Public Sector Reforms

doc_17

degrees in what subjects that are taught at second level? There are 10 jobs posted here for second level http://www.educationposts.ie/adverts/second_level/employee/

and various other jobs at different levels. And thats just now. Buy the Indo, especially on Thursday and Sunday, eah day and apply away.

Then you could implement the reforms discussed from within. Let me know how those applications go!! The best of luck to you:D

ardmacha

The point is that ei.sdraob proposed the false statement that basic PS wages were still at their peak, when in fact they have fallen by 12-15% (depending on how you define the average). Against this most people in the private sector have not have a cut at all, or only a small cut, although the overall private sector figure has been affected by sectors where demand has disappeared e.g. construction.

ei.sdraob

doc_17 wrote: »

degrees in what subjects that are taught at second level? There are 10 jobs posted here for second level http://www.educationposts.ie/adverts/second_level/employee/

and various other jobs at different levels. And thats just now. Buy the Indo, especially on Thursday and Sunday, eah day and apply away.

Then you could implement the reforms discussed from within. Let me know how those applications go!! The best of luck to you:D

all part time and substitute listed on that page...

ardmacha wrote: »

The point is that ei.sdraob proposed the false statement that basic PS wages were still at their peak, when in fact they have fallen by 12-15% (depending on how you define the average). Against this most people in the private sector have not have a cut at all, or only a small cut, although the overall private sector figure has been affected by sectors where demand has disappeared e.g. construction.

im still waiting to see data for that 15% drop

and now i want to see data that private sector wages werent affected

also a graph on recently unemployed % from private and public sectors be nice

go on im waiting, i try to backup my arguments with info and references not hot air

doc_17

The vast majority of 2nd level teaching posts are initially part time. They might have full hours but the job is for a set time to see if you are suitable. ie can you handle the pressure/discipline etc. Plus the substitute jobs are how most begin their teaching careers.

So you want to just walk into a permanent job 1st day out? The average amount of time it takes a teacher to get a permanent job is 7 years.

Also those people who fill the substitutes job will pay the entire pension levy for the duration of their employment regardless of whether or not they continue teaching and can't get it back. Its no wonder you have such a low opinon of the PS if you think its that easy to get a full time permanent pensionable job.

But if these simple things ,ie not knowing where to look or wanting to start at the bottom, put you off you'd probably be better of elsewhere.

ardmacha

im still waiting to see data for that 15% drop
and now i want to see data that private sector wages werent affected

Don't be perverse. Public sector pay cuts are a matter of public record, and the postings here have stated the % cuts at various pay levels. The only issue of debate is the nature of the average.

Private sector cuts are not well documented, if you believe the majority of private sector have had cuts then indicate some data to support this. Nobody disputes that some people have lost jobs or had big decreases, the issue is what proportion of the people is this.

Riskymove

ZYX wrote: »

Net pay is reduced by 3000, gross pay is reduced by 5,000. I am absolutely astounded you do not know this.

but that is what I am saying

using your example


pay is 50k

1. a 10% paycut

pay now 45k

40% of 45k = 18k this is your tax bill

take home = 27,000



pay is 50k

2. levy is 5,000, this is paid to state

therefore taxable income = 45k

40% of 45k = 18,000 your tax bill...

but then tax relief of 40% is applied to the 5,000 Levy (i.e. €2,000)

this reduces tax bill to 16,000

This means take home = 29,000



basically there is no way a 10% pay cut and a 10% levy with tax relief could result in the same take-home pay as that would mean that the tax relief was worthless and had no effect.

It must do something right?

The_Honeybadger

Riskymove wrote: »

but that is what I am saying

using your example


pay is 50k

1. a 10% paycut

pay now 45k

40% of 45k = 18k this is your tax bill

take home = 27,000



pay is 50k

2. levy is 5,000, this is paid to state

therefore taxable income = 45k

40% of 45k = 18,000 your tax bill...

but then tax relief of 40% is applied to the 5,000 Levy (i.e. €2,000)

this reduces tax bill to 16,000

This means take home = 29,000



basically there is no way a 10% pay cut and a 10% levy with tax relief could result in the same take-home pay as that would mean that the tax relief was worthless and had no effect.

