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Will you tell him, or should I? October 29, 2009

Posted by WorldbyStorm in Economy, Irish Politics.

Reading Vincent Brown’s so so piece in today’s Irish Times – long on rhetoric, short on specifics – I was taken by the comment underneath it:

so now the new mantra by the public sector unions is tax the rich based on their assets, seeing as they seem to have finally realised that based on their income would still be a drop in the ocean in comparison to the 20 odd billion deficit.  
Ok, let’s say we do that. Now, in your doyle family example, what do you propose. That you seize their cash? Force the sale of their equities? Seize their property? Or how about a raise in capital gains tax?  
Ignoring the impracticalities of all these things, they will not amount to a constant income stream to stem the tide of borrowing that we are foolishly engaging in.  
Instead, we get no opinion piece about the fact that yesterday it was found out that someone in the HSE got paid 1.3 million euro over the last 6 years to stay at home.  
The public sector is a joke. Raise taxes any further and watch what people in the private sector will do. They will avoid paying taxes in anyway possible. I am dating a Lithuanian girl who told me that Ireland is now famous in Lithuania for being a place where it is better to come to have a baby and just take the social welfare then to stay in Lithuania.  
I am fed up paying my hard earned money out to a public sector that gets outrageous pensions, 20 days holidays, unvouched for sick leave, flexitime, has zero accountability, and on top of it all has the nerve to go on strike.  
To hell with them. Privatise the lot.

Nah, not the outrageous pensions (whatever they may be), or flexitime (such a crime, so unheard of in the private sector), or indeed unvouched for sick leave (he must try working in the parts of the private sector I have where – as ever – the unvouched sick days depended on what your place in the pecking order was)… but…20 days holidays? What further outrage is that? Twenty days, count ’em… twenty bloody days off on holiday. The bastards.

Now, I can go to citizeninformation.ie and read:

Your entitlement to annual leave or holidays from work in Ireland is set out in legislation and in your contract of employment.  While you are required to attend work as provided for in your contract of employment, legislation gives various entitlements to leave from work.  These include annual leave, public holidays, maternity leave, adoptive leave, carer’s leave, parental leave and other types of leave from work.
The Organisation of Working Time Act 1997 provides for a basic annual paid leave entitlement of 4 weeks, although an employee’s contract could give greater rights.  It is also important to note that the periods of leave provided for by legislation are the minimum entitlements only, you and your employer may agree to additional entitlements. 
In the case of agency employees, the party who pays the wages (employment agency or client company) is the employer for the purposes of the Act and is responsible for providing the entitlement. 

Perhaps it’s a piss take. But if not I think someone better tell brian… perhaps his employer doesn’t comply with the legal annual leave entitlement. Or perhaps brian just doesn’t know. But he seems so certain about everything else. Surely not.


1. Crocodile - October 29, 2009

Browne’s piece was fairly typical but it did contain one pithy point: the country is not broke – the state is.


2. Proposition Joe - October 29, 2009


On the 20 days holidays point, there are many in the private sector who don’t count “company days” (enforced closures around Christmastime or Easter) as part of their annual holidays. They think of holidays as purely discretionary days, which might be as low as 12-15 days.

On smaller scale, there’s something similar in the public sector with “privilege days” which are often as counted as standing apart from annual leave entitlement.


WorldbyStorm - October 29, 2009

Tell me about it. I worked for the best part of a decade for a group of companies where one had two days allocated to Easter and around three or four (can’t remember which) at Christmas. Worse again the group attempted to impose a rule that one could only take Summer Holidays in July and August. That only worked so far, people tend to get married or have other events at odd times and it was very striking to me how the culture changed in terms of employees between say the mid 1990s and early 2000s where more and more would walk if the company didn’t concede on such matters.

But the allocation at Christmas/Easter was legal IIRC and across a year an employee would get 19 (until the legislation changed in 97) or 20 days holidays. After five years employment it went up to 21, after ten it would have gone up another to 22.

The point being that one still had 20 days holidays, but perhaps not full autonomy as to when they could all be taken.

But that’s clearly a different issue. Whether people count them or not they still get them. We certainly counted them as holiday allocations while many of us chafed against the imposition by those responsible for the limitation – the group itself. No-one forced it to take that route. Our competitors in the retail and industrial areas we covered took a variety of routes including 20 days spread throughout the year. And then when we linked up with two separate European multinationals the whole process became a farce as those working directly within them, for the most part recruited after most of us, had an extravagantly greater level of benefits, including more holidays, despite sharing much of the management, back office/accounting and directorial personnel.

The main point is that the provision of holidays in the private sector is the responsibility of the company / companies that this guy works for, not the public sector and it’s unreasonable in the extreme to point back at the PS or worse again PS workers as if it they somehow to blame.

To be honest – and this probably tells you how much a job can socialise your behaviour patterns, for myself I’ve always preferred longer Christmas and Easter holidays and spreading what is left across the Summer.

As regards privilege days… don’t open that can of worms again! 😉


Tomboktu - October 29, 2009

Allocation by the company at Easter and Christmas is illegal? If that is so, I really would like to get the low down on that!


