Wednesday, March 28, 2012

Will the Irish pay the new household charge?

As the deadline for registering and paying the new household charge approaches on the 31st of March, the majority of the citizens still have yet to pay. There are many scenarios on what the failure to pay will result in. But is the introduction of the charge timed right and why is there so much controversy over it when such charges exist all over Europe?

The “Household Charge” of €100 has been introduced in order to fund local services like emergency services, maintenance and cleaning of streets, public parks, street lighting, libraries, etc. It is an interim measure and will be replaced in future by a valuation-based property tax that already exists in other EU countries.

Ireland is one of the last countries in Europe that does not fund local services through local property-based charges. The EU/IMF Programme of Financial Support for Ireland commits the Government to the introduction of a property tax for 2012.  

The Household Charge is an annual charge introduced by the Local Government (Household Charge) Act 2011 which is payable by owners of residential property. It is a matter for owners of residential properties to register and pay the Household Charge on or after the 1st of January 2012.

A property tax, requiring a comprehensive property valuation system, would take time to introduce and accordingly, to meet the requirements in the EU/IMF Programme, the Government has decided to introduce a Household Charge in 2012.

The new charge is separate from and in addition to the Non-Principal Private Residence (NPPR) charge. If you own a residential property in Ireland, you are obliged to declare your liability for the Household Charge and pay it by the due date, unless you are not liable.

If your house is rented you are liable for the charge and not your tenant. Virtually all private residential properties, including apartments and bedsits, are liable for the charge. There are a few exemptions that are not though; properties owned by an approved charity, government departments or by local authorities and under their schemes and mobile homes, are some of them.

A late payment fee of 10 per cent will be added if the charge is paid within six months of March 31st. This will increase to 20 per cent after six months and to 30 per cent after a year. Late payment interest of 1 per cent per month from the due date will also apply until the charge has been paid.

Since this new measure has been announced by the government, many political and social groups have been promoting their campaign opposing it, on social media, the internet and public demonstrations.

The Irish government and all of the main political parties support the new charge, apart from Sinn Fein. The party’s leader Gerry Adams TD has called on the Taoiseach to axe the Household Charge following the publication of figures which show that less than 7% of households have paid until the end of February.
The Louth TD also called on the government to put in place a plan B to ensure that local councils are adequately funded.

With only days to go before the March 31st deadline the government’s plan to generate €160 million for local councils appears to be in real danger of collapse, according to the Sinn Fein TD.
He called the government to accept that the Household Charge is an unfair tax which should never have been introduced. It is a flat tax that hits the poorest hardest and people on low and middle incomes are bearing the brunt of austerity.

 Mr Adams believes that, the Household Charge should be axed and the government should introduce a cap on wages in the public sector at €100,000, as proposed by Sinn Féin. This would raise €265 million “more than envisaged by the Household Charge.”

Another Sinn Fein politician, Senator Katherine Reilly, also believes that the government got it wrong. “The tax scheme should be progressive, regulated to the ability to pay” she notes. This charge is in line with the EU/IMF austerity programme, as an interim measure to property tax, she explains.

The charge is completely unjust, according to the Senator. “People have massive mortgages repayments and the charge is not looking to the ability of a house owner to pay; it is completely unfair,” she says. “People are in the breadline, the households are squeezed with high levels of unemployment, while more and more charges are being introduced,” she continues.

But there are speculations that if house holders fail or decline to register and pay for the new charge, the government will eventually collect it directly from the existing utility bills of the household.  At the moment there is an enquiry on the legality of such measure with the Data Protection Commission.

“If such thing happens, Sinn Fein will organize some sort of protest about it-like marching and campaigning against it outside the government buildings,” Senator Reilly said. “The government must take a serious look to that, it is not going to work; people are financially squeezed.”

Gerry O’Donnell from Virginia Co. Cavan suggested that the public should know how these funds raised by the new charge will be used by the government; “I think that our government should publish a list to out-line exactly what we will get in return for this payment; do we get a service? Will they replace and ensure that the roads to our homes are maintained for example,” he pointed out.

