Austerity in two halves: #Budget2012
Early next week will finally see the introduction of #Budget2012 to the Dáil, in a novel format with two speeches, one by Brendan Howlin on Monday and one by Michael Noonan on Tuesday. The budget has been heavily trailed, with endless kite-flying over the last few weeks. A brief guide to (some) of the proposed changes was given by Caroline Madden in the Irish Times last Monday. For ease of reference, most of the main suggested budgetary changes are given below. It will be interesting to compare the kites to the actual cuts next week.
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The top rate of VATÂ will go up 2% to 23% (to the sound of champagne corks popping in Newry, Armagh, Ennishkillen, Strabane, Derry etc).
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There will be a flat rate €100 household charge or property tax (and not just on primary residences) which may not be popular…
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There will be increases in both capital gains tax and Deposit Interest Retention Tax and the extension of PRSI to some non-salary incomes for PAYE workers and others (see Caroline Madden’s piece for details).
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Motor tax will increase, with a rise of 63% being denied by the Minister (suggesting that, while it may not be 63%, it may be pretty high).
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Carbon taxes will increase meaning a rise of up to 3 cent per litre on the price of petrol and diesel, or 30c on a bale of briquettes or around €1.20 on a 40kg bag of coal.
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There will be cuts in education, or, to be more exact, a rise in third level fees which will cause Labour serious problems with a variety of other measures threatened, like changes to teacher-pupil ratios.Â
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There will be a cut of up to €700m in the health budget which would see the closure of various community hospitals, a rise in the cost of (all) prescriptions from 50c to €2, a €50 annual charge for medical cards, a continuation of the employment control framework and more.
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A ‘fat tax‘ has apparently been ruled out.
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Changes to public sector pay, pensions or income tax have been ruled out as have changes to social welfare payments. Others claim there will be cuts and changes to various payments, such as lone parent payments and social welfare rates including child benefit.
Two coalition partners presenting separate budget speeches might inadvertently reflect alleged tensions between the parties (and one outworking of the presidential election result?). Willie Penrose and Tommy Broughan are already gone from the Labour parliamentary party over the budget, and recently there was Labour backbench outrage over the Taoiseach’s suggestion that he would ‘make an honest leader‘ of Deputy Eamon Gilmore, their party leader and Tánaiste.
Optics appears not to be a strongpoint of the coalition at the moment as the Taoiseach is now intent on a state of the nation address at 9.30 pm on Sunday, on the eve of the budget (although at least X-Factor fans can opt out). Unfortunately, for the Taoiseach, the only frame of reference most people have for this type of address is the infamous ‘living beyond our means‘ speech of Charles Haughey with which it will draw parallels.
Given that tax receipts are now behind target for 2011, projections, and thus cuts, for 2012 may still be undergoing eleventh hour revisions as we speak…
Topic: Government, Politics
Region: Ireland
The harsh reality is that government spending will have be cut by circa three quarters from its peak. Spending was circa 60 billion with revenue circa half that. Cira half of that revenue is dedicated to bailing-out the eurosystem so the remainder (25% of the peak) will be split between state services and paying dues to the EU. Happy days…
If Ireland has the lowest corporation tax rate in Europe wouldn’t it make more sense to add 1% to the rate ( it will still be the lowest ) rather than drive everyone into grinding poverty. ?
Re increase in corporation tax. Google, Intel, Pfizer etc. have taken over from the Brits as the new rulers of Ireland. He who pays the piper calls the tune.
The other place where the champagne corks are popping is the Irish public sector, whose gilt-edged pensions and pay arrangements are left untouched while everyone else faces tax increases to support them. In a small way I am thankful that the UK government is at least expecting public sector workers to recognize that they have a part to pay in contributing to those pensions.
They dare not touch the Corporation Tax as that would open a door for the Germans/French to make the case for further increases. May be a matter of if not when, but no use gifting the argument to your, er…, friends.
dissenter
well who’s kidding who ? if the corp. tax rate does chip in it simply means other areas of the economy have to foot the bill, Ireland’s slitting its own throat by not letting it rise.