The Cedar Lounge Revolution

Dear God. The Irish Times is up to it’s old tricks… for under the heading: Middle classes hit by wave of wealth taxes we read in a front page article, that is also the most read yesterday, that:

THE LEVY on incomes announced yesterday is just one of a number of Budget day measures that will have a disproportionate impact on the middle classes.

Other budget day “wealth tax” measures including the €200 levy on second properties, the departure tax for foreign holidays and reductions in the tax relief available on pension contributions.

And also:

Several other measures in the Budget will also have a sting in the tail, particularly for the better off, such as the €200 charge on parking spaces provided by employers in urban areas and possibly the readjustment of benefit in kind on company cars to reflect their carbon foot print.

The increase in the standard rate of VAT by 0.5 of a percentage point to 21.5% will also hit their pockets to a greater extent, given their higher spending power. The decision to withdraw automatic medical cards for all people over 70 and subject them to means testing, will undoubtedly push up the living costs of wealthier retirees, not withstanding the €400 cash payment they will receive in lieu.

There’s more!

Likewise the decision to restrict tax relief that is granted on health expenses to the standard rate, rather than the higher rate as is currently the case, will by definition only have an impact on those who fall into the higher tax bracket.

To which I say… well, I won’t say it.

The increased in Deposit Interest Retention tax, as well as life insurance policies and investment funds, from 23 per cent to 26 per cent also amounts to a wealth tax.

The welter of additional health charges will also fall hardest on those who do not qualify for medical cards. [She doesn't say it but they're obviously wealthy].

Mortgage interest relief is also being rebalanced in favour of first time buyers, rather than established home owners. [Wealthy, you see?] The 1 per cent tax levy applies to all gross incomes, so a worker who takes home a salary of €40,000 a year will pay a levy of €400, a person who earns just €10,000 a year will pay a levy of €100, and so on. [The latter person would not be wealthy. Just so we're clear].

High-income workers – people who earn more than €100,100 a year – will pay a levy of 2 per cent on the balance of any income in excess of this amount. But these higher income earners escaped the mooted abolition of the PRSI ceiling.

The raft of so called “lifestyle” taxes introduced yesterday include an 8 cent per litre rise in petrol tax and a 4-5 per cent rise on motor tax.

But the best?

The middle classes will also have to fork out more for a bottle of wine, after the Minister imposed a 50 cent increase in excise duty per bottle.

WTF? Forgive me for pointing out that wine consumption isn’t restricted exclusively or even overwhelmingly to the ‘middle classes’. Still,

This will be offset by a 50 per cent reduction in duty on low-alcohol beer and cider – a measure designed to emphasise the health benefits of lower alcohol consumption.Meanwhile, the other “old reliable” – cigarettes – will cost smokers 50 cent more per packet of 20.

So the poor benefit yet again. Pints of stout all round for the horny handed sons and daughters of toil. But what to make of the following…

In light of this utterly heroic spinning on behalf of the middle classes’, or worse again the wealthy who, realistically, have little enough to complain about this Budget, it’s odd that the editorial takes a rather better line than one might expect noting that:

The solution is a levy of 1 per cent and 2 per cent; a tax increase accompanied by a juvenile exercise in semantics which calls it something else. It will bring in over €1 billion in a full year. But this levy is to be waged on all incomes other than welfare. Persons bringing home the minimum industrial wage will have to pay up. Persons whose income is so low that they don’t fall into the tax net – and don’t deserve to – will now do so. There was an expectation that the child allowance would be taxed or means-tested. Instead, it is to be halved and then abolished for 18-year-olds and over. Lower income parents who hoped to send their children on to further education will have the rug pulled from under them. Has this Government no sense of fairness?

This is a severe budget, especially for the lower and middle-income groups. By resorting to borrowing and postponing hard decisions, Mr Lenihan has increased the chances of an equally harsh budget next year.

Much, for once, to agree with there – although as ever the ‘hard decisions’ are meant to be taken in relation to ‘reforming’ the public service. Now if only the Irish Times could overcome that particular fetish and its rather sad infatuation with the supposed ‘middle classes’. But that’s not going to happen, is it?