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What does 'An Essential Service' Mean ?????
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07-03-2005 10:03am#1It means more money for Eircom and Dave McRedmond .
Currently Eircom charges about €24 a month line rental including 21% VAT. An essential service such as electricity charges 13.5% VAT
Eircom do not propose to reduce the charge to the consumer. So heres how it operates nowadays.
€24 including 21% VAT = €19.80 To Eircom and €4.20 to the Government .
As there are 1.1m residential lines the exchequer gets €4.62m a month in VAT for them.
BUT
€24 including 13.5% VAT = €21.15 to Eircom and €2.85 to the Government
This reduces the Governments VAT take by €1.5M a month (€18m a year) but leaves Eircom better off to the tune of :
1.6 Million x €1.35 a month as business customers will pay the extra line rental too (but not VAT) . Thats €2.16 Million a month extra for Eircom . €26 Million a year for doing nothing and the tax payer gets €18m less.
Then theres the Social Welfare line rental to be paid by the same taxpayer despite the reduced VAT income to offset that subsidy , that would be 200,000 x €1.35 a month extra or €3.2 m a year leaving the taxpayer €21 million worse off and Eircom €26m better off and the consumer no better or no worse off for the same crummy customer service .
It also complies with Retail = or Retail - guidelines set for Consumer Line Rental
Mc Redmond gets much of his his fat bonus for recurring revenues , he increases Eircom recurring annual revenue by €26m at a stroke.
Essential me arse
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