It must do something right?

Foget it buddy, you cannot debate with someone who is absolutely determined not to admit they are wrong no matter how much evidence is produced

Riskymove

look you are basically saying it here but overlooking the reduction in tax

Example 2. So if you earn 50k, pay 5000 to pension levy and pay 40% on the rest you take home 27,000 (so yes if it was a private pension, you have only paid 3000 from your net pay and have a pension fund with 5000 in it.)

you have paid a levy of 5,000 but it only costs 3,000

where does the 2,000 difference come into it?

you save it in tax

Del2005

ardmacha wrote: »

The point is that ei.sdraob proposed the false statement that basic PS wages were still at their peak, when in fact they have fallen by 12-15% (depending on how you define the average). Against this most people in the private sector have not have a cut at all, or only a small cut, although the overall private sector figure has been affected by sectors where demand has disappeared e.g. construction.

I've had a quick look but can't find it. Would the PAYE returns for 2008 v's 2009 show how much of a pay cut the private sector had. I know that the public sector would be in this but it would give a rough estimate.

The_Honeybadger

ardmacha wrote: »

The point is that ei.sdraob proposed the false statement that basic PS wages were still at their peak, when in fact they have fallen by 12-15% (depending on how you define the average). Against this most people in the private sector have not have a cut at all, or only a small cut, although the overall private sector figure has been affected by sectors where demand has disappeared e.g. construction.

You cannot say most people in the private sector have taken no cut or only a small cut, that is speculation, there is no data available except for an Irish Times survey touted by unions, which has very little credibility. I know many people in the private sector who have taken pay cuts, and many who have lost jobs altogether

ardmacha

You cannot say most people in the private sector have taken a big cut or any cut at all, that is speculation. I know people in the private sector who have had increases.

The_Honeybadger

ardmacha wrote: »

You cannot say most people in the private sector have taken a big cut or any cut at all, that is speculation. I know people in the private sector who have had increases.

Of course I can't nor did I, but you said in a previous post that most in the private sector had taken little or no cut, as if it were fact, can you back this up???

Flex

ardmacha wrote: »

You cannot say most people in the private sector have taken a big cut or any cut at all, that is speculation. I know people in the private sector who have had increases.

The difference is that some private sector workers work for companies that are still doing ok, or even making a profit. Whereas, 100% of public sector workers are working for an employer facing bankruptcy.

namenotavailablE

Basically there is no way a 10% pay cut and a 10% levy with tax relief could result in the same take-home pay

This is not correct- the following might help:

[B]Pay without cut or levy    Pay with 10% cut    Pay with 10% levy[/B]

Gross pay          50000               50000                    50000
Cut/ levy          [U]NIL[/U]                 [U](5000)[/U]                   [U](5000)[/U]
Taxable pay       [U]50000[/U]                [U]45000[/U]                    [U]45000[/U]
Tax @ 40%        [U](20000)[/U]              [U](18000)[/U]                  [U](18000)[/U]
Net pay           [U]30000[/U]               [U] 27000 [/U]                   [U]27000[/U]

The above shows the impact of a paycut or a tax-relievable levy versus the original gross pay of 50000 without reduction.

Essentially, the effect of either a straight cut or the imposition of an equal amount of a tax relievable levy is identical on your take home pay.

You can see that the cut or levy of 5000 is somewhat offset by a reduction in tax of 2000 [20000-18000].

There is no additional tax credit or saving given. In essence, the 2000 difference in tax between "no cut" and "cut-or-levy" is the 'credit' which arises, but you don't get an extra 2000 added to your personal tax credits over and above that- you basically pay a smaller amount of tax.

ZYX

Riskymove wrote: »

look you are basically saying it here but overlooking the reduction in tax



you have paid a levy of 5,000 but it only costs 3,000

where does the 2,000 difference come into it?

you save it in tax

Yes you save it in tax. You pay a levy of 5000 but it cost you 3000 in take home pay. How can you fail to understand this. That is what tax relief is. You pay 5000 of your gross income and it costs 3000 of your net income.