Many groups that are campaigning against the new charge are warning that once this charge is introduced, the amount will keep rising and it will also lead to water charges. In most other European countries, water and household tax is a reality for many decades now.

In France the municipal taxes are on average about € 1,800 per household, while in Norway around € 1,448 per annum. In Germany the average water bill is around € 750 per annum. Of course there are many differences between the Irish public services and those of our European counterparts. In many cases the services in other European countries are of higher level.

But how does the household charge is implemented in other EU countries and how does it affect their people? Thanos Kalamidas, an artist and free lance journalist in Helsinki, explains how the Finnish system works:  “there is property tax in Finland and it is painful,” he says. “In Finland the idea is that the land belongs to the state and you just have the right to use it, however surreal this might sound in a capitalist world.”

Thanos explains that if you buy and sell property in Finland, your capital gains will be taxed at 28%. There is a separate real estate tax, levied by the municipality as well. Non-resident investors are not exempted from paying this. The property tax rate is based on the value of the real estate, but it generally ranges from 0.3% to 1% of this value. The rate is different for permanent residents, who pay only 0.15% to 0.50%.

Marianne Ranke-Cormier, a Parisian and editor of the on-line Newropeans Magazine, explains how the tax works in France; “in France this charge is called ‘Taxe foncière’ (Land value tax) and also ‘Taxe d'habitation’ (local residence tax) existing since the French revolution, which corresponds to the spirit of equality,” she explains. The rich landowners must also pay it applies to all real property, built or non-built. However, the tax is levied by municipalities, so the richer the city then the tax is lower.

This is the case for Paris where the taxes are lower than in the suburbs, “which is unequal, as properties in Paris are more expensive, so the rich Parisian owners pay less taxes when compared with the owners of the suburbs,” she says. “It is time for owners of property of Greece and Ireland to contribute to the community for the services they exploit. The land belongs to nobody, it is a common good and I find it normal to pay back to the society for the right to ‘own’ a large or small part of it,” Marianne adds.

 Ildiko Gonda, and artist from Budapest explains how this charge affects them, in one of the newest EU states. “In Hungary the tax differs, depending if it is a holiday home, family house or apartment, business premises, building site, etc. It also depends on whether the owner occupies the property, or it is a second real-estate property,” she says.

It varies in the different districts of Budapest and there are wavers, depending on the number of dependants living in the property. There is a penalty tax for sites, because the local government wants to force the owners to fill the gaps and build in the empty site.

In Hungary people live in their majority in their own property like in Ireland. For this reason there are social elements built into the taxation system. “But people are finding tricks to avoid taxation,” Ildiko comments. “From this year, there is such tax everywhere in Budapest, but it works similarly as in France.”

Last year the charge has been also implemented in Greece, as a condition of the EU/IMF bail-out agreement for the debt ridden country. But unlike the Irish, the Greeks were not “asked” to register for it in order to pay; the government there made sure that the charge will be collected as soon as possible.

The house hold tax is being collected through the property’s electricity bill and DEH (Public Corporation of Electricity). DEH is obliged to charge the home owners the new tax in four yearly instalments. The charge is not just € 100, but as in Finland or Hungary it is calculated according the size, value, age, use and location of the property and there are many different levies or wavers for single people, couples with kids, one parent families, etc.

If the home owners fail or decline to pay the tax, then DEH has the right to suspend the electricity provision to the property until the owner settles the bill. The owner has not the right to switch to another electricity provider until he/she has settled the fees. In the case that the owner does not apply for the electricity service reconnection and does not pay the charge, then DEH will inform the relative state authorities to proceed with further persecution of the owner.

Of course the reaction from the Greek public was strong and in many cases violent. According to many, these measures are being implemented the wrong time, when the people are losing their jobs and their salaries are being cut. Others view this as totally unfair, as they feel that they have to pay this tax to save the banks and the mistakes of the corrupt political elite. Water charges already existed in Greece, but the new house hold charge was something that many saw as another way for the government and the EU to rip them off their hard earned money.

