The government is stunned by a stinging new report from the International Monetary Fund (IMF) which pressures the Irish administration to target children, pensioners, students and home-owners in a further set of cutbacks.
The IMF, the international monetary watchdog, recommends a host of new taxes and cutbacks which would hurt ordinary households in the pocket.
This comes as Finance Minister Michael Noonan, who has been forced to slash billions off the Irish economy to repay bailouts since coming to power 18 months ago, strives to find another €3.5 billion when he announces the budget in December.
The IMF wants the government to implement a range of tax increases and spending cuts which go well beyond what it had planned for the budget.
There has been a suggestion of a property tax at least double that under consideration by ministers. The IMF also is pushing for cuts to pensions and means-testing of universal payments like child benefit which have already been fiercely resisted by Minister for Social Protection Joan Burton.
The IMF wants Noonan to reduce the old age pension. This would knock €11 off the average weekly contributory pension payment.
It wants an annual property tax of 0.5 percent of the value of a house. This is twice the government’s target and would push property tax to €835 on an average house worth €167,000.
The report from the IMF also wants changes to child benefit, either by means-testing or income tax, changes to the medical card regime to hand out fewer cards, the re-introduction of college fees and a system of bank loans for students, and closer scrutiny of the Croke Park Agreement.
Noonan, who on Tuesday began a tour of European capitals to help secure a deal on Ireland’s bank debt, moved to play down the IMF demands. He said they were “simply advice.”
“It is not mandatory to accept any of the advice. Of course, it is well-founded advice coming from the IMF,” he said at Fine Gael party’s two-day think-in in Westport, Co. Mayo.
He said he wouldn’t intend making a proposal to government that the property tax be set as high as the IMF suggestion.
The government can afford to ignore IMF recommendations when they appear in an annual review. But the suggestions are likely to form the basis of future negotiations if the government fails to meet the targets set out in the bailout agreement.
The IMF, one of three organizations that make up the troika that organized Ireland’s bailout in 2010, said in its annual report on Ireland that the government must find ways to save money as the economy slows faster than expected.