The_Honeybadger

namenotavailabl wrote: »

This is not correct- the following might help:

[B]Pay without cut or levy    Pay with 10% cut    Pay with 10% levy[/B]

Gross pay          50000               50000                    50000
Cut/ levy          [U]NIL[/U]                 [U](5000)[/U]                   [U](5000)[/U]
Taxable pay       [U]50000[/U]                [U]45000[/U]                    [U]45000[/U]
Tax @ 40%        [U](20000)[/U]              [U](18000)[/U]                  [U](18000)[/U]
Net pay           [U]30000[/U]               [U] 27000 [/U]                   [U]27000[/U]

The above shows the impact of a paycut or a tax-relievable levy versus the original gross pay of 50000 without reduction.

Essentially, the effect of either a straight cut or the imposition of an equal amount of a tax relievable levy is identical on your take home pay.

You can see that the cut or levy of 5000 is somewhat offset by a reduction in tax of 2000 [20000-18000].

There is no additional tax credit or saving given. In essence, the 2000 difference in tax between "no cut" and "cut-or-levy" is the 'credit' which arises, but you don't get an extra 2000 added to your personal tax credits over and above that- you basically pay a smaller amount of tax.

Where is the tax relief in your calculation? Interested to know if you made that calculation yourself or do you have a reliable source? Tax relief is given at source, before tax, your calculation does not allow for this. It takes income out of your taxable amount, this is to encourage people to plan for their retirement. I don't see this in your figures. In the column with the levy, the employee would get some of the 5000 levy back (at source before it is even deducted therefore its not coming out of your gross in real terms), this is on top of the tax you do not pay on the 5000, the amount depend on their age/income.

Aged under 30 - 15%
30 to 39 - 20%
40 to 49 - 25%
50 to 54 - 30%
55 to 59 - 35%
60 and over - 40%

Source: http://www.revenue.ie/en/tax/it/leaflets/it14.html

Please prove me wrong but your figures appear to ignore this major benefit.

ZYX

mickeyk wrote: »

Where is the tax relief in your calculation? Interested to know if you made that calculation yourself or do you have a reliable source? Tax relief is given at source, before tax, your calculation does not allow for this. It takes income out of your taxable amount, this is to encourage people to plan for their retirement. I don't see this in your figures. In the column with the levy, the employee would get some of the 5000 levy back (at source before it is even deducted therefore its not coming out of your gross in real terms), this is on top of the tax you do not pay on the 5000, the amount depend on their age/income.

Aged under 30 - 15%
30 to 39 - 20%
40 to 49 - 25%
50 to 54 - 30%
55 to 59 - 35%
60 and over - 40%

Source: http://www.revenue.ie/en/tax/it/leaflets/it14.html

Please prove me wrong but your figures appear to ignore this major benefit.

MickeyK, everyone knows about tax relief on pension contributions. We understand it. You obviously do not. Let me explain it as simply as I can
If you want to save €5,000 for your retirement then you take €5,000 from your take home pay and put it into a savings account. Your takehome pay is now down €5,000. You get no tax relief.

However if you put €5,000 into a pension fund and you are a top rate tax payer then this money comes off your pretax income. So it only costs you €3,000 (assuming top tax rate of 40%) of your take home pay to put €5,000 into your pension. The €2000 difference is your tax relief

The same is true for public servants. If they have 10% levy to pay on €50,000 income that means it will only cost them €3,000 of their take home pay.Again the €2000 difference is the tax relief.

The same however is true of a paycut of 10%. Your gross pay is reduced by €5,000 but your net pay is only cut by €3,000.

No one is ignoring tax relief. As I said we all understand it except you and RiskyMove.

namenotavailablE

Where is the tax relief in your calculation?

The tax relief is got by virtue of taxing the reduced income. The lower pay value in the 2nd and 3rd cases is what's taxed. That's how the tax relief is given - you are basically taxed on a smaller amount of income.

