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Thursday, 24 March 2011

Brace Yourself...

Brace yourself...€200m cuts and tax rises on way.

IRISH taxpayers are being warned to brace themselves for further hardship with over €200m in increased charges and spending cuts on the way.

Finance Minister Michael Noonan said his 'mini-Budget' would include more cuts and tax hikes.

While the Programme for Government contains a pledge not to increase income tax, there are many other indirect taxes which could be increased instead.

These include charges for State services -- for example A&E charges.

The Government has promised a 'Jobs Budget' within the next three months which will cost €220m to implement.

But it has to raise this money in other ways to ensure that the funding from the EU-IMF bailout deal continues to flow.

Wage

In the Dail yesterday, Mr Noonan confirmed that the Government would need money to pay for measures such as reversing the cut in the minimum wage, halving the lower rate of employers' PRSI and reducing the lower rate of VAT from 13.5pc to 12pc.

"These costs will have to be counterbalanced by offsetting measures to reduce expenditure or raise revenue," he said.

It means that the Government is facing the prospect of having to raise €220m through either tax increases or spending cuts, which will be implemented by bringing in another Finance Bill.

Mr Noonan said he would be examining the options available to him over the coming weeks -- and did not provide any further details.

Summit

He was quizzed about the impact of the measures by Sinn Fein finance spokes-man Pearse Doherty, who said that they would cost up to €779m in a full year. But Mr Noonan said the actual cost would be €220m this year and €640m in a full year.

Mr Noonan again stated that there would be no compromise on the 12.5pc corporation tax rate when Mr Kenny met other EU leaders at today's crucial bailout summit.

He said that around 14pc of tax revenues will be required to service the interest on the State's national debt this year, rising to 18pc by 2014.

"While this is undoubtedly significant and high, the level of tax revenue devoted to servicing the debt in the 1980s was higher," he said.


Report by Claire Murphy - Evening Herald

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