News Ireland daily BLOG by Donie

Monday 16th February 2015

Irish Government blew an opportunity to get a debt write down deal

Says former IMF chief Ashoka Mody

Ireland fell in with what Berlin and Brussels wanted it to do?

  

Left picture above shows Ashoka Mody of the IMF outside the Department of Finance.

THE current Irish government blew an opportunity to get a debt write-down deal and a “slower pace of austerity” from the EU/ECB/IMF troika when it took office four years ago, the former IMF chief of mission to Ireland said today.

“When this (Irish) government came in it had a mandate,” he said in an interview on Newstalks’s Lunchtime programme.

“The new government had so much going for it.

“Ireland fell in with that premise and therefore perpetuated a culture that this current Greek government is trying to break.

“It was on that premise that it won the election and what the deal at that time could have been, I don’t know but it should certainly have been a superior deal. That deal would have required a clear premise on some amount of debt restructuring,” he added.

Ashoka Mody, an economist and a visiting professor at Princeton University, also suggested that the debt accumulated by the previous government was “odious debt” that arguably should not have to be repaid.

In international law such debts are considered to be the personal debts of the regime that incurred them and not those of the State.

While the Government has claimed it has already received a number of concessions from Europe including the promissory note deal on the former Anglo Irish Bank, many believe it should have held out for a debt write-down.

“There was a burden of debt that would legitimately be declared as an odious debt and this was not necessarily because there was something unique about this particular government but because there had been severe and egregious errors that it inherited,” Mr Mody said.

He also said that water charges were symbolic. The financial “burden was borne unequally.”

Greece is still fighting for some kind of deal this week as euro zone finance ministers meet in Brussels.

They are attempting to find common ground with Greece’s’ new government, elected on a pledge of less austerity.

Greece confident as EU meeting looms, sticks to no-austerity pledge

Speaking recently, Finance Minister Michael Noonan said our debt is sustainable – “evidenced by the fact that borrowing costs are the lowest on record.”

Our debt-to-GDP ratio peaked in 2013 at 123pc and fell to an estimated 110pc last year, he said.

The latest figures show the Greek ratio at about 170pc.

Mr Mody also said he was confident that Greece will eventually restructure its debts but he warned against a “bogus restructuring” whereby the country’s problems would not be sorted out properly.

“It’s not in anyone’s interest to draw this out,” he said. “The longer it lasts the longer the political discontent, it’s not just in Greece.“

“The fact that the Greek government is much maligned in Europe is not a surprise.”

Strict new sunbed rules to outlaw ‘happy hours’, make eye-wear compulsory

  

Stricter rules on sunbed use are to be enforced from next month on the back of last year’s ban on under-18s using the tanning machines.

With 150 people dying each year from skin cancer, a tougher regime is being brought in outlawing so-called happy hours or free use of the beds and lamps from March 2.

On top of that, users will also have to wear protective eyewear or glasses and won’t be able to use the machines unless they are being supervised in order to minimise damage to their skin and eyes.

The aim of the increased restrictions is to combat the rising levels of skin cancer in Ireland – with more than 850 new cases of melanoma being reported each year – and to dissuade people under 30 from using the quick, artificial tan.

Health Minister Leo Varadkar said: “The more that someone uses a sunbed, the higher the risk they will get skin cancer.

“The incidence of skin cancer is increasing faster than any other type. So this phase of sunbed measures is all about making sure that adults know the risks.

“More and more evidence is emerging that using a sunbed without protective eyewear can damage the eye and potentially cause cancers.”

The new regulations will require sunbed businesses to display warning signs, provide information on the risks and ban health claims – while new hygiene standards will be also be introduced.

According to figures produced by the National Cancer Registry, there were more than 10,000 cases of skin cancer in 2011 – and the same year there were over 7,000 people living with melanoma.

Inspectors from the Health Service Executive (HSE) environmental health division will be tasked with enforcing the increased restrictions on sunbed use and penalties will be imposed on businesses flouting the rules.

Kathleen O’Meara, head of advocacy and communications at the Irish Cancer Society, claimed sunbed use is as carcinogenic as tobacco or plutonium.

“The new regulations highlight the dangers of sunbed use for everyone, whatever your age or skin type,” she said.

“It is our hope that this legislation will mark a turning point in attitudes to using sunbeds in Ireland. We would advise everyone not to use sunbeds, but it is vital that young people who are most at risk are protected.”

Outlining the new regime, health chiefs revealed skin cancer is the most common type of cancer in Ireland and they warned it is a particular problem because of fair skin.

They noted the 2009 reclassification of sunbed use by the World Health Organisation’s International Agency for Research on Cancer from a group 2A carcinogen – one that is probably carcinogenic to humans – to a group 1 carcinogen – one that is carcinogenic to humans.