Interested to know if you made that calculation yourself or do you have a reliable source?

I wrote the tax calculation spreadsheets here. I know based on a lot of testing/ user feedback that they are correct and that they correctly treat the tax impact of the PS pension levy. Feel free to download them to test their calculation accuracy against your own data.

Tax relief is given at source

That is the key point to understand- 'relief at source' means that your payroll department calculates tax on your 'pay after levy deduction' amount. That is the nature of at source relief for any type of 'relieved at source' deduction paid through your payslip (AVC's/PRSA's/public sector superannuation & income protection are also treated in the same way).

In the column with the levy, the employee would get some of the 5000 levy back

That's the lower tax you pay as a result of the levy- 18000 versus 20000. That 2000 difference is as a direct consequence of the levy. Since it reduces your taxable pay you get the tax relief at source.

The_Honeybadger

Namenotavailable I have checked out your source and you are correct in everything you said, great posts. ZYX please accept my humble apology for being dismissive of your posts earlier, if it makes you feel better I feel quite silly now
Obviously didn't know my topic as well as I thought, riskymove may continue the argument but I am convinced.
Enjoyed the debate despite losing it, enjoy the weekend

Count Dooku

Riskymove wrote: »

in the operation of the public service it really needs to be a case of making your spend more efficient as opposed to reducing it

Why is it no more efficient to reduce spending with keeping level of existing services at the same level and then use saved money to provide new services or for schools, roads etc?

K-9

namenotavailabl wrote: »

The tax relief is got by virtue of taxing the reduced income. The lower pay value in the 2nd and 3rd cases is what's taxed. That's how the tax relief is given - you are basically taxed on a smaller amount of income.

I wrote the tax calculation spreadsheets here. I know based on a lot of testing/ user feedback that they are correct and that they correctly treat the tax impact of the PS pension levy. Feel free to download them to test their calculation accuracy against your own data.
That is the key point to understand- 'relief at source' means that your payroll department calculates tax on your 'pay after levy deduction' amount. That is the nature of at source relief for any type of 'relieved at source' deduction paid through your payslip (AVC's/PRSA's/public sector superannuation & income protection are also treated in the same way).

That's the lower tax you pay as a result of the levy- 18000 versus 20000. That 2000 difference is as a direct consequence of the levy. Since it reduces your taxable pay you get the tax relief at source.

Exactly, the person on €50,000 would save tax of 41%, Income levy of 2%, PRSI and Health Levies of 8%, the new pension levy which is 10% on over 20k and I believe there is the old pension levy of about 6.5%.

In effect, on the €3,000 pay cut (5% to 30k, 7.5% over it) they are saving Gross deductions of roughly 67% or losing 33% Net.

The figures on the taxcalc site show a Net Pay reduction from €34,404 to €33,163, a drop of €1,241, a drop of 41% Net. It isn't 33% because they lose the tax and PRSI relief on the reduced pension deductions.

That person on 50k would have lost €3,250 Gross through the pension levy last year but would have had 41% tax relief and 8% PRSI relief. They still would have paid the income levy and I believe the old pension levy. It would have cost about €1600 Net.

I think you have to look at it as a €1,600 Net cut last year and a €1,241 cut this year Net.

The Gross was 6.5% Pension levy last year and 6% pay cut this year.
The Net 3.3% last year and about 2.5% this year.

The correct pension figures are here:
http://www.finance.gov.ie/viewdoc.asp?DocID=5794


A person on the 20% rateor somebody paying no tax, would probably see a higher Net pay percentage deduction.

