Thursday, 4 March 2010

Cáin feabhra

An Saoi: The underlying tax figures for February are dire. Just look at the income tax figures. February is the month when employers send in their forms P35 with any balances due for 2009, and we also get our first feel for 2010 with the January remittances. Despite the income levy, the payments received are down 12% on 2009 and 18% on 2008. They are also €115M below the Dept. of Finance’s figures for February, prepared just four weeks ago. The weather has little to do with income tax.

VAT is slightly over the monthly target. However, as VAT returns are not due in February, this has to be down to technical reasons, for example Revenue staff slowing down refunds or late payments actually due in January. It is unlikely that VAT at point of entry could explain the difference, as customs duties are down. In addition, excise duty is poor and VAT payable on withdrawal from bond would not explain the discrepancy.

All the other payment heads reflect a country mired in the quicksand of depression and going nowhere slowly. Despite the cut in thresholds, CAT is bringing in less tax as assets are devaluing more quickly. VRT for cars continues to decline despite the incentives. With few transactions taking place, stamp duties continue to slide.

The trend for Corporation Tax is unclear since the splitting of preliminary tax payments makes it very difficult to see what is happening yet.

The outlook for March looks even bleaker. The Jan/Feb VAT returns are payable, and that most reliable of predictors - the Central Bank’s credit card figures - shows that January was a complete washout. Credit card purchases were down 14.7% on January 2009, and a massive 29.4% on January 2008. At this stage, we can only presume that February wasn’t much better. Consumer surveys suggest that consumer sentiment is as cold as the weather. The reduction in short-term bank finance or its pricing may also be forcing many smaller businesses to turn to the Collector General as an alternative source of funding.

I am going to stick my hard neck out and estimate the end of year outcome as follows:



I will adjust next month, if necessary.

Mini-budget and further pay cuts in June? Because there will certainly be no pick up!

9 comments:

Anonymous said...

@An Saoi
AT some stage we will hit the bottom. We can't keep dropping forever.

An Saoi said...

I agree, but can you see it? I am for the first time perhaps in my life going to agree with Pat McArdle in yesterday's Irish Times. The headline to the piece was "Worrying unknowns lurking beneath exchequer stabilisation", which is a good description. The CSO retail sales figures for January show a volume decline of 4.8% over January 2009 or 4.7% excluding the motor trade. Pay cuts and interest rate rises have not fully hit yet.

The loss of the ECB's cheap money in July is going to make money very tight and very expensive. The Irish taxpayer is going to see the real cost of the bail out of stupid German lending to (privately owned) Irish banks.

However look on the bright side, today was a beautiful day and maybe we will have a great summer, because you won't be able to afford to anywhere else!

Oliver Vandt said...

@An Saoi
One thing that would do us all good is knowing that the justice system treats bankers in the same way as it does, say, TV licence evaders.

The journalist who in January broke a story about the Gardai being poised to make arrests in the Anglo investigation before the end of February (over a year since the investigation began) reveals important news.
His Jan report of imminent arrests is here:

http://www.tribune.ie/business/article/2010/jan/10/gardai-poised-to-arrest-anglo-irish-staff/

But by Mar 1st Canon Law had reasserted itself and
"THE GARDA investigation into practices at Anglo Irish Bank is “unlikely” to result in any criminal charges or arrests in the short to medium term, it has emerged."
http://www.irishtimes.com/newspaper/finance/2010/0301/1224265371985.html

The journalist speaks here on why the arrests never took place.
http://www.thepropertypin.com/viewtopic.php?f=46&t=27447&start=15

The thread is in the Anglogate forum: "Tribune: gardai-poised-to-arrest-anglo-irish-staff"
Go to the second last post on page 2. He says:

"when i wrote the story, there was particular date earmarked for the arrests (not the anniversary), a number of people and a charge that was to be brought. I can't say the charge as that was deal with main sources. some internal inquiries were made after publication of story.

Then it became:

"Quote:
Threat of arrests in Anglo probe
http://www.independent.ie/national-news ... 58032.html


And some may be arrested if investigating officers are not satisfied with their level of co-operation while being interviewed...

A senior officer said last night: "We are aiming to have this investigation brought to a close within a couple of months to allow us to send off the file.

"We are now entering a critical phase in our inquiries after a huge trawl through the documentation and computer files seized from the bank last year.""

His conclusion on this:
"Now there's further climbdown. My info is that it's for internal reasons. One of the other posters has come close to explaining why but don't think it's appropriate for me to write it here."

Internal reasons? The Gardai failed comprehensively to hold the church to account. Now this. Do they want to be a force for Law or a force for Canon Law?

Oliver Vandt said...

@An Saoi
The Gardai have been sitting on this for a year. This below was already revealed BEFORE they raided Anglo:

"Anglo carried out 'balance sheet management' transactions for banks all over the globe, writes Business Editor Emmet Oliver"

http://www.tribune.ie/article/2009/feb/22/revealed-inside-story-of-anglos-deposits-anglos-cu/

Oliver Vandt said...

@An Saoi
Basically Anglo, like the Irish banking sector generally, is the subject of a massive establishment cover up. We all know this. Let's start saying it.

Oliver Vandt said...

@ALL
What the public thinks on prosecuting the bankers:

“according to a Sunday Independent/ Millward Brown Lansdowne opinion poll…

An overwhelming 91 per cent want criminal prosecutions pursued against those in the banking sector found to have been in breach of the law, precisely the same finding as a year ago when the same question was asked in the last such poll."

The author, normally very supportive of the government, concludes:
"The public is obviously dissatisfied that no such action has been taken against bankers in the last year, despite the instigation of a number of investigations by various authorities."

http://www.independent.ie/national-news/no-faith-in-leadership-politics-or-banks-poll-2062791.html

Joseph said...

An Saoi,

Why are you going higher on CGT? People selling their companies or other assets?

Thanks,

Joseph

An Saoi said...

Joseph,

Purely underlying trends. I suspect that a lot CGT paid in recent years arose from the using various methods to withdraw money as "Capital" from a business rather than as income as the rate was less than half when PRSI is taken into account. I also gather that there is a small pick up in private equity transactions. There are also a lot of business owners reaching retirement age, which will drive disposals.

I feel that there will also be some forced disposals to reduce debt. Better quality assets may still find buyers.

As an example of asset disposal, there are a lot of pre-1963 sub-divided houses for sale at present. If a person owned it for a long time, there will be a good gain. The cost of updating it to comply with recent regulations in a declining market make selling the only logical option for many landlords.

However to put the figure into perspective, it is less than the outcome for 1999!

An Saoi said...

Joseph,

To add to my earlier response,
for tax reasons, many people selling a business will use a holding company structure. The sale is in effect a disposal of shares in the trading company , rather than property etc. This reduces the stamp duty liability to 1% and also because of Section 626B, Taxes Consolidation Act 1997, defers the payment of CGT. No liability arises until there is a withdrawal of money from the holding company. Looking at the Iris Oifigiúl, there is a constant stream of holding company liquidations, usually described as "Members' Voluntary". It may make sense to get the cash out now, which would create a liability to CGT.