The health chiefs warned that ultraviolet radiation will cause cancer.

Liz Yeates, director of public affairs at the Marie Keating Foundation, said: “We know that younger people under the age of 30 who use sunbeds are particularly at risk and have a 75% increased risk of developing malignant melanoma.

“For this reason, we are hopeful that these regulations, in particular the restriction on marketing practices of sunbeds, will have a strong impact with this particular age group.”

Dr Maurice Mulcahy, regional chief environmental health officer, said: “With the introduction of these new provisions, Ireland now will have laws and guidance which will protect the public from the threats to their health and wellbeing, associated with artificial tanning devices by making adults more aware of the risks associated with sunbed use and prohibiting the sale, hire or use of a sunbed by those under 18 years of age.

“We will shortly be writing to all sunbed businesses and will also be actively engaging locally with them over coming weeks, to advise and explain how they can comply with these new legal requirements.”

Companies offering sunbed use will also be required to notify the HSE of their operations and a list of notified tanning shops will be drawn up.

Over 25% of people in Ireland do not take any exercise,

The CSO reveals

cso sport  cso walking

More than a quarter of Irish people do no sport or physical exercise, new figures from the CSO reveal.

A statistical analysis of the sport and exercise data from 2013’s Quarterly National Household Survey showed that almost 73% of people over 15 do some sort of exercise, if recreational walking is included.

45.7% of men and 30.1% of women participate in sport, while walking for fun or fitness is an activity 27.4% of men and 41.7% of women take part in.

That means almost six in ten of us go walking for recreation. In addition, one in five use walking to get where we need to go (instead of driving, cycling or public transport).

Yet that still leaves 27.5% of people over 15 years of age who are not physically active. That includes the 12.8% of us who don’t do any sport, but still walk to get where they’re going, and the 14.7% who do nothing at all.

Of those who do no activity at all, 35% said they had no time, 29% said it was due to illness, injury, or disability, and almost a fifth said it was down to “lack of motivation”.

Gym or sports club memberships were slightly more popular among men, but in general, more than half of us (56.6%) have a membership to a sports or fitness club.

And when it comes to the type of exercise we do, the most popular activity is the gym itself – and similar aerobic activity – which 19.2% of take part in. That’s followed by swimming (14.2%), and cycling (13.6%).

And almost twice as many people play soccer (7.7%) as Gaelic football (4.3%)l

The survey also asked people what health and fitness facilities they’d like to see in their local area, with 18.7% calling for a swimming pool, 11.4% favouring cycle lanes, and just 8.1% saying they’d like to see public walkways.

How to avoid paying Tax legally

A guide for everyone?

Here’s how to legally reduce what you pay in tax.

  

How to reduce the tax you pay. You don’t to be rich and famous or have an expensive accountant to trim your tax bill.

With just a little planning you can legally reduce the amount of cash you pay to HMRC – leaving more to spend on whatever you please.

Here’s what you need to know…

How to reduce the amount of income tax that you pay

This is the duty you pay on income, whether that cash comes from an employer, pension or savings account.

The tax is applied on a graduated scale and everyone has what’s known as a personal allowance, where no tax is due. At the moment the personal allowance for most people stands at £10,000 a year, so you don’t pay any income tax until you earn more than this.

On income between £10,000 and £31,865 income tax is applied at a rate of 20% (basic rate) after £31,866 and up to £150,000 of income is subject to a tax of 40% – but taking into account the personal allowance, most people start paying a higher rate of tax when they earn £41,865 a year. Anything more than £150,000 is subject to a tax of 45%. [Note, from April 2015 the personal tax free allowance will be raised to £10,600 and therefore the higher rate tax threshold will increase to £42,385.]

Get married

*From 6 April 2015, a low-earning spouse who doesn’t fully use their personal allowance can transfer up to £1,090 of an unused balance to their partner (as long as the partner is not a higher rate tax payer) by making a claim to HMRC online. Taking advantage of this perk would save a couple up to £212 a year in tax, according to accountants Baker Tilly.

Pensioners who are already eligible to claim the existing Married Couples Allowance (MCA), which is available where on spouse was born before 6th April 1935, will not be eligible for the new relief.

*On the other hand, if you are a higher rate tax payer and your spouse isn’t, you can consider moving savings and investments into their name to attract a lower rate of tax, points out Danny Cox, chartered financial planner at Hargreaves Lansdown.

Use a pension

*When you pay into a pension your cash qualifies for income tax relief. So if you’re a basic rate tax-payer for every 80p you pay into a pension, you receive 20p from the government.

