Jill Kerby: Summer’s over and the reality of health cuts, property tax is back

The end of summer signals the end of the respite from school for the nation’s youngsters. For the growns-ups – if they’re lucky – there is a break from the unrelenting litany of bad news and bills (that will get paid after the holiday).

The end of summer signals the end of the respite from school for the nation’s youngsters. For the growns-ups – if they’re lucky – there is a break from the unrelenting litany of bad news and bills (that will get paid after the holiday).

Let’s hope the nation has had a chance to recharge its batteries, because there’s no escaping the reality of pre-Budget spending cuts and higher tax announcements. Expect a lot more of it in the coming weeks, especially now that the worst economic news of all is filtering through: the great German industrial machine is slowing down.

Even one of the world’s most powerful politicians, German chancellor Angela Merkel, cannot force Germany’s trading partners to buy more German manufactured goods if they don’t believe future sales justify such investment. Consumers will not buy stuff anymore if they are paying off old debts, don’t have access to cheap and ready credit and want to preserve their savings because they are worried about the future.

This is the great conundrum of our age: global prosperity now depends on endless growth, which is impossible. Something has to give eventually: raw materials, income, credit/capital… the laws of physics cannot be rewritten, no matter how much politicians and central bankers want see only an upward line on a GDP growth chart.

Should Germany enter recession, all bets are off in terms of keeping the Greeks, Irish, Portuguese and Spanish on their current, let alone future, life support packages that include guaranteeing the ECB’s purchase of their toxic sovereign bonds. Whatever about eurocrat central bankers who answer to no one clamouring for such purchases, private bond buyers, with clients to answer to, have shut the door on these bonds. (Their jobs are on the line if a default happens.)

The slowing down of Germany’s economy is going to also give a greater impetus to the EU/ECB/IMF troika to hurry us along in the spending reforms and tax widening promises we made in exchange for the €67 billion overdraft. That is the reason that health spending cuts, details about the property tax, upcoming cuts to unemployment benefits (“poverty traps”) have all been highlighted by government spokespeople and ministers this past week.

The softening-up process that always happens before a Budget has begun in the hope that the impact of the cuts won’t seem quite so brutal on the day. But spin like this goes in both directions, and carer and patient groups have been the first out of the traps to pledge their resistance to the approximately 5% cuts in home help and disability services.

The other big announcement was about how the 2013 property taxes will be collected/deducted from PAYE earnings (such has been the difficulty in the collecting of the €100 self-assessment household charge.)

Resistance to the property tax will grow, but with mixed success if the size of the tax is small enough in year one and only amounts to €20 or €30 a month, as some commentators are suggesting (with very little to back up their predictions, it must be said).

No matter how it is spun, health care cuts and property taxes are happening already or will come in early 2013. Another two austerity budgets will follow the December one, each requiring around another €3 billion of cuts. We should all be working out personal coping strategies.

If you or someone close to you are at possibly at risk of HSE home care benefits being withdrawn, you need a contingency plan in place before it happens.

The reality is that ministers always opt for the easy cutting option (as argued by their civil servants) and target people who themselves cannot resist, such as the ill and elderly poor and who pose the lease electoral threat. Until they are forced to reverse the decision and target something (or someone) else, the elderly/disabled/ill poor person suffers.

Anyone in your family, your circle of friends or your community who is disadvantaged needs to be protected until the other fight is won. This means finding the cost of hiring a private carer to make up the lost service, appealing to charities if possible, fund-raising or even setting a charity up to provide the service if that’s what it takes.

This is part of the “ark building” process I’ve written about a number of times. Some people who want to hand all responsibility for most of the way our lives are conducted to the state will say, “Community action – let’s the government off the hook.” Until that mind-set can change (if ever), consider this just a form of short-term survival tactics that we will all increasingly have to resort to, as our country’s economic difficulties deepen.

As for the property tax, the best thing you can do between now and January 1 is to get an independent, impartial valuation of your residence, holiday home or investment property. Get the valuer to base it on the rental yield of the property, which multiplied by a factor of 12-14 will give a pretty accurate idea of its real value.

This kind of “evidence” will give you some confidence to appeal any higher valuation the biased state assessors will come up with: they are reportedly going to use market values based on most recent sale prices. However, this pool of data is far too small – and the market is still falling – to provide any kind of a clear and accurate picture of residential prices for tax purposes.

jill@jillkerby.ie