Zoe Karasoultani, a journalist from Thessaloniki, Greece commented; “no Greek has agreed to this charge. Nevertheless it has been implemented, but some are still refusing to pay; others like my family have paid it, but with heavy heart. The ones who refused to do so now simply owe the amount to the revenue.” It seems that they will be dealing with them from now on.

If the EU and our governments are trying to harmonize the property taxes in all EU states, or provide the state with more resources to fund public services, it seems that they are doing so during the worse time possible. By using the current crisis in order to push for the desired reforms, they are only turning the public opinion against the new charge.

Introducing this charge maybe a step to the right direction as Marianne has put it, but in a climate of unemployment, austerity and a serious economic crisis, it is a recipe for protests; cutting jobs and salaries while raising taxes and even worse introducing new ones, is never going to go down easily with the public.

Friday, March 9, 2012

Britain to blame again for the new EU fiscal treaty referendum?

British opposition to the EU’s original fiscal treaty proposal is partly responsible for forcing a referendum on the issue in the Republic, former Taoiseach John Bruton argued yesterday.

The Republic has to hold a constitutional referendum to ratify the fiscal treaty, which imposes budgetary rules on EU members limiting the amount of money they can borrow and the deficits they can run.

Addressing the Ireland Canada Business Association yesterday, John Bruton, a former Taoiseach and EU ambassador to the US, said the British government’s refusal to agree to amend existing European treaties to accommodate the new fiscal rules had “forced everybody else” to go outside existing agreements.

“The fact that a member state would do such a thing, to my mind, suggests something not far from malice,” he added.

Mr Bruton argued that if Britain had agreed to amend the existing EU treaties to accommodate the fiscal pact, it is possible the Republic could have avoided the need for a referendum. He suggested it would have been possible for the Government to rely on the fact the electorate have already ratified those existing treaties in previous referendums.

Mr Bruton is president of IFSC Ireland, a private organization that promotes the Republic, and particularly Dublin, as a location for international financial services. His brother, Richard, is Minister for Enterprise, Jobs and Innovation in the Coalition.

Mr Bruton was giving the Ireland Canada Business Association’s inaugural lecture, which was hosted by accountancy firm Price-Waterhouse-Coopers at its offices in Dublin. In his speech, he argued the welfare state, designed during a period of sustained growth in the 1950s and 1960s and promising generous pensions to workers, was the root cause of the EU’s sovereign debt crisis.

He said the markets recognized in many EU states the ratio of workers to pensioners was falling, making it harder to sustain retirement benefits. As a result, the markets were targeting the EU.

By: Barry O'Halloran
The Irish Times, 09/03/2012.

The above article just sickens me. We all know what the Brits are doing in the E.U., they want to protect their interests that lie with the Markets and the financial sector. But at least please call a spade a spade and stop the nonsense! They hate the euro and they want it gone. They advocate for the debt ridden nations to leave the euro-zone as soon as possible.

They tried to block the new EU fiscal treaty, because they will lose out in manipulating the European currencies and economy. And now that they managed to force Ireland to have a referendum on it with their objections and withdrawal, they will meddle again in the referendum and try to shoot down the treaty.

If the Irish vote NO they will be doing Britain's job and making them a favor, for the worsening of the crisis for all of the nations that are in dire need for a solution right now, including Ireland! But only Ireland's reputation will be damaged by this, not Britain's.

I understand that the British Government has invested a lot over the decades to maintain the financial sector and it is one of Britain's main economic sectors, since they got rid off a lot of their industries. But if Greece, Ireland, Portugal and Italy are called to face tough austerity and make the necessary reforms, with very painful consequences for their people, why Britain isn't?

Perhaps they should go back to what they had before and not rely on easy money from the Markets. It will be for Europe's, the British people's and the World's benefit to control the financial sector. 

The U.K. is acting selfishly again, to protect the very institutions that brought us to this mess: the banks and the markets. Next time please stop lecturing us about how Europe is robbing Britain out of its resources, and consider that you (the ordinary British citizens) might also not escape the will of the Markets, after they have consumed everything in the other European countries.

We need to control the markets and the banks, not support them, side with them and give them more power over our citizens. But the City of London has different views!