If you’re a high-rate taxpayer the saving becomes more substantial; for every 60p you pay, you get 40p from the government. The average higher rate taxpayer with earnings of £50,200, who makes pension contributions at 5% would reduce an annual tax bill by around £1,000, according to pension provider Prudential.

If you’re under the age of 75 you can contribute up to £40,000 a year into your pension and qualify for tax relief (the Lifetime Allowance you can contribute currently stands at £1.25 million).

Pensions mean tax relief [Members of occupational pension schemes receive basic and higher rate tax relief automatically through their payroll. But it’s thought up to a quarter of higher rate tax payers, who contribute to other kind of personal pension schemes and only automatically receive basic rate tax relief, miss out by not reclaiming the full tax relief on offer,  according to Prudential.

The additional relief can be reclaimed through an annual tax return or by informing HMRC. Claims can be backdated by up to four years if you don’t usually to submit a self-assessment return.

Some political parties are floating the idea of a flat rate of pension tax relief, so if you have unclaimed higher rate tax relief it’s a good idea to claim for it as soon as possible.

*Investing in pension for a non-earning spouse is one of the most generous government pension giveaways, says Danny Cox from Hargreaves Lansdown. Non-earners can make a £2,880 pension contribution and the government will add £720 in tax relief – even if the individual pays no tax.

Reducing tax on your pension income

The theory behind pension tax relief is that when your draw income from your pension it is subject to income tax, so the upfront relief stops the cash from effectively being taxed twice.

However, you can also avoid paying income tax when you draw your pension. At retirement you can normally take 25% of your pension as a tax-free lump sum of cash. And then if further withdrawals fall within the annual personal allowance, these will also be tax-free.

How to reduce the amount of Capital Gains Tax (CGT) you pay

This levy is applied on the ‘gains’ or profit made from assets when you sell them. The tax is charged at a rate of 18% if you’re a basic rate tax payer or 28% if you’re higher rate.

There is an annual allowance where no tax is due, which in the current year stands at £11,000 – using this allowance saves up to £6,160 in tax.

*Register losses

Losses produced by assets can be offset against gains at any time in the future, which in effect increases your tax free allowance. Just remember to register any losses that your assets make with HMRC.

*Use your ISA allowance

Around £158 million in unnecessary CGT payments have been made this tax year alone, estimates research by Unbiased.co.uk. And a sizeable chunk of this comes from people not using their Individual Savings Account (ISA).

Each of us has an annual ISA limit (currently at £15,000) that shelters cash and investments from both CGT and income tax.

If you hold shares or funds outside of your ISA, it can be worth selling – taking gains up to the CGT limit – and then immediately buying them back through your ISA to shelter them from further tax, says Danny Cox from Hargreaves Lansdown.

But remember that Capital Gains Tax can be a better option at 18% or 28%, than income tax at 20% or 40-55%. Therefore, it can be better to have income-producing assets prioritised for an ISA than capital growth assets.

Use a trust to buy a second home for children

You don’t have to pay CGT on profits made from your main home (principal private residence) but you do have to pay it on profits made from additional properties, including those that are used to generate an income, such as buy-to-let.

However, a loophole recently exposed by the Telegraph shows how you can use a trust to buy a second property for your children and flatmates to live in and not to have to pay CGT when you sell it.

As long as the child or children are named as beneficiaries of the trust and live in the home, they will have their own “principle private residence relief” on the property, which means that when you come to sell it, you won’t have to pay CGT. You can read more of the details on how this would work here.

How to avoid Inheritance Tax (IHT)

Under the current rules up to £325,000 of inheritance can be passed on to others without being taxed. After this threshold, assets are taxed at a pretty hefty 40%. On an estate of £500,000, this equates to a tax bill of £70,000.

Partly as a result of rising house prices, more and more people are finding that their estate qualifies for inheritance tax.

*Get married or enter into a civil partnership

Married couples and civil partners can combine their inheritance tax so that double (£650,000) can be left to beneficiaries tax-free; a spouse’s threshold is automatically transferred when one dies.

*Reduce the value of your estate before you die

An obvious way to reduce liability is to reduce the value of an estate before death. You can literally give away your money or assets and this is known as gifting. But it has to be done at least seven years before one dies. If you don’t live seven years after you have made gifts, the assets or cash are subject to tax.

However, there are few ways to get around the seven-year rule: You can give to your spouse without limit and without paying tax. You have a tax-free annual allowance of up to £3,000 to gift cash or assets to anyone of your choice. Unused exemptions from the previous tax year can be carried forward to the present tax year – but no further.

As well as the annual £3,000 allowance, you can gift up to £250 to any number of people without paying inheritance tax. You can also give away your income without paying tax, and there is no limit on this.

