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The Irish Independent reports that workers were hit with a massive tax grab of €1,400 a head last year as the
Government sought to shore up the public finances.

Income tax returns went up by a whopping 22pc, or €2.6bn, as the universal
social charge took more money out of taxpayers’ pockets.

Despite government claims that there has been no hike in income tax rates,
changes to tax bands and credits and the introduction of the social charge have
all taken their toll on pay packets.

But the total tax take was still 2.5pc below target as the recovery of the
public finances continued to stagnate, according to the Exchequer Returns for
2011.

The economy is still stalling because of rising unemployment,
less consumer spending, more austerity measures, the eurozone crisis, and the
international downturn.

The figures last night showed that the position at the end of the year was
about €600m off target.

However, as this deficit had been expected and planned for by the Government
in the run-up to last month’s Budget, the shortfall will not immediately impact
on policy.

It even led to some degree of optimism about the management of the public
finances going into 2012.

Austin Hughes, chief economist at KBC Bank, said that “at a time when there
have been major overruns in a range of other euro area countries” the final
figure could be taken as a positive.

Finance Minister
Michael Noonan welcomed the increase in tax revenues. He also said the
receipts highlighted the “robustness and credibility” of the Government’s 2012
revenue forecasts.

The Government actually got a boost from an unexpected €100m at the end of
the year. The late windfall came as wealthy people paid off their tax bill on
sales of shares and property transactions.

They rushed to do this ahead of an expected hike in capital gains tax in
December’s Budget.

Even a month ago, the Government did not anticipate these extra receipts,
which turned out to be a pleasant surprise.

All told, tax revenues went up by €2.25bn this year.

The increased income tax take means the 1.8 million people in the labour
force each paid an average of €1,436 more in tax in 2011.

Some paid more than others as the universal social charge is linked to
income.

For example, a regular married couple with a single income of €50,000 would
have paid about €1,300 extra in income tax.

The boost from income tax including the social charge helped total tax
revenues to grow in 2011 for the first time in three years. The increase to a
total of €34bn was a 7.2pc rise on the previous year.

But the increase in income tax had a knock-on effect on consumer spending,
with a shortfall of almost €500m in predicted VAT returns.

The VAT take during 2011 was €9.7bn, representing a drop of 3.6pc on the
previous year’s VAT take, which was €10.1bn.

The total tax figure was officially €875m lower than the Department of
Finance forecast a year ago.

But some €261m worth of corporation tax collected in 2011 was lodged too late
to be counted in the official figures for the year.

Because of the banks being closed for so many days over the Christmas period,
the money only came into the Exchequer yesterday, so will have to be counted
officially in January’s figures.

Once this missing €261m is added into the equation, there was a shortfall of
€612m in tax for the year as a whole.

The Irish Independent also reports that former
Taoiseach John Bruton has insisted he won’t hand back his €138,000 a year
ministerial pension unless the Government passes laws cutting the pensions of
all public servants.

The comments came in a wide-ranging interview with the Irish Independent, where
Mr Bruton also said the Government should prepare for the collapse of the euro
because countries should plan for “every eventuality” even
“unthinkable” ones.

On the issue of his pension, the IFSC Ireland chief and former Fine Gael leader
stressed that he had given “35 years continuous service” to the State
without ever having a “permanent position”.

“During that time I acquired pension entitlements similar to other public
servants,” he said. “If the Government makes decisions about public
servants’ pensions generally I have no issue with that.

Politician

“But I don’t think service as a politician is any less worthy than any other
form of service, particularly as politicians have been directly and personally
selected by the people in a way that other public servants are not.”

Asked whether there was an argument that “times have changed” and the
State can no longer afford to pay the pensions, Mr Bruton said it was “up to
the Government” to make a call on that.

“If the Government feels it wants to change it, they can do so,” he said.

“But whatever changes are applied should be applied across the board, I don’t
think politicians should be singled out, and I don’t think people should be
singled out to be questioned just because they’re performing a public role.”

In November, the Government announced plans to further reduce any public service
pensions above €100,000. The portion above €100,000 will now be cut by 20pc, in
addition to cuts of up to 12pc on pensions between €12,000 and €100,000.

The Irish Times reports that the universal social charge and the pension levy boosted the State’s tax take
by €2.3 billion to €34 billion in 2011, but the Department of Finance conceded
yesterday that revenues fell slightly short of their target.

The State ended the year almost €25 billion in the red, compared with €18.7
billion last year. The figure included a €9.5 billion bill for recapitalising
the banks.

The final tax take of almost €34.3 billion was €873 million short of the
€34.9 billion target set in Budget 2011, according to the December exchequer
returns, which the Department of Finance published yesterday. Michael McGrath,
assistant secretary at the department, said the additional €2.3 billion raised
during the year included revenue from two extra taxes.

The first was the universal social charge, imposed on workers’ pay packets in
Budget 2011. The second was the stamp duty levy on pensions, which the
Government raised to pay for a jobs initiative. Income tax receipts were €500
million short of their €14.125 billion target. VAT generated €9.7 billion, €500
million shy of the €10.2 billion target set in Budget 2011.

The dip in VAT was down to slowing consumer spending, which accounted for
almost €375 million, and a reduction in some rates to 9 per cent from 12 per
cent in July, which cost €125 million. Mr McGrath said this would have no impact
on Budget 2012’s VAT targets.

Corporation tax – charged on companies’ profits – realised €3.78 billion,
just over €200 million less than the €4 billion anticipated. The exchequer
deficit hit €24.9 billion in 2011, from €18.7 billion the previous year. The
department said the €6.2 billion increase was due to recapitalising the banks.

