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The cuts are going to happen.

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  • 25-10-2009 6:09pm
    #1
    DJDC
    Closed Accounts Posts: 365 ✭✭


    I have noticed some people on this board becoming increasingly agitated with public service workers, almost to the point of hatred. I think everyone needs to calm down and realise that of course the average joe in the PS is going to fight any further cuts in his/her salary tooth and nail. Their anger is only worsened by the fact that their individual decisions did not lead to the bubble/crash although the benchmarking process will go down in history as a failure.

    However, what we have now is a simple case of mathematics. We are spending €25bn more than we are taking in via tax receipts. Increasing tax levels any further will just have a negative effect on the country just like it did in the 1980's. Already the effective tax rate for earners above €100k is 52% which for a "low tax knowledge" economy is crippling. There is rumours the Oct tax receipts are terrible and many economists feel we are close to a tipping point where the marginal change from increasing taxes becomes negative. Even if Cowan bottles it and doesn't cut the PS this time and instead raises taxes again, they will just be faced with an even worse situation 6 months down the line in terms of budgetary deficit. The ECB, IMF will not allow Ireland to become a threat to the stability of the eurozone through unsustained borrowing you can be assured of that.

    So the cuts are going to happen and the longer the unions/government hold off the more savage they will be for the PS. So everyone just calm down and realise this is a battle the PS can't win, the numbers are against them and there's nothing they can do about it.


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