Furthermore, parents and grandparents can make one-off marriage gifts (cash or assets) to children or grandchildren of up to £5,000 and £2,500 respectively tax-free. Gifts to charities or political parties, during life or through a will are exempt from inheritance tax.

*Discretionary trusts

If you want to reduce the value of your estate but don’t want your beneficiaries to have rights to your assets or money before you die, you can transfer them to a trust.

This allows gifts to be made under the rules above and also starts the seven-year clock ticking, but the gift is delayed until you decide.  For example, if beneficiaries are children and you don’t want them to receive lump sums of cash until they are an adult, you can specify an age.

People who are chosen among the 100 potential astronauts shortlisted for Mars mission one way trip

   

Hannah Earnshaw from GB.(above) and an Irish scientist Dr Joseph Roche from Ireland are a couple of people who have been shortlisted for a one-way trip to Mars.

The Trinity College based astrophysicist Dr Joseph Roche is among the 100 people named in the third round of selection for the one-way trip.

More than 200,000 people applied to join the proposed one-way Mars One project, aiming to set up a permanent human colony

An Oxford physicist who can recall 90 digits of the mathematical entity pi is among five Britons to make the shortlist of would-be astronauts for a proposed one-way trip to Mars.

Ryan MacDonald, a 21-year-old masters student from Derby, has reached the final 100 candidates for the Mars One project which aims to set up a permanent human colony on the red planet in 2024.

The other British hopefuls are Dr Maggie Lieu, 24, a PhD in astrophysics at the University of Birmingham, Hannah Earnshaw, 23, a PhD student in astronomy at Durham University, Alison Rigby, 35, a science laboratory technician, from Beckenham, Kent, and Clare Weedon, 27, a systems integration manager for Virgin Media, from Addlestone, in Surrey.

Ryan MacDonald believes joining the Mars One project would allow him to leave a legacy.Photograph: Karen Robinson/the Guardian

More than 200,000 people applied for a place on the $6bn mission which the Dutch non-profit organisers plan to film for a reality television series. The original applicants were whittled down to 660 last year, and to the final 50 men and 50 women this month through a series of filmed interviews.

Speaking to the Guardian before making the shortlist, MacDonald conceded that the Mars mission may never get off the ground, but described his motivations for wanting to live and die on the planet.

“The most important thing to do in life is to leave a legacy. A lot of people do that by having a child, having a family. For me this would be my legacy,” he said. “Hundreds of years from now people are not going to know who the President of the United States was.

Everyone will remember who were the first four people who stepped onto Mars.”

Hannah Earnshaw: ‘Obviously it’s going to be challenging, leaving Earth and not coming back.’ Photograph: Karen Robinson/the Guardian

Others have been shortlisted from around the world, including 39 from the Americas, 31 from Europe, 16 from Asia, seven from Africa and seven from Oceania.

“Human space exploration has always interested me, so the opportunity to be one of the people involved was really appealing. The future of humanity is in space,” Earnshaw said.

“My family is pretty thrilled. They’re really happy for me. Obviously it’s going to be challenging, leaving Earth and not coming back. I’ve had support from my friends and family and we can still communicate via the internet.”

The shortlisted candidates will now be tested in groups to test their responses to stressful situations before finding out at the end of the year if they have made the list of 24 people chosen for the mission.

Before any humans are sent to Mars, the Dutch organisation has to find funds to send a robotic lander and communications satellite to the planet. If that goes well, the next step will be to send an “intelligent” rover to scope out a landing spot for habitation modules and life support systems which will be sent up on rockets before the first humans arrive.

Earnshaw said she was “not surprised” by the scepticism the project has drawn. Last year, researchers at Massachusetts Institute of Technology found that any manned mission to Mars would result in the crew dying after 68 days, while critics have pointed out that the estimated cost of Mars One is a fraction of the amount proposed by Nasa.

“It’s a very ambitious mission and requires lots of things going right for humans to leave the planet. But this project is encouraging other people to talk about the wider implications.

Alison Rigby is one of five Britons selected among the 100 would-be astronauts for the proposed Mars One mission. Photograph: Karen Robinson/the Guardian

“It’s definitely feasible. Space travel is risky but at the same time, there is a time scale in place,” Earnshaw said.

Dutch entrepreneur Bas Lansdorp, co-founder of Mars One, said: “The large cut in candidates is an important step towards finding out who has the right stuff to go to Mars. These aspiring martians provide the world with a glimpse into who the modern day explorers will be.”

The shortlisted 100 now face a series of tests to assess how well they work in groups under pressure. Part of their training will take place within a simulated Martian environment. Candidates not selected will have a chance to reapply in a new application round that will open in 2015.

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