Government to Introduce the graduated property tax early

Following hot on the heals of the December 7th budget, the government (small g) has decided to bring forward plans for a graduated property tax to be introduced in 2013, a year earlier then the EU/IMF bailout decreed.
Its likely to be based upon your house value, and it could mean that the €100 property tax in 2012 could grow by 30 times that amount for certain householders:

According to the Irish Times:

Under the commission’s proposed scheme a charge of €188 would be paid on houses valued at up to €150,000; €563 on houses between €150,000 and €300,000; €938 on houses up to €450,000; €1,313 on houses valued at up to €600,000; €1,699 on houses up to €750,000; €2,188 on houses valued at up to €1 million; €3,125 on houses up to €1.5 million and 0.25 per cent of the valuation on houses over that.

FS

Round-Up of the week

This week has seen a lot of talk about mortgages and debt relief, but very little concrete information I'm afraid. The Government and Central bank has ruled out widespread debt write offs.

You might remember back during the election campaign, Fine Gael promised a large increase in the mortgage interest relief for people who bought their first home between 2004 and 2008? Well it seems that that promise was for election purposes only. We are to wait until the end of the month to hear the report of a group of experts who will recommend what steps should be taken to help those in arrears/'the negative equity generation'.

The stories doing the rounds include; Banks taking a equity stake in your home in exchange for a reduction in your mortgage, mortgages being written off and renting your house from the Government and the introduction of intergenerational mortgages.

The Irish Independant have reported that some lending institutions are writing off debts or allowing people to settle debts for less than what is outstanding. This is being denied by the relevant institutions who very understandably want to avoid the potential for individual customers to take advantage of the situation, this is also known as 'Moral Hazard'.

KBC has increased its standard variable mortgage rate by 0.25% to 4.45%.

Bord Gais has got the approval for its 22% increase in Gas prices from the regulator, the ESB reacted by confirming it would do the exact same thing for its customers.

The number out of work increased by 1600 over the last month, a trend we had hoped that arrested itself some time ago.

The Government tax take figures have shown that they are collecting more then they had budgeted for, which is good news. The amount of VAT collected remains below target which just shows the lack of consumer sentiment out there.

FS

Recession 2, the sequel?

Stock markets have fallen to their lowest level since August 2009, the price of gold is booming and the talk of 'double dip' recession is on the lips of every media minded economist. So whats going on, we thought this was all behind us?

In the recent days:

• Rating agency Standard & Poor's have downgraded the US credit rating from AAA+ to AAA, the first time America has dropped from the top credit rating since 1941. They site the reason of the possibility that the US could re-entre recssion in the coming months. They were also less than inpressed on the political stalemate and point scoring between Reuplican's and Democrat's during their recent debt ceiling negotiations.
• China is taking the opportunity to criticise the US economy as they try to get the Yuan named as the new global reserve currency. Seeing as China holds one Trillion dollers of US debt, what they have to say carries some weight. 
• The cost for Italy and Spain to borrow money by selling bonds on the international market went up past 6%, this is unsustainable. The EU began buying the bonds of the two countries today, this has reduced the cost somwhat but is this a solution or just a sticking plaster? Spain and Italy's economies are far to big to be bailed out. The ECB will have to act decisvly if the Euro is to remain in place.
• Investors are fleeing the stock markets in their droves, the Irish ISEQ index dropped 4.4%, the French and German indices dropped 4.7% and 5% respectively today alone. This is having a major effect on pension funds and investors who are exposed to the stock market directly or through life insurance companies investment funds.
• There is a flight to quality, Gold is seen as a safe haven during market turmoil, this has increased the price to €1700 an ounce.
• In Ireland the tax take is 1% up on expectations, thats good right? Well yes and no, the increase is due to corporation tax, exporting multinationals based in Ireland are booming . VAT take (a sign of consumer confidence) is low and getting lower. Expect to see VAT figures drop dramatically in the coming weeks, now that the scrappage deal is finished.
• The live register figures indicated a further 1500 people out f work in the last month.
• Morgan Kelly, UCD economist thinks that property prices still have some way to fall and this will mean that by 2015, Ireland will have a national debt for betweem €240-250 billion.

Its not all doom and gloom though, the cost of oil has dropped in the last few days, and due to the recent Erozone troubles we can fairly safey say that there will be no interest rates hikes coming from Frankfurt untill 2012 at the earliest.

FS