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Effect of threatened property tax on wage-inflation

  • 02-08-2009 1:48pm
    #1
    AntiPropertyTax
    Closed Accounts Posts: 26 ✭


    I think the government is in danger of scoring an own goal against the irish economy if it goes ahead and introduces a property tax in the december budget.
    Such a tax (reports on RTE radio suggested 800 a year, head of central bank had called for 1000 a year), would be the 2nd highest outgoing charge for most people (after mortgage).
    Most people won't be able to "absorb" such a sudden jump in the cost of living, and will try and pass it on.
    It will become something that people have to "factor in" when they make decisions on how much they need (not want or desire, but actually need) in terms of salary to break even each year.
    Because its not linked to income, it will be a big dis-incentive to people to move from social welfare to low paid jobs.
    I was in England in 1988/1989 and remember the poll tax coming in. The lowest base wage was 8,000 before it, but after the poll tax came in, it was 10,000. I believe a similar thing will happen here.
    Anyone got any thoughts on the effects on wage inflation ?


Comments

  • #2
    nesf
    Registered Users, Registered Users 2 Posts: 27,644 ✭✭✭✭nesf


    Introducing it during boom times would have resulted in higher wage inflation since the general trend on wages was up. Nowadays when the trend is down I sincerely doubt you'll see wage inflation because of this or at most it'd have a limited effect. There's just too much downward pressure on wages right now.


  • #3
    eamonnm79
    Closed Accounts Posts: 459 ✭✭eamonnm79


    Yeah, i think that an increase in the number of homes in the Repo courts is more likely than wages going up.
    What employer is going to put wages up in this eco environment.

    I guess the lesson the world will learn from Ireland will be that taxing your way out of a recession is impossible.
    Trying to tax yourself out of a depression is catastrophic.
    I know we are runing out of options but the government still seem to be making the wrong ones.


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