Irish Republican News · December 7, 2010
[Irish Republican News]

[Irish Republican News]
Lenihan unveils ‘slash and burn’ budget

Ordinary workers, families and social welfare recipients have borne the brunt of 6 billion euro in cuts and taxes in the 26-County Budget today by Minister for Finance Brian Lenihan.

The first instalment of the Government’s four-year recovery plan sees a widening of the income tax net and a reduction in most social welfare payments.

The impact of the budget will be felt most keenly by taxpayers on low incomes who will be brought into the income tax net for the first time and by people dependent on social welfare.

Unveiling the most draconian budget in living memory, Mr Lenihan acknowledged the current period had been a “traumatic and worrying time” for citizens.

“The budget cuts for the next four years are large, but if we postpone them then more wrenching adjustments will be needed at a later date,” Mr Lenihan said.

Speaking from Leinster House today Sinn Fein President Gerry Adams said the Fianna Fail/Green Party Government has no mandate to introduce today’s budget.

Mr Adams said there is a better way forward based on stimulating the economy, creating jobs, reforming the tax system and building an economy that serves citizens instead of punishing them.

He said Sinn Fein would vote against a budget based on the IMF/EU sell-out deal and the fundamentally flawed four-year plan of Fianna Fail and the Greens.

“We are totally opposed to the economic strategy of this government. It is punishing the least well off and depressing the economy. And all to bail out banks and bond-holders,” he said.

“Fianna Fail and the Greens have no mandate to do what they are doing. This is a Government on its last legs yet it is trying to set the course for the economy for the next five years at least.

“There is a better way based on stimulating the economy, creating jobs, reforming the tax system and building an economy which serves citizens instead of punishing them.”


The budget reduction brings more than 60 per cent of the workforce into the tax net through a reduction in tax credits.

The average income loss for families of the combined tax/social welfare package is estimated at 7 per cent.

The income tax bands and credits are to be lowered by 10 per cent, while a total of 25 tax reliefs are to be abolished or restricted. The top tax rate will remain the same.

A 2,000 euro higher education charge has been introduced, while school capitation grants have been reduced, and the school transport charge increased and extended to primary school children.

The maximum rate of payment for all weekly social welfare schemes are to be reduced by 8 euro from January. There will be a 10 euro reduction in the personal weekly rate of Supplementary Welfare Allowance, and a six euro reduction in the rate of Jobseeker’s Allowance and Supplementary Welfare Allowances for those aged 22-24.

The Carer’s Allowance for those under 66 is to be cut by 8 euro to 212 euro a week, while Disability Allowance is to be reduced to 186 euro a week.

Child benefit is to be cut by 10 euro a month for the first and second child and by 20 euro for subsequent children.

As expected, the minimum wage is to be reduced by one euro to 7.65 euro.

While alcohol and cigarettes remained untouched, a litre of petrol or diesel will rise by 4 cent and 2 cent respectively.

The rate of pay-related social insurance (PRSI) for self-employed, higher earning public servants and office holders are to be increased, while the ceiling on employee PRSI contribution is to be removed. PRSI for the self-employed are to be increased to 4%.

The income levy and health levy are increased and will be replaced with a single universal ‘social charge’ of 7% for most taxpayers.

All stamp duty exemptions are abolished, with stamp duty reduced to 1 per cent on all residential property transactions up to a million euro.

All property-based tax reliefs are to be effectively terminated by 2014. Rent Relief is to be phased out over eight years.

Tax on deposit interers is to be increased by 2 per cent to 27 per cent on ordinary deposit accounts and by 2 per cent to 30 per cent on longer-term deposit accounts.

Public service pensions above 12,000 euro are to be reduced by an average of 4 per cent.

The government’s ten euro air travel tax is to be reduced to 3 euro in an attempt to assist Ryanair and Aer Lingus.

A salary cap of a quarter of a million euro per annum is to be introduced for civil servants.

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