EU and IMF have power of approval over Ireland's four-year plan
EU Bodies are yet to endorse austerity measures
The EU and IMF are entitled to seek whatever changes they see fit to yesterday's four-year austerity plan according to the Irish Times. The Department of Finance confirmed that Fianna Fail's austerity plans could be ammended by the two external bodies.
The document was drafted by the Government, but it is believed that neither the IMF or European Commission have endorsed it yet.
Despite this yesterday, Economics Commissioner Olli Rehn yesterday welcomed the plan saying it is "a sound basis for negotiations" on an emergency loan with the IMF and the EU.
The main points unveiled in yesterday's plan, as outlined by the Irish Times are as follows:
- €15bn in measures aim to bring deficit under 3% GDP by 2014
- €6bn of adjustments to be front-loaded in 2011
- An extra €1.9bn sought via income tax changes
- Standard VAT rate to rise from 21% to 23% in 2014
- Entry point for income tax to fall to €15,300 – from €18,300 currently – by 2014
- Minimum wage to be reduced by €1 to €7.65
- Reduction of social welfare spending of €2.8bn targeted
- Domestic water charges to be introduced by 2014
- Introduction of a site value tax in 2012
- Students' contribution charge to rise from €1,500 to €2,000
- Reform of capital acquisitions, capital gains tax
- Pension-related tax changes to yield €700m
- Tax savings of €240m on public sector pension deductions
- Site valuation tax to be introduced
- Cut in public service staff by 24,750 from end-2008 levels to 2005 levels
- Overall pay adjustments of €1.2bn by 2014
- 10% pay cut, new pension scheme for new public sector entrants
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