Concern is mounting over next week’s “emergency budget” planned by the Dublin government deal with the economic crisis.
The budget, to be presented to the Dublin parliament by Minister for Finance Brian Lenihan next Tuesday, is in the final stages of preparation.
The “broad scope” of expenditure cuts and borrowing requirements has been decided, according to government officials.
Mr Lenihan is said to be putting the finishing touches to taxation measures and these would be presented to Cabinet on Tuesday.
Minister for Transport Noel Dempsey insisted this would be the final budget for 2009, despite frequent revisions in the government’s estimates of its budget deficit.
“We are preparing the document in such a way as we give people an idea of where we’re going, not just for the remainder of this year, but medium-term and longer-term,” he told Irish radio.
The Government was trying to reassure taxpayers by setting out the tax rates they’ll be facing this year, he said. VAT (sales tax) and excise duties are down because people are “afraid” to spend.
He accepted the Government couldn’t bring “absolute certainty” in this budget. “There’ are no pop-up solutions to what is the greatest crisis since the 1929 crash.”
Mr Lenihan was “looking at” the cost of social welfare, which accounts for O22 billion each year. “Every area of public expenditure has to be scrutinised and will be scrutinised over the next two or three years. Nothing is ruled out at this stage.
“Those who have most will pay the most. We’re going to try and protect the most vulnerable but everybody’s going to have to make a contribution.”
Taoiseach Brian Cowen forecast a ten per cent drop in the living standards for everyone in the 26 Counties over the next two years.
New figures show that the rate of unemployment in the 26 Counties increased last month to 11 per cent.
“Sometimes I think there is a view: let’s get this all over with on the 7th of April and get back to normal,” he said on Monday.
“But quick remedies are not possible. This is a process of adjustment that must go on now for a period of years.”
He set a 2013 target to fix the crisis. Public services would have to be cut, because Ireland is enjoying a 2009 standard of living, but now has 2002/2003 incomes.
“That will give people a good indication of the gap that has emerged of how you balance,” he said. “It shows how steep and severe the downturn has been.”
In its pre-Budget submission to the government, Sinn Féin has proposed a higher tax rate of 48 per cent on incomes over 100,000 Euros.
Deputy leader Mary Lou McDonald MEP said proposals by the party, which had been costed by the Department of Finance, would raise 2.46 billion Euro by the end of the year.
Ms McDonald told a Dublin news conference yesterday that the government had confused accountancy with economics.
“They should have put more money aside in the boom and invested in long term priority projects.
“Instead they wasted much of the state’s money on non-productive schemes such as property incentives, fueling and prolonging the property bubble.
“Now we have the same thinking in reverse. They will exacerbate the recession by over taxing and spending cuts, rather than stimulating the economy.”
The party has said the higher tax rate on big earners will bring in an extra E180 million this year.
Other Sinn Féin proposals for dealing with the crisis include a health levy of up three per cent on those earning in excess of 100,000 Euros; an increase in capital gains tax up from 22 per cent to 30 per cent; an increased tax on second homes and property speculation; and a reduction in tax relief on mortgage interest for landlords.