Putin is re-elected, Europe debates how to deal with it!

And yes, he did it again; (everlasting) Russian President Mr Vladimir Putin is elected once more to be the country's President for yet another term! And while we in the rest of Europe do not quite understand Russian politics, somehow the Russians (or the majority of them at least) seem quite content with what is going on in their country. And I do mention the majority of them, because lately we have seen strong opposition and many protests in the streets of Moscow and other large Russian cities, calling for Putin to leave the Russian political scene for good.

Europe of course and "the West" in general are trying to figure a way of dealing with the Russians, Putin and their kind of "democracy." No, having the same President re-elected the Putin way is not democratic at all, that is one thing for sure. But why do we have to understand them or even make them change in order to do business with them? Why do we have to make everyone that is trading with us or is near to us behave the way we do, or spread our version of "democracy" to every country in the World?

As if Democracy in Europe and America are perfect! I won't even go to the American version of "democracy", a "gift" from America that is being forced to some unfortunate nations with invasions and bombings! Either you are going to have "democracy"  or else we are going to force it upon you. Excuse me, isn't democracy by its definition deriving straight from the will and actions of the people, the citizens and not by foreign powers? In my opinion "democracy" for the Americans means one thing: Capitalism! Unless you are free to consume and spend money on buying things that you do not need, then you are not democratic enough for their liking! And they are going to convert you to it.

And what about Europe? Recently the German Minister of Finance Mr. Wolfgang Schauble, virtually threatened the Greeks to vote again for either the PASOK or the New Democracy Party in the upcoming election in the country, in order to secure the second bail-out loan. To remind you, those two parties run Greece since the '70s and they are responsible for the current economic mess in Greece but also in the eurozone! The same people that we want to get rid off so badly, our European partners now are threaten us that we have to keep them or else! But then how will Greece change? Why insist on keeping in power those people who are guilty of bringing their country to its knees? Is it because they are the ones who signed the sell out of the country to our "partners" in Europe and America and if we get rid off them, the deals they signed will perhaps be cancelled by any new political establishment?

Of course this makes me wonder how democratic are Greece and Europe itself, when they allow such things to take place! It also makes me wonder if the corrupt political elite who was supported by Europe for decades, was only placed in the lead of the country to do just that; drive the country bankrupt and bringing it to the mercy of the bankers, the marketers and the capitalists. And I won't even go to the democratic deficit within EU, or examine the case of other countries, like Italy for example; they had someone very similar to Putin, he is called Berlusconi and he dominated the country's media, public opinion and politics for years, yet Europe tolerated him until things reached a dead end! No one was asking the question he ask about the Russian case: how to deal with Italy?

Russia is a major trade partner for Europe for its oil and natural gas, among other things. We should not try to change their politics; it could be dangerous! Russia is not Iran. And even with Iran what have we achieved so far? We banned their oil into Europe, it is the weak European economies like Greece that suffer because they can not import oil from there! The Iranians simply sell it on to the Chinese; there are other markets you know apart from Europe. We can not afford to do the same with Russia, can we. Russia had never had the type of democracy we have in the rest of Europe and perhaps they will never do; or even if they will eventually it will take much more time and it must come from within the country, from the Russians themselves.

Why try to force it or why shall we make everybody conform with our way of doing politics in order to do business with them? Besides who tells us that our way is the best? There are a lot of skeletons in Europe's closet and if we get involved in other people's politics, be sure that they will get involved in ours in return; why go back to the Cold War days?

Personally I am more concerned about what is unfair and undemocratic in Europe/EU right now. We can not change or interfere in Russian internal affairs, not without consequences. Putin must go but we can only watch, or perhaps assist the groups that call for our help; but they have to reach out to us first. We should try to sort our problems in Europe before we criticize Russia, because right now we are not in much better place. Democracy in Europe is fading and we have unelected "technocrats" put in our governments, while bankers, the markets and the capitalists rule our countries.  And we dare criticize Russia for its elections? Sort your own back garden Europe, before you dare to criticize others!!

Tuesday, March 6, 2012

Referendum in Ireland over the new EU fiscal treaty!

