THE IRISH Government has revealed a package of billions of euros worth of new taxes and spending cuts in its sixth straight austerity budget – claimed by some to be its most savage yet.
Finance Minister Michael Noonan outlined plans for a further €3.5bn (£2.8bn) of “fiscal consolidation” in the 2013 budget, revealed at the Dail on Wednesday – a figure he claims is necessary for Ireland to bring its deficit closer to the Eurozone limit of three per cent of GDP.
But the 2013 plans will only reduce the Irish deficit to 7.5 per cent, leaving a ‘long way to go’ according to the Minister.
The latest austerity package, the sixth in a row, has been described as the most savage yet and is predicted to hit ordinary families hard. New revenue will be raised by property tax, cuts to child benefits and changes to social insurance. The new measures could mean that ordinary families suffer a €1,000 decrease in their annual income.
The new property tax will be levied at a rate of 0.18 per cent on homes worth up to €1m (£810,000) and at a rate of 0.25 per cent on properties of greater value. The tax, which was described as “progressive and fair” by Taoiseach Enda Kenny, will not be applied on new or previously unoccupied homes bought between 2013 and 2016.
There will also be higher taxes on the incomes of pensioners, cuts in governmental expenditure on medical care and increases in the duty on cigarettes and alcohol.
“The individual measures are modest,” said Mr Noonan. “However, I believe that the combination of the measures will have a significant beneficial impact.”
There will be no change, however, to the 12.5% rate of corporation tax.
Hundreds of protesters gathered outside Leinster House to rally against the new austerity measures, which were described as “regressive and anti-family” by former Labour minister Roisin Shortall.
Sinn Fein deputy leader Mary Lou McDonald said: “This budget is deeply unfair to those on low incomes, to children, to single parent families, to homeowners in negative equity and to the elderly.”
She added: “The treatment of children in this budget is disgraceful.”
Next year, Ireland’s European and International Monetary Fund loans are due to expire and the government hopes that the country will then be able to resume the sale of bonds at affordable rates.
Mr Noonan said: “Ireland has consistently achieved – or exceeded – all of the targets set in the EU/IMF programme of assistance. We have implemented over 160 separate conditions of the programme and are determined to emerge from it at the end of 2013 and to return to sustained market access.”
The Finance Minister said that the government would meet its deficit reduction target for this year, projecting that the deficit would fall steadily to 2.9 per cent by 2015
”We will not dither or procrastinate but will drive forward to lead this country out of the despair and despondency and lack of self-worth in which we found ourselves in March 2011,” he added. “There are manifest signs that the country is emerging from the worst of the crisis and that the efforts of the Irish people, despite the hardship, are leading to success.”
The Irish economy returned to growth in 2011 for the first time since 2007 and growth is forecast to continue in 2012 and 2013. Mr Noonan partly attributed the growth to increases in Irish exports. In 2011, exports increased by 5.1 per cent and reached pre-crisis levels after a 3.8 per cent increase during the first half of 2012.