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14/10/15: There isn’t Ireland without MNC Inc.: Budget 2016
Wednesday, October 14, 2015 11:51
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trueeconomics.blogspot.com / by Constantin Gurdgiev / October 14, 2015
Budget 2016 went in like a circus convoy entering a sleepy town: all pomp and all the excitement with little substance of change in tow.
Budget 2016 is a political budget and not an economic one. The point of all the smaller taxation measures in it, relating to people working for living, is simple: get those voters, vulnerable to swing Left to stay Centre. Sinn Fein got punched, few independents too; Labor got cookies to hand out. But even on this count, Budget 2016 was a fizzle of a firecracker with mostly smoke to show in the end:
- Much lauded idea of exempting from USC all earners
- Virtually all net gains for low income earners from this Budget do not accrue from Michael Noonan spending tax revenue or Government cash, but from minimum wage increase. Just how exactly does minimum wage hike (a mandated cost imposed onto employers – rightly or wrongly is not the point here) qualify as a fiscal policy measure (aka, Government fiscal management of the economy) beats me. Proper economics have no room on fiscal policy side for the scenarios where Government spends not its own on stimulating its own votes. Note: Employer PRSI change is virtually immaterial, costed by the Department of Finance at only EUR7 million over full year. Where this might help somewhat is in alleviating pressure on employers to cut working hours.
Besides the above aberrations, the Budget was a net positive for current consumption spending, and was a net zilch for. Now, here the Government logic is completely off the charts. We are borrowing money to fund the Budget 2016 measures. And we are channeling this borrowed cash into activities that are not expected to generate a return, since these are non-investment activities. Multipliers for current consumption are miserable – most of the stuff we will be buying with the few quid we got in Budget 2016 is stuff made elsewhere and all we can collect in this economy from it is a small gross payout on labour in the retail and logistics sector. Whatever the social imperatives can be for such a ‘stimulus’ (and they are quite sound in some cases), it is poor economics and poor strategy.
The post 14/10/15: There isn’t Ireland without MNC Inc.: Budget 2016 appeared first on Silver For The People.
Source: http://silveristhenew.com/2015/10/14/141015-there-isnt-ireland-without-mnc-inc-budget-2016/