Last week Mr Eamon O’ Cuiv quit as a deputy leader for the opposition party in Ireland Fianna Fail, after a disagreement with the party’s leader Mr Martin over the new Treaty.

“To me, this whole issue is about the fundamental future of Ireland and I believe it’s much bigger than any one individual,” said O Cuiv. “Therefore, it would be impossible for me to stay as deputy leader and not have my heart and soul in what I would consider to be an absolutely fundamental decision that we have to make,” he noted

The disagreement came when he opposed the party’s line to support a YES vote on the referendum, as in his opinion it would be bad for Ireland! Others who oppose the treaty are starting their campaign, and they claim that this treaty is going to make small countries to be forced into austerity and recession for the benefit of the richer and bigger states that will have more control over the small ones. They claim that this treaty is unfair to the small countries and benefits again the bigger ones.

The debate is just heating up in Ireland. Again the NO side gets a head start!  They are starting to get organized and raise their voice before any arguments or campaigns begin from the supporters of this treaty!
Are those who oppose the treaty correct, is this treaty something bad for the small states? Or are they playing the populist nationalist card to gain votes, but in fact they want to protect the status quo and the sovereignty of their country because they feel that is the best thing or they want to protect the interests of some people/groups in their country?

Personally I am not 100% certain that this is the ideal solution myself, but I am pleased that at least we have any plans at all. You would think that after years in recession and one of the worst crisis of the past few decades, our leaders could do better than that. But knowing how things work in EU and Europe I am not surprised that we have another mash up again. As I said, it is better than nothing! With 27 national Governments and different interests, it is getting harder to reach a unanimous deal!

As for the referendum, well what can I say; I witnessed the last referendum about the Lisbon treaty in Dublin. Confusion, misinformation from both sides, threats, populist arguments and a very bad run campaign in the first run. Arguments from the YES side were urging people to vote YES "for jobs and stability" when the Treaty was not about jobs itself. On the other hand, the NO side pulled some very ridiculous arguments like the one that claimed that after the Lisbon Treaty the Irish children would be forced to join an EU army, abortion would be legalized and even microchips would implanted in the future generations!! None of those was included in the Treaty itself.

 People were definitely not adequately informed and a lot of them just voted NO because they were not happy with the quality of information, others because they wanted to get back at their Government for all the (then) recent scandals and some did not even bother voting. If it happens again, well we should brace ourselves for more turbulence; especially if external bodies (from the British conservatives but also from USA and other European eurosceptic groups) get involved just to cause problems.

British nationalist party UKIP already vowed to support the NO camp in Ireland during the referendum! Are we going to have another Lisbon Treaty mess?  In a recent poll the Irish voters back the treaty and the majority would vote YES, even though a quarter are still undecided. It will be certainly an interesting debate to watch!

The Treaty has some basic flaws of course, as again it just brushes the surface of the problems and it does not deal with the root of them and the faults that exist within the eurozone and the EU in general! Instead of pushing for real reforms within the eurozone and each state individually, it only puts in place rules about how much each state can borrow or how it will be punished if it breaks the rules. Yes it is a start, but it is not efficient! I am sure there will be a lot of favoritism and loopholes that certain states can find ways to escape punishment or bend the rules as it has been happening all this time. Especially when the Treaty is modeled after the values and economic traditions of the powerful and rich countries of Europe.

We need a real fiscal unity in Europe, we have one currency and one market, we need a single economy. Having laws and penalties for states breaking the rules is not enough; we need to place the foundations for a real and fully functioning European economy! But of course that requires many compromises mainly from the rich and established European powers.

If it was me I would vote yes, but only with the condition that it won’t stop to this treaty only. I would vote yes in trust that this is only the beginning and the first step. I do not like standing in the way of any move forward, even if it is a tiny one or a not so adequate one. It is better than what we got right now, as the times are dire I think that we need to keep moving, keep experimenting, keep trying solutions so that we can get Europe and its economy back on its feet again. But will the rich states accept any further reforms or they will try to preserve their interests, and  punishing the states who do not play by their rules is simply adequate for them?