REVEALED: CUT TO TOP RATE OF TAX ON TABLE IN BUDGET - A cut to the higher rate of tax is firmly on the Budget table as a way to provide relief to middle-income workers, provided the benefit can be clawed back from high earners. But the average family is only expected to benefit to the tune of €300 a year from the modest tax cuts in Budget 2015. The tax relief will be targeted to give the greatest benefit to those on middle incomes. The more a worker earns, the less their tax cut will be worth. Labour ministers were briefed on the shortlist of tax options available to the Government by Tanaiste Joan Burton and her new economic adviser last week, the Irish Independent has learned. A cut to the USC is virtually ruled out by Government, as it delivers a disproportionate benefit to higher earners, and is seen as too expensive. The widening of tax bands to raise the entry point to the higher tax rate above €32,800 is the easiest way to take people out of the top rate of 52%, which is made up of 41% income tax, 7% USC and 4% PRSI. Every euro earned above €32,800 is currently hit with the marginal tax rate of 52%, leaving the worker with just 48 cent in their pocket. However, this move would deliver a big reduction to just a small number of people. A special tax credit is also a possibility, but this would not address the issue of reducing the 52% rate on low and middle-income earners. Lowering the top income tax rate from 41% to 40% is emerging as a strong possibility, as the Government is keen to reduce the marginal tax rate.
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BOUCHER BACK AT DESK FOLLOWING CANCER TREATMENT - Bank of Ireland chief executive Richie Boucher has returned to work following his treatment for cancer. It is understood that Mr Boucher returned to his desk in the middle of last week, having undergone surgery in early August, says the Irish Times. The Zambia-born executive had a successful operation to remove cancerous tissue from his colon and bowel. The cancer was diagnosed following a routine check-up earlier this year and Mr Boucher informed staff at Bank of Ireland of the diagnosis in July. Mr Boucher joined Bank of Ireland from Royal Bank of Scotland in 2003, as head of corporate banking. He was appointed group chief executive in early 2009, succeeding Brian Goggin, following the financial sector collapse in Ireland. On the day before he entered hospital for treatment, Mr Boucher presided over publication of the bank’s half-year results, which showed it had returned to profit for the first time since the crash, with a pre-tax surplus of €327 million. Separately, it emerged yesterday that Baillie Gifford & Co increased its stake in Bank of Ireland to 4.01% last Friday. In a regulatory announcement to the stock exchange, Bank of Ireland said the global investment group increased its holding to just under 1.3 billion shares last week from 972.7 million previously.
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ECB PLAN 'TO EXCLUDE TRACKER MORTGAGES' - It is unlikely that Irish banks will be able to offload their loss-making tracker mortgages using the ECB’s asset-backed securities (ABS) programme, says the Irish Examiner. The ECB president, Mario Draghi, unveiled a new set of measures to stoke economic activity across the eurozone at the bank’s September monthly meeting, including a programme to purchase asset-backed securities. The three domestic banks - Bank of Ireland, AIB and Permanent TSB - have just under €50 billion of loss-making tracker mortgages sitting on their balance sheets. The Government had been in negotiations with the troika during the bailout programme about looking at ways of moving these tracker mortgages either off balance sheet or setting up separate and cheaper funding lines. However, these talks failed to reach any agreement. The ECB’s ABS programme includes mortgages, which potentially opens up a new avenue to Irish banks to solve the tracker mortgage problem. But all securities will be split into three tranches: senior, equity and mezzanine. Lorcan Roche Kelly, head of Agenda Research, says that ECB will only buy senior tranches, which will exclude loss-making tracker mortgages from the programme.
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US ALARMED BY PROSPECT OF SCOTTISH 'YES' IN INDEPENDENT VOTE - A “Yes” vote for independence would be an economic mistake for Scotland and a geopolitical disaster for the west, senior US figures - including Alan Greenspan - tell the Financial Times as Washington wakes up to the chance that its closest ally could break up this week. Having assumed for months that “No” would win comfortably, Washington has reacted with alarm to opinion polls showing that Thursday’s referendum is going down to the wire. “We have an interest in seeing the UK remain strong, robust and united,” said Josh Earnest, the White House spokesman. Mr Greenspan, former chairman of the US Federal Reserve, said the economic consequences of independence would be “surprisingly negative for Scotland, more so than the Nationalist party is in any way communicating”. “Their [nationalist] forecasts are so implausible they really should be dismissed out of hand,” said the normally circumspect Mr Greenspan, noting the pace of decline in North Sea oil production. Despite Nationalist claims to the contrary, he said there was no chance of London agreeing to a currency union. Differing fiscal policies would also cause any Scottish attempt at using the pound regardless to “break apart very quickly”. “There’s no conceivable, credible way the Bank of England is going to sit there as a lender of last resort to a new Scotland,” said Mr Greenspan. Many US officials combine ancestral roots in Scotland and knowledge of the Scottish Enlightenment’s influence on the US constitution with strong emotional ties to the UK, an ally the US has fought alongside for 100 years.
