Just before Brian Lenihan, Minister for Finance, announced the Budget 2011, the toughest in Ireland’s history, Prime Minister, Brian Cowen urged the Parliament to see the positives in the document.
He said “I reiterate that the Budgetary targets that we set ourselves last year in a difficult situation have been adhered to as will be outlined by the Minister in his remarks today.
"Our revenues are up half a million higher than the €31bn that we projected, that our expenditure is under control based on the expenditure we said we would spend during the year; and that having stabilized the situation, we now have the prospects of growth."
It’s believed that Lenihan’s Budget will affect lower and middle class income earners with substantial tax increases, cuts to social welfare and bringing more workers into the tax net being just some of the key feature of the Budget.
The Budget will cut up to €6 billion ($8 billion), with €1.5 billion ($1.99 billion) in new taxes and €4.5 billion ($6 billion) spending cuts.
Four percent will be cut from all social welfare payments including pensions. Unemployment payments will be cut by €9 ($12) a week and children’s benefits will be cut by €10 ($13) and €20 ($26) for the third child.
Traditionally those who are paid lower in society do not pay tax but they will now be brought into the tax net. There will be no changes to the top and lower income tax rates. Tax bands will be narrowed which will mean more people pay the higher rate of income tax. Income tax bands and credits will be cut by ten percent.
Members of Parliament will face another pay cut. Brian Cowen’s salary will be cut by additional €14,000 ($18,600) and ministers by €10,000 ($13,200). Also the state car fleet will be reduced by one third.
Key points of the Budget include:
- No reduction in state pension
- €10 reduction in Child Benefit rates
- €40 payment for fuel allowance recipients
- 15,000 activation places for unemployed
- Taoiseach salary cut by €14k; ministers by €10k
- Public sector salary capped at €250k
- Public service pensions over €12k cut 4%
- New minimum wage not in tax net
- Employee PRSI/health levy pension relief gone
- Employee PRSI contribution ceiling removed
- 1% tax on residential transactions up to €1m; 2% over €1m
- All stamp duty exemptions abolished
- Revised air travel tax of €3 from March
- 4c on petrol, 2c on diesel