WorldbyStorm - October 29, 2009

Didn’t I say legal? I’m pretty sure it was legal.


3. D_D - October 29, 2009

This idiot doesn’t even know the legal holiday entitlement.

Vincent Browne’s column should not be so easily dismissed. It should be welcomed. Twice in two days in the Irish Times Vincent and before him Fintan O’Toole delivered exactly what is needed at this time, and what is not coing from the unions or even the left : that there IS an alternative, that there bloody-well IS a pot of gold. Vincent may have been light on detail but Fintan was not. Nor has he been in a series of articles since the crisis began. His stuff is totally subversive, whether he knows it or not. He has actually said it before in so many words: there is no need for cuts at all. Certainly for cuts that affect ordinary people. None.


4. D_D - October 29, 2009

Sorry, the original IT commentator is the idiot, not Proposition Joe. Just in case.


5. Tomaltach - October 29, 2009

I have a huge problem with the ‘pot of gold’ thesis. First, I think the pot is far far smaller than we think. As another commenter pointed out using O’Toole’s own figures: 40,000 with assets of 33-50 billion gives an average of between about 800k and 1.2 million each. Nice if you have it, but this is hardly extra-ordinary wealth. True, some will hold tens of millions others a few hundred k.

So what do we do? Take a once off “Celtic Tiger Wealth Tax” or set up a continuous wealth tax? Do we apply the tax even if these individuals have ploughed some of these assets into productive capital? Generally people use assets to earn income from them, so decreasing the asset values reduces taxation flow from earned income. Which is easier to monitor and collect? (In the end a wealth tax is simply taking now what you might take later from an income or a disposal of the assets). It is worth noting that those places where there is a wealth tax the percentage is very low and that many of our friends in the high tax countries, such as Austria, Denmark, Finland, and Sweden have recently abandoned wealth taxes.

It is always tempting to think there is a crock of gold at the end of the rainbow, but alas, it is only a mirage. I have no ideological problem with a wealth tax – but the sums involved, the practicalities, the trade-offs I mention, and the pattern in other countries, leave me in doubt that any apparent avenue for avoiding a widespread reduction in our standard of living is merely wishful thinking, perhaps just denial.


WorldbyStorm - October 29, 2009

Hmmm… I think as a temporary measure it has some merit.


6. dmfod - October 30, 2009

isn’t the idea that you can’t tax wealth just another part of the ideological consensus? you could start by abolishing all tax reliefs only useful to the wealthy & then implement an annual asset tax applicable to all a person’s assets – why is this considered so impossible? any time a normal person applies for a grant or social welfare of some kind they are means-tested so why not have a assets test for the rich to calculate an annual levy on their assets? they’re not all going to emigrate either – even the rich aren’t as totally footloose as is made out.

in line with this you would set up severe penalties for tax dodging i.e. asset expropration & imprisonment


WorldbyStorm - October 30, 2009

Tobin taxes as well would deal with some of that. I’d absolutely agree re starting to remove tax reliefs in a serious fashion. We could go further and note that business operates in an environment where there are considerable under the radar subsidies from the state … lower costs for utilities etc, etc.


7. D_D - October 30, 2009

It is the right that is in denial: There Is No Alternative to €4 billion in cuts – from workers’ pay, social welfare, childrens’ allowance, the already in-crisis Health service, community budgets, and so on. The first of years of these cuts to come. This is indeed a war situation: bombs on the livlihoods of ordinary people especially the poorest.

So as a war measure, and even going on Tomaltach’s particular reading of Fintan O’Toole’s figures, a restoration from the €33 billion of, say, 50% (it is a war situation after all) is €17.5 billion. The pot(s) is there. Getting to it is matter of politics not economics. All out on Novemeber 6th!


8. Proposition Joe - October 30, 2009


… a restoration from the €33 billion of, say, 50% (it is a war situation after all) is €17.5 billion.

Even if the €33 billion is still out there sloshing around, and imagining for a second that it would be possible to confiscate half of it … at the current rate of cash-burn that would just put off the cuts for a mere 9 months. Then we’re back to square one.

But really, would be possible to yield 50% of that wealth? Any serious holdings of liquid assets would be gone off-shore at the first whiff of an asset grab, and the illiquid stuff is much harder to stick a serious tax on, in the midst of collapsing asset values and weak cash-flows. 1-2% might work, but 50% really is impossible to do. Imagine the scene …

Taxman: hey, Richie Rich, I see you got a nice yacht there … gimme 50% of what you paid for it.

Richie: I’m broke! But tell ya what, I’ll give ya my helicoptor instead

Taxman: Na, it’ll cost us money to off-load that pile of junk … keep it.

Not that I’d be agin’ taxing wealth, but you gotta be realistic as to what’s collectable. Inheritance taxes could definitely be raised, as could DIRT to part-fund the cost of the bank guarantee, also some form of residential property tax exists right across the western world so why not here I guess. But you would end up hitting people in very ordinary houses if serious cash is to be raised, the very folks who been burned most by the crash already.


