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When a Squeeze Becomes a Pinch

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The term ‘middle-class squeeze’ refers to the situation wherein increases in wage do not equate with inflation rates for middle income earners and the cost of living continues to increase. This leads to a perceived decline in actual wages which seems to primarily affect this middle level income earners. The ‘squeezed middle’ is something that we hear in general and political conversation quite a lot in Ireland these days as the issue continues to heat up alongside the ever increasing housing prices (both rental and purchase) and the increases in the cost of living.

In recent days, Junior Finance Minister Michael D’Arcy has taken note of these ongoing conversations and complaints and stated that this ‘squeezed middle’ are in dire need of some manner of assistance, going as far as to suggest that a third ‘middle’ rate of tax is now being considered. D’Arcy was quoted as saying:

“People accept at this stage the people in the working middle need to get something back. So what we now have to do is to help people who are in that mid-range. Both the Taoiseach and the finance minister are extremely eager to do something there. There is a train of thought that there should be a third middle rate of tax between the two rates at a lower space. We have to reduce the burden of income tax on those people.”

This will be welcome news to anyone currently floundering in the squeezed middle. The Junior Minister went on to outline that that this new tax level will rest somewhere in between the top and lower standard rates, stating that the entry point to the higher rate which is currently €33,800 is “damaging” to job creation as workers earning less than the average industrial wage (€45,075) can still be paying the top level of tax, which is an anomaly that seems to only be faced here.

Junior Minister D’Arcy also damned the culture of “welfare dependency” which has sprung up in Ireland as a result of these issues, with tax levels and the cost of living leaving many to believe that they will earn more on welfare than working when the cost of travel etc. is factored in and suggested that the strategy from this point will be to make sure that work done is paid for appropriately, and to possibly introduce this new tax bracket to allow mid-level earners to take home enough pay to live more comfortably.

As always we are available for any advice or guidance you may require on business or finance matters.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

ZOOM, ZOOM, ZOOM – CAR INSURANCE PRICES

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If your car insurance was due for renewal in recent months, you would not be alone in having received quite the unwelcome shock when the renewal notification landed through your letterbox. Car insurance prices in Ireland are well and truly spiralling at present, and with no end in sight many motorists are now at risk of not being able to afford to keep their cars on the road. A recent meeting of the Joint Committee on Finance, Public Expenditure and Reform took place at Leinster House to focus on these issues as they continue to pose an immense threat to drivers.

Figures show that over a third of Irish drivers saw their car insurance premiums continue to rise meteorically in the last year, with many facing increases of up to 50% on their previous premiums. Whilst this is a financial issue facing the wallets and pockets of Irish drivers, it has also become an overall road safety issue which begs for rectification. As a consequence of these consistently rising costs, many drivers are unfortunately put in a position in which they must drive under reduced levels of insurance in order to manage their costs. This is both a financial issue for our country and a safety issue for all drivers as we have seen a recent 17% increase in accidents involving uninsured drivers as a result of rising costs that cannot be realistically kept up with, these rising costs do not correlate to your own claims or penalty points, but are an issue across the board for all drivers young and old. Many long-term drivers have experienced a hike of over 50% in the cost of their insurance premiums despite having never made a claim.

Conor Faughnan of the AA stated that rising costs were an issue of major urgency facing members of the AA and that

“Competition should be encouraged by the rising costs being seen, but that isn’t happening. Foreign insurers are in active retreat.”

Thus positioning this as a financial issue for the country as well as individuals. Faughnan also stated that foreign insurers fear the lack of clear information on insurance claims costs in this country and are wary on this front also. Whilst fuel costs are dropping, rising insurance costs ensure that drivers are feeling no benefit. Ireland Underground, a group of representatives of young drivers in Ireland have been quoted as saying that these rising costs have left Ireland’s younger drivers feeling

“As if they are besieged on all fronts by a sense of hopelessness.”

Once again, we are seeing our young people being hit hard by the financial issues which previously threatened their continued living in this country. It is not just our younger people here though being hit hard as older people are also finding themselves being hit by astronomical insurance premiums, and as a result are struggling to keep their cars on the road and maintain their own independence in this way.

Suggestions have been made to bring our costs and compensation in line with EU averages and allow greater competition for both Irish and foreign insurance companies in Ireland. According to the AA’s annual survey of motoring costs, the average cost of running a family car in Ireland has increased by €255.82 in the last year.

Should you require any assistance with your own finance management issues please don’t hesitate to contact us here at DCA Accountants.

 

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

TIGHTER SQUEEZE FOR DUBLIN BUSINESSES

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It’s no secret that the property market in Ireland has been rife with struggles in recent years, with the increased strictness and new mortgage rules putting roadblocks in the way of first and second time buyers. Now, with office space rental prices increasing whilst availability decreases it has become more difficult than ever to gain access to appropriate property in Dublin both for personal and business customers.

 

This issue is set to become a prevalent one for Dublin businesses as it has been suggested by the Society of Chartered Surveyors Ireland that rental rates for businesses in Dublin are to rise sharply by 12% in the coming year. To add fuel to the fire of a rocky year for leasing in Dublin, it has also been recently reported by estate agentSherry Fitzgerald that vacancy levels for office space in Dublin have hit an all-time low. It seems to be a Catch-22 situation ahead for new and upcoming businesses in Dublin as there will now be limited property available and a cost increase on existing property.

 

The SCSI’s group chair Brian Meldon has been quoted as saying the following regarding the lack of supply:

“While some respondents are anticipating an increase in supply in 2017, no new office space has been delivered to the Dublin market for the last five years and as a result demand continues to surpass supply.”

 

It has been suggested by economists that the influx and growth of the tech company sector in Ireland may have led to greater competition for office space, resulting in less availability and higher rates as competition increases.

 

It is not just office rental availability which has become an issue in recent years, as property website Daft.ie have this week published their report which showed that this month, tenants had only 3,600 properties to choose from in the entire country, a massive drop from the 5,200 seen at the same time last year, and a marked difference between the 16,000 available in 2010.

 

Undoubtedly, demand for office space across the country will continue its rise in 2016 as our economy continues down the road to recovery. Between office space and personal accommodation, we may see ourselves running head first into a rental crisis in the coming months and years. If you are curious about the rental prices and availability in your own area, we would advise having a read of the Daft report which includes many infographics to keep you informed.

 

As always, please don’t hesitate to get in touch with us here at DCA Accountants if there is any way we can be of assistance to you and your business in the midst of these crises.