The Dublin government today unveiled a raft of budget measures it claimed would restore the 26-County State’s finances by 2014, but fudged key facts and figures on how it would affect the public.
Six billion of the total fifteen billion euro taxes and cuts will be implemented next year, if the annual Budget in December is passed by the Dublin government.
Measures include cutting social welfare by 3 billion euro, reducing the public sector pay bill by 1.2bn euro and increasing VAT by 2%.
The minimum wage is to be cut by 1 euro to 7.65 euro.
The plan will also draw more workers into the income tax net. By 2014 anyone earning 15,300 euro will start paying tax, down from the current level of 18,300 euro.
The plan has received the approval of the International Monetary Fund and the European Central Bank, who are continuing to negotiate th conditions of an 85 billion euro bailout for the crashed 26-County economy.
Speaking at Government Buildings, 26-County Taoiseach Brian Cowen said the current crisis was “a challenge that can be surmounted.”
“We are a smart, resilient, proud people and we are going to come through this challenge,” Cowen said.
On Monday evening, the Taoiseach responded to a call by the Green Party for a general election to be held by January, said that he accepted that an election would be held following the enactment of the budget legislation, due by March -- but he refused today to give an indicative date.
Speaking alongside Minister for Finance Brian Lenihan and Green Party leader John Gormley, Cowen said his focus was now on securing the stated cuts and taxes. He the State would have to “take some steps back to go forward again”.
The budget roadmap includes:
- Public sector workforce to be cut by almost 25,000 to 24,750, bringing staff numbers back to 2005 levels;
- Student fees will increase by 33%; new cuts in student grants;
- Water metering will be brought in by 2014;
- Interim flat property tax to start at 100 euro, increasing by 2014;
- Carbon tax charges will double to 30 euro a tonne;
- Unspecified reductions of social welfare to save 2.8bn euro;
- A billion euro to be raised in taxes and deductions on pensions;
- 10% pay cut, reduced pension scheme for new public sector entrants;
- Current public workers still covered by Croke Park Agreement;
- The minimum wage is cut by 1 euro to 7.65 euro;
- VAT will increase 1% to 22% in 2013 and to 23% in 2014;
- Corporation tax will remain at 12.5%.
The National Recovery Plan stated, published today, said: “The Plan will help dispel uncertainty and reinforce the confidence of consumers, businesses and of the international community.
“The tax and expenditure measures contained in this Plan will negatively affect the living standards of citizens in the short term.
“But postponing these measures will lead to greater burdens in the future for those who can least bear them, and will jeopardise our prospects of returning to sustainable growth and full employment.”
The State’ cost of international borrowing rose to record levels this morning on bond markets, and remains just under 9% this afternoon.
Sinn Fein activists held a protest on Merrion Square in advance of today’s publication of the coalition’s four year plan.
Speaking ahead of the publication today Sinn Fein TD Aengus O Snodaigh said, “The Government has no mandate or authority to bring forward this year’s budget, never mind a budgetary plan for four year.”
The four Sinn Fein TDs yesterday tabled a motion of no confidence in the Taoiseach.
Sinn Fein Dail leader Caoimhghin O Caolain called on all those in the Dail opposed to Brian Cowen’s leadership to vote no confidence in him.
“This Dail should have been dissolved by the Taoiseach last night. Brian Cowen no longer commands a majority in the Dail.
“He should now put the issue to the test and allow a vote on the motion of no confidence which has been tabled by the four Sinn Fein deputies.
“Are we to continue with this charade which is an insult to the Irish people? They are being denied a democratic choice because Fianna Fail and the Greens want to put the people in the straitjacket of a savage and regressive budget, a four-year plan and an IMF/EU loan BEFORE a General Election.
“Brian Cowen and his Government should go and go now.”