Riskymove

ZYX wrote: »

Yes you save it in tax. You pay a levy of 5000 but it cost you 3000 in take home pay. How can you fail to understand this. That is what tax relief is. You pay 5000 of your gross income and it costs 3000 of your net income.

yes I agree with all that...I do understand it

now perhaps it seems its just me but if what you are saying is correct, what actual effect does tax relief have? what advantage is there to it over a straight pay cut?

if a private sector worker on 45k pays 27,000 tax, net pay 18,000


and a public sector worker on 50k with 10% levy (with tax relief) pays 27,000 tax

so therefore 50k less 27k = 23k less the 3,000 levy = 20k

i.e. 2,000 better off than the private worker ?

is this not the case?

if not, can you explain

Riskymove

namenotavailabl wrote: »

There is no additional tax credit or saving given. In essence, the 2000 difference in tax between "no cut" and "cut-or-levy" is the 'credit' which arises, but you don't get an extra 2000 added to your personal tax credits over and above that- you basically pay a smaller amount of tax.

so what you are saying is that the "tax relief" is simply that the €5,000 levy is removed from your gross before tax and thats it; that's the advantage of having tax relief on the levy?

so what would happen in the case of a levy that did not have tax relief?

ardmacha

what advantage is there to it over a straight pay cut?

People have contracts etc, they could sue you if there was a straight paycut, but not if there is a levy.

Riskymove

ardmacha wrote: »

People have contracts etc, they could sue you if there was a straight paycut, but not if there is a levy.

er...they cut our pay anyway so obviously not

anyway I meant an advantage to the earner financially?

Count Dooku

Riskymove wrote: »

anyway I meant an advantage to the earner financially?

keep pension at the same level

Sarn

Riskymove wrote: »

i.e. 2,000 better off than the private worker ?

is this not the case?

if not, can you explain

No, it is not the case.

As the €5000 (10%) is taken off your pay you never pay tax on it. Your overall taxable income is reduced. This appears as a reduction of €3000 in your annual net income. If the pension levy did not avail of tax relief the €5000 would come directly from your annual net income.

In theory, the benefit of the pension levy and associated tax relief would be an increased pension at the end. In that case the PS worker would ultimately be better off compared to someone who took a straight 10% pay cut. However, as the pension levy money doesn't improve the final pension it works out exactly the same as a 10% pay cut.

namenotavailablE

so what you are saying is that the "tax relief" is simply that the €5,000 levy is removed from your gross before tax and thats it; that's the advantage of having tax relief on the levy?

Yes- it is deducted from your gross and you then pay tax on the reduced gross amount.

so what would happen in the case of a levy that did not have tax relief?

If the levy didn't have tax relief (the income levy is an example of that) it would mean that you would pay tax/PRSI etc on your full 50000.

You could categorise deductions from pay as being either 'tax relievable' or 'non-tax relievable'. Typical examples of tax relievable deductions are pensions & AVC's/ income continuance insurance/ public sector pension levy & superannuation. Examples of non-tax relievable deductions are the income levy and anything like say a loan repayment coming out of your pay directly.

Tax relievable amounts are subtracted from your pay and you pay tax/PRSI etc on the reduced amount. The non-tax relievable amounts don't change the taxable pay- you pay tax/ PRSI etc on the original full amount of pay.

Therefore, your tax will differ depending on the type of deduction and the reduction in the tax amount is your tax relief in the case of tax relievable deductions.

Count Dooku

Sarn wrote: »

No, it is not the case.

As the €5000 (10%) is taken off your pay you never pay tax on it. Your overall taxable income is reduced. This appears as a reduction of €3000 in your annual net income. If the pension levy did not avail of tax relief the €5000 would come directly from your annual net income.

In theory, the benefit of the pension levy and associated tax relief would be an increased pension at the end. In that case the PS worker would ultimately be better off compared to someone who took a straight 10% pay cut. However, as the pension levy money doesn't improve the final pension it works out exactly the same as a 10% pay cut.

Are you sure that pension levy will decrease pension?
AFAIK pension depends primary from gross-income and straight cuts would reduce gross income and pension at the same time, while pension levy kept gross income used for pension calculations untouched

Sarn

Count Dooku wrote: »

Are you sure that pension levy will decrease pension?
AFAIK pension depends primary from gross-income and straight cuts would reduce gross income and pension at the same time, while pension levy kept gross income used for pension calculations untouched

You are right in that it is not exactly the same as a straight cut. The pension levy is better than a straight salary cut as the final pension will not be decreased. There is still no benefit to the worker for paying it.