During the year, the State handed over €3.1 billion in promissory notes to
the Republic’s financial institutions. On top of that, following the
stress-testing exercise in July, it made once-off payments of €7.6 billion to
recapitalise the banks. The exchequer also received €1 billion for the sale of
part of the State’s shareholding in Bank of Ireland, leaving the net cost of
shoring up the banks at €9.7 billion. Excluding this cost, the exchequer deficit
fell by €2.75 billion during the year, which Mr McGrath said was a positive
development.

Net-voted spending, the money spent by Government departments, was down over
€700 million at €45.7 million. Mr McGrath said the State achieved the targets
set out in the bailout deal agreed with the troika. They are to carry out their
latest review of the Republic’s finances next week.

Alan McQuaid, chief economist with Bloxham Stockbrokers, said the real
question facing the Government is whether it can achieve this year’s budget
targets, including an exchequer deficit of €18 billion. He warned it was
difficult given the uncertainties facing the global economy. However, he said
that even if the targets were not achieved, further austerity measures would
hamper growth.

Peter Vale, partner with Grant Thornton, said it would be “interesting” to
see if the Government reaches its €10 billion VAT target this year.

“It is worth noting that income tax rates have increased steadily in recent
years but the impact on overall income tax receipts has been marginal,” he said.
“This may be the case with future VAT revenues as lower spending is offset by
the higher VAT rate.”

The Irish Times also reports that the Irish Bank Resolution Corporation – the former Anglo Irish Bank – is trying to
establish who is behind a British Virgin Island company that acquired an
interest in a Ukrainian shopping centre that had belonged to Seán Quinn’s
family.

The company – which acquired the interest before Anglo moved to seize Quinn
family assets – is now frustrating attempts by IBRC to take control of the
centre in the Ukrainian courts.

The High Court in Belfast is to be asked today to continue a previously
unreported injunction granted before Christmas preventing the company, Lyndhurst
Development Trading SA, from selling on its interest in an operating firm that
runs the Kyiv shopping centre while IBRC seeks to establish who owns the
offshore entity.

The State-owned bank is involved in mirror proceedings in the British Virgin
Islands as it seeks to prevent the shopping centre slipping from its grasp.

The shopping centre produced a rent roll of $10 million in 2010 but the bank
has been unable to seize control of the Ukrainian company that receives the
rent.

On December 26th, the courts in Kyiv granted a $45.2 million judgment in
favour of Lyndhurst and against the Ukrainian operating company.

The shopping centre is one of a number of properties bought by Quinn
companies in the last decade as part of a programme whereby Mr Quinn sought to
provide valuable inheritances for his children.

Loans from Anglo that were used to refinance the purchases, which total
hundreds of millions of euro, have not been repaid, but the bank is finding it
difficult to seize some of the assets involved. A Quinn family company called
Demesne Investments Ltd, with an address in Mr Quinn’s native Derrylin, Co
Fermanagh, had an interest in debts due from the operator of the Kyiv property
but these appear to have been transferred to Lyndhurst, via an intermediary,
IBRC told the Belfast courts before Christmas.

A Quinn family spokesman had no comment on the matter yesterday.

In the case in Kyiv on December 26th, the judge accepted a submission from
the former director of the company that runs the centre, but refused to hear
from the director appointed in her place late last year. The Quinn family was
not represented at the hearing.

Senior IBRC executive Peter Woodhouse said the Ukrainian court system was
acting “as a tool of legalised robbery of foreign investors” and called on the
Ukrainian prime minister to intervene.

The Irish Examiner reports that
more than 7,000 public sector workers have applied for the early
retirement incentive scheme ahead of next month’s deadline.

The latest figures from key departments show the Government is well on target
to reduce overall numbers by 9,000, in a bid to slash the bill for the
300,000-strong public sector.

The scheme allows staff to retire on a pre-cuts pension level and their
retirement lump sum is subject to lower rates of tax than it would be after
March 1.

However, Public Expenditure Minister Brendan Howlin has warned that there will
be difficulties in the transition period, particularly in adjusting services and
replacing key staff in frontline services.

The indications from several departments and agencies, however, are that the
bulk of the expected redundancies should be achieved.

Almost 1,000 civil servants have given notification of their intention to retire
before the end of February.

The two areas to be hardest hit are health and education. Figures from the HSE
show up to 3,200 individual requests are being processed. Officials stress
though that many of these health workers could change their mind at the last
minute or will in fact not take up the offer.

Department of Education figures show 640 primary teachers and 465 second-level
school teachers have indicated their intention to go this month or next.

Teachers’ representatives have expressed concern that many facing retirement do
not want to go in February, as it is mid-term and many students are preparing
for exams.

Garda representatives have also warned of a crisis with nearly one-third of
senior command positions set to be vacant by the February deadline.

These include:

* Four assistant commissioners, out of 12 positions.

* 15 chief superintendents, out of 48 positions.

* 45 superintendents, out of 152 positions.

Figures show a total of 650 gardaí will have retired by the end of February,
including three assistant commissioners, 10 chief superintendents, 32
superintendents, 31 inspectors and 414 gardaí.

In the Defence Forces, 53 officers and 437 enlisted personnel have submitted
applications to retire or be discharged on dates prior to the deadline.

The Department of the Environment confirmed 55 employees should go by the
deadline, and that 730 officials with local authorities have expressed interest
in the scheme.

The Government wants to shed 23,500 public sector positions by 2015.

Mr Howlin has admitted that despite an expected 9,000 workers leaving positions
this year, an extra 3,000 will need to be hired to keep frontline services and
teaching positions covered.

This will see an easing of the current public service recruitment embargo.

However, Mr Howlin has stressed that the departure of so many public service
staff at one time would represent “a real test of the Croke Park agreement”,
which calls for efficiencies and flexible work practices to be agreed by
workers.

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