9. D_D - October 30, 2009

@ Proposition Joe

“at the current rate of cash-burn that would just put off the cuts for a mere 9 months. Then we’re back to square one.”

Isn’t the planned ‘adjustment’ for €15-20 billion? How many billion do you think needs to be cut from public spending?

Maybe the rest could be put ‘off balance” like the NAMA billions? Where will those NAMA billions come from? What pot of gold will supply them?

It is always hard to tax the rich. So easy to cut the Christmas social welfare bonus and operations at Crumlin childrens’ hospital. So easy.


Proposition Joe - October 30, 2009

Isn’t the planned ‘adjustment’ for €15-20 billion?

That’s the amount all right, but it needs to be taken out of the per annum spending though.

Whereas a 50% wealth tax would be be a once-off windfall.

If you go back to that well the next year, you’ll won’t find that the wealthy have doubled their assets again in the meantime.


10. D_D - November 1, 2009

“but it needs to be taken out of the PER ANNUM spending though [my emphasis].”

Do you mean this is to be a permanent ‘adjustment’? No return to growth. No return to bigger profitability? No reduction in unemployment?


Proposition Joe - November 1, 2009


The 15 billion adjustment brings us back to sustainable spending against the trend level of economic growth. We’d still probably be in deficit, but managably so.

From that base, we can then begin to increase spending in line with future economic growth.

In terms of when we get to that point, it depends on how fast unemployment falls, how much of the productive base we lose via migration of the skilled workforce, and the level drag arising from servicing costs on the debt built-up during the “special period”.

We also would need to re-order our tax structure so as to further increase spending slightly ahead of economic growth allowing us invest in some targetted strategic spending. Universal preschool education for example, stuff that pays off economically in the long term.

But the whole point is that a once-off windfall doesn’t really improve our situation that much. Just like winning 100 quid in the bookies doesn’t allow you to continue spending 150 quid a week more than your wages.


11. WorldbyStorm - November 1, 2009

A fair few probably’s but that’s fair enough. However, this surely is a two pronged approach. Firstly to tide us across with as little damage to the social infrastructure as is humanly possible the next five years and simultaneously reformat our revenue stream and expenditures. Therefore a one off windfall tax might not be the worst thing in that context and might substantially aid the situation if it is clear that it is a one-off (albeit a precursor to somewhat higher taxes all around) and indeed part of a societal wide package which would include universal pension/healthcare provision (on either a public or private model but clearly regulated by the state), wage cuts in the PS hypothecated for growth stimulus programmes in the private sector etc, etc.


Proposition Joe - November 1, 2009

Interesting idea on the universal pension provision. Were you thinking in terms of private sector workers surrendering their pension funds or other assets to the state in order to buy into a PS-style pension?

I’ve no doubt that anyone offering such a deal would have their hand bitten off by eager takers. But I’d have my doubts though about future affordability, unless the new universal pension entitlements were quite watered-down from what currently obtains in the public sector. And that, I’d guess, would be a non-starter with the unions.


WorldbyStorm - November 1, 2009

Personally I’d be happy with even a watered down version which guaranteed higher levels of income for all workers PS and private sector even if some in both private and PS had to take a reduction in what had been expected and from talking to people in the PS there’s a strong awareness that the pension provision supposedly previously guaranteed to them is going to change sooner or later… BTW, I could see some private pension holders feeling equally aggrieved depending on how this worked out. I think the US experience of the [part] universalisation of health care is educative in how difficult it is to shift these sort of models.


12. ejh - November 2, 2009

Well indeed – once you have an everybody-looks-after-themselves, public-provision-is-a-threat-to-me model, it’s extraordinarily hard to challenge it, especially in the absence of a strong union movement which would make collective values and solidarity rather more important in the public mind. The tendency to hysteria and shrieking which is common to the first model doesn’t do much for the standard of debate around these issues, either.


Proposition Joe - November 2, 2009

Correct in your analysis of the difficulty involved in carrying people along with such a paradigm shift, even when its obviously in their own interest. Witness the ridiculous sight in the US of hysterical retirees chanting “ain’t no bureaucrat gonna come between me and my Medicare”. Other than the bureaucrat busily shoveling cash my way, of course.

However, you’d be waiting a very long time for the unions to campaign for something that would involve their members giving up some entitlements in order to spread the resources more evenly. That’s just not what unions do.


13. ejh - November 2, 2009

Are they given the opportunity to do so?


14. ejh - November 2, 2009

(Incidentally, the claim “that’s just not what unions do” is not really compatible with, for instance, British trade unions’ support for the Social Contract under Labour in the Seventies.)


Proposition Joe - November 2, 2009


Foiled again with an obscure counter-example from Labour history 🙂


Dr. X - November 2, 2009

The Social Contract is hardly an obscure event. . .


15. Dr. X - November 2, 2009

Nor, indeed, is the Programme for National Recovery of 1987. . .


Proposition Joe - November 2, 2009

Fairly tenuous connection though to the giving up of some entitlements in order to spread the love around.

More like pay restraint in direct exchange for future tax cuts to be enjoyed by those same workers.

Or is that too narrow a reading of the PNR?


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