IMF Bail out...what does it mean for Ireland

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missymoomooo Posts: 639
Hi All, Haven't really been following a lot on the news lately on account of it being so damn depressing but i'm just wondering what will happen if Ireland ends up getting this bail out from IMF. I've been told if we dont get it and the county can't pick up in's revenue that there will be no wages, no money in the banks and then god only knows.... What does it mean for Ireland if IMF bail us out...do they then get financial control and if so what do they plan to do?
lux Posts: 6270
Ireland's in a unique position as a member of the euro-one failure of a euro country can and will affect all others in the zone. So they IMF and the EU have to negotiate carefully together. An economist in our dept described the IMF like a surgeon operating on someone with cancer in several places. It will have access to the budgets of all depts and will basically cut out x, y and z. In the worst cases, if there are three schools or hospitals in a small area two could be ordered to close. Likewise, they might decide 1,000 nurses or teachers need to be cut-this may impact on everybody as services will be affected. They might decide public sector wages need to be cut by another 20%. The IMF will simply put a scalpal through what it wants cut and the Govt will have to implement it-same for tax increases. The EU on the other hand is more concerned with how our actions affect the euro. Germany doens't want to give money to a country which can lure businesses from it to Ireland with teh promise of a lower corp tax rate. However, the EU historically has been reluctant to interfere with this to get treaties passed so its hard to see how it would go about forcing this change. The worst case scenario is corp tax increases because a lot of companies are here for that reason alone, so if they get a better deal in another country they will be gone. The IMF would want to keep it but Europe would not, so that's what's most complicated. ETA- people should NOT panic about money in the banks. Argentinian banks were frozen UNTIL the IMF came in with loans and then things improved bank wise so people STOP and THINK before doing anything rash.
jumpinjack Posts: 277
Well said lux, agree with you about witholding panic with regard to deposits. We need to be 'brave' if you like, stand firm, it there's another 'Northern rock' event, we're screwed for sure. Stiff upper lip for the rest of the world, that is certainly watching. Was only reading today that other countries are looking on gleefully at our demise-sad a**holes. Corpo tax thing v worrying, H2b says his ( foreign) company will be GONE from Irl. if corporation tax goes up--it's the ONLY reason they're here. Saying that they're tax bill is pittance, but they employ people, like my H2b...I'm scared...anyone else???
SaraD08 Posts: 1795
Jumpin jack... How do you mean their tax bill is pittence?? Company i work for just paid €9,000,000 in CT yesterday....and if you look at google and all those other companies their tax bills would be substancial! Over 300,000 people in Ireland work for these type of companies and not to mention all the sub contractors etc who rely on the business.. so on a whole there will be over 400,000 extra people joing the dole if CT increases! My hubby is self employed.... so if his business goes and ct is increased we're both out of jobs >:o( Dunno whether they will actual bring CT level... it will cause even more unemployment.. which in turn would be loss of taxes from the government and increased dole figures!
jumpinjack Posts: 277
Hi SaraD08, sorry ,i meant [i:3bouqm9x]relative[i][/i:3bouqm9x][/i] to the company's profits the tax bill was pittance-maybe that was the wrong adjective to use, but afterall it is only 12.5% and the very reason other European countries are putting us under pressure to increase it. The tax bill to which you refer does indeed seem impressive. Secondly did you read my post or just focus in on that comment? I said my H2b is [i:3bouqm9x]working [/i:3bouqm9x]for a foreign company who's only reason for being here IS the corporation tax rate, he would lose his job if it goes up ,so hold-off on the lecture with regard to what would happen if it increases,I'm very aware, thanks though **ETA I can see why you might get annoyed on comments with regard to CT if it affects you directly and genuinely hope for your sake and mine, it stays the way it is, best of luck
Cinnabon Posts: 2626
SaraD08 - it's not pittance but when you compare it to other countries in Europe it is very low. The european average corporation tax is >22% whereas Irelands is 12.5%. I know the company I work for are mainly here because of the low tax rate and if there was a large increase they would be gone in the morning with the loss of about 5000 jobs. There was a suggestion today that we could possibly increase the rate by about 2-3% without it having much of an impact for the large companies but much more than that could be detrimental.
SaraD08 Posts: 1795
fmh62, i totally agre with you that the CT is far less in irealnd than in the rest of Europe... thats unmistakble... however just say it were to increase to say 22% to be online with the rest of europe... no body will benefit, companies will pull out, head over to countries like India or China, where labour is cheap...and now their work forces have good education especially india, NOT elsewhere in Europe... for ireland this means an extra 400,000 on the dole... in turn means we're gonne be a far bigger drain on Europe.... so no body will gain for Ireland iincreasing its CT... therefore a loss in CT for the government loss in PAYE/PRSI for the public finances... and a drain on the dole etc... So it doesnt actually make sense to bring it online with europe... even it other countries are upset by it... it doenst make finanical sense... Hopefully it wont come to that :-8 God you know each week when i watch prime time... i think thats it... its rock bottom... we cant get any worse.. and each week we do.... very frustrating O:|
zoesmama Posts: 2774
tbh my thoughts have been along the lines of this article - http://www.irishtimes.com/newspaper/opi ... 09092.html
SaraD08 Posts: 1795
[quote="zoesmama":2wlfjkkc]tbh my thoughts have been along the lines of this article - http://www.irishtimes.com/newspaper/opi ... 09092.html[/quote:2wlfjkkc] yes the IMF will keep us in the right direction etc.... its just depends on the measures they have to take to be firm thats all.... its very worrying times... not only for the companies who rely on the CT but also for public sector workers :-8
Jane Smith Posts: 3158
Jumpin Jack and Sara....you are both right in what you say. There are companies which pay little or no corporation tax, such as those in the leasing industry for example....most of their tax liabilities are deferred, but on the other hand these companies contribute to the economy in numerous other ways as mentioned by Sara. India and Asia etc. are a massive threat to us but closer to home and one who has really been a competitor in recent years for the type of business that goes on in the IFSC and the like is Hungary. Along with other incentives they had a very attractive corporation tax rate of 19% until this July when they reduced it to 10%!!! Ireland is a very expensive place to employ people compared to these other jurisdictions which offer far cheaper labour so without our attractive tax rates and incentives we are left with very little incentive to retain business here. The government has come out very strongly in reiterating the current corporation tax is non-negotiable despite the pressure from the EU....but who wants to take the government at their word or their ability to keep their word at the moment?
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