Business Analysis & Overview

Wednesday 3 September 2014

Thomas Molloy: Fingerprints of Troika all over the hardest hitting reforms

Published 06/12/2012 | 13:00

  • Share

THE troika's fingerprints are all over the Budget, as it forced Michael Noonan to introduce all manner of reforms that will be clearly difficult to sell to the Irish people.

  • Share
  • Go To

However, the taxes, cuts and savings are necessary to appease the organisations bailing out the economy.

The most obvious troika innovation was a proper property tax, which has finally been unveiled after years of discussion and endless recommendations from the various foreign think tanks that advise governments.

While the property tax is considerably lower than the troika had hoped for – at just 0.18pc of the property's value – it represents a key plank in the bailout partners' efforts to put the Irish Government's finances on a firm footing.

Less obvious was the troika's influence when it came to taking medical cards from middle-class pensioners – while also slapping higher taxes on their pensions.

While Mr Noonan will know that taking medical cards from elderly voters is a political hot potato, the troika has been quietly but insistently agitating for this type of measure.

It is pushing hard for taxes that shift taxation from the young (who have borne the brunt of the cuts so far) towards the elderly.

The troika is also likely to be happy with the decision to use some of the proceeds from privatisations to pay for structural reforms (code for redundancy payments), rather than the job-creation schemes favoured by the Government.

Still, the troika did not get everything it wanted. Pensioners are still entitled to a raft of benefits, such as free travel, which leave troika officials scratching their heads, but remain dear to people living here.

Troika officials, who said last night that they had only just received the Budget like everybody else, will be disappointed that there is nothing to improve competition in the sheltered sectors, such as the law and medicine.

Officials are also likely to be unhappy with Mr Noonan's decision to cut child benefit, rather than taxing it.

Irish Independent Supplement

Read More

Editors Choice

Also in Business