straight off the top because burning the bondholders would mean no money from the IMF/ECB (an over-estimate but we will use it) – So where would the ULA get the money – 5% asset tax on the richest 5% of the population = €10billion (source Credit Suisse) Doubling the effective tax rate on all income over €100K (a graduated rate based on income with an effective rate of 58%) = €5billion (source Revenue Commissioners) Stopping payment to Anglo Bondholders (to start with) = €3.5billion Stopping the payment of interest on IMF/ECB money to bail out the banks = €6.8billion (2012 estimate – source Dept of Finance) Capping public sector pay at €100K = €264million (source Dept of Finance) Total = €25.564billion Where does the funding for a public investment programme come from – estimated cost €26billionover five years NPRF = €5.3billion Surplus from savings above = €5.56billion Changes to pension funds tax breaks (€2.2billion over 5 years) = €11billion (minimum – the measure is designed to significant increase investment in the Irish economy by Irish pension funds, currently only 1% of the €70billion pension fund pot is invested in Ireland) Savings from reduced expenditure from remedial public sector works (eg renovating the water mains network) = €2.5billion (minimum) Total = €24.3billion This does not include other measures like increases in CAT, CGT, Corporation Tax etc.

Jolly Red Giant  2 Dec 2011

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