Government borrowing by proxy?
It appears that the government coffers are in an excellent state with tax returns running way ahead of expectations. Some of the reasons why:
Stamp duties were 28% higher than last year and yielding €423m more than forecast, while the VAT take increased by 14% and was €427m ahead of target. However, there was bad news on the corporation tax front, which showed a continued slump in tax paid by businesses.
So where is all this Stamp Duty and VAT coming from? It wouldn’t have anything to do with this by any chance:
SOARING personal debt has put the Irish economy at greater risk of shocks than ever before, according to a major new report by Goodbody Stockbrokers. It said the surge in household debt levels over the past decade would leave the economy more exposed to a boom-bust cycle if interest rates or unemployment rose. Average household debt would reach 160% of disposable income within two years, up from 50% in 1995 and 120% at the end of last year.
Mark Waters marked time at 5:20 pm on November 3rd, 2005 .
I have long been of the opinion that little or nothing was likely to be done about ballooning property prices since the Government was a major beneficiary of the current situation by being able to collect stamp duty calculated on the property price, even allowing for exemptions passed onto first time buyers.
Regarding personal debt levels, what worries me is that when the chickens eventually do come home to roost, there will always been some complainants demanding that the Government “do something”.
“Ireland’s debt profile had changed as a result of a population increase in younger, higher-spending age groups and an “extraordinary” economic performance that had made Ireland one of the richest in the EU, he said.”
I’ve mixed feelings about this. Basically, if we’re that well off, can’t we afford much of our consumer spending without resorting to debt? I know I am not an economist but realistically, I can’t imagine that any economic growth based on debt accumulation is anything other than a fantasy.
Like the new décor, by the way.
Most of the debt about 80% is in houses. Which i believe is not bad as it is an asset i.e unlike a holiday it does depricate in value an awfull lot. Even if the bubble burst a house is still worth something. Also anopther large portion is probably in cars which people do need and unless they are ferraris are needed. So i don’t think mcuh of the debt really is uncontrollable consumeresm. Credit card debt would be a more interesting figure to see. nice site by the way