By Peter Hannaford on 12.5.05 @ 12:05AM
A report from the happy land of economic boom.
DUBLIN -- Ireland, Europe's "Celtic Tiger," shows no signs of
turning into an economic pussycat. Quite the opposite.
Next year's government budget, just out, projects Gross Domestic
Product growth of 8 percent, and some analysts think it may reach
10 percent.
Ireland's construction boom and strong consumer spending have
driven up tax revenues. This is expected to continue. The result
should be a budget surplus of approximately $1.8 billion. About
half of this has been earmarked for public employee pay increases
and added spending on childcare and other social welfare
programs.
The remainder, nearly $1 billion, may go for tax cuts for the
second consecutive year. The debate is between those who favor
one-time credits and those who want to index income tax rates.
With the economic boom continuing, the benefits of one-time
credits without indexing would soon vanish as taxpayers' prosperity
moved them into higher brackets.
Some members of the Dail (parliament) want more spending on
health care from the surplus. All this will be sorted out in the
caucus of Fianna Fail, the party which commands a strong majority
in the Dail.
Once a country of high unemployment, Ireland now finds itself
with not enough people to fill all the jobs available. As a result,
workers from new European Union countries in Eastern Europe are
emigrating to Ireland to take the jobs. It isn't always that
simple, as the current strike against Irish Ferries indicates. In
that case, Irish Ferry workers do not want foreigners taking jobs
(and at lower wages). At present, the ferries that ply the Irish
Sea with passengers and cargo, are tied up in Wales.
The ferry strike is the exception. Overall, employment is
expected to hit two million by year's end -- out of a labor force
of 2,086,500. Talk about full employment!
From whence did all of this spring? It was triggered by
Ireland's joining the EU in 1972. That brought the country large
sums of Regional Development Funds, used to build infrastructure,
promote tourism and lure inbound investment.
The population grew younger. Approximately 40 percent of
Ireland's four million people are under 30 and it has the highest
percentage of 15-24-year-olds in Europe.
College and university enrollments have climbed steadily, making
the young, well-educated, highly motivated work force attractive to
high-tech companies.
"The ICT [information/communications technology] sector is the
savior of Ireland. Imagine what would happen to the economy without
it," said the vice chairman of a leading high-tech company late
last month. Modest corporate taxes (12.5 percent) and a generally
supportive government have made Ireland a magnet for many
international ICT companies.
The country is not without problems. Housing prices have
averaged a 7.2 percent increase over the last 12 months, and
consumer debt it up. These are problems of prosperity. There are
darker ones, too. The other day the Dublin police seized $8.1
million worth of cannabis resin, shipped in from Spain in boxes
labeled "notepads." Drugs in rural areas have also become a
problem.
And, shades of Washington, D.C., Ireland has its own lobbyist
scandal. Various people and companies have come forward to say they
paid large sums to one-time government officials who used them
illegally to bribe officeholders.
Not even the well-liked Prime Minister, Bertie Ahern, has
escaped the tar brush. A developer has accused him of accepting a
bribe of $1 million a dozen or so years ago to thwart a tax break
for a shopping center. The PM stoutly denies the allegation.
Good times aren't all a matter of the good luck of the Irish.
Hard work is an important part of it, but everyone seems to be
enjoying himself. The enthusiasm for continued good times and the
warmth and hospitality one encounters meeting with individual Irish
men and women put a visitor in a very happy mood.
topics:
Taxes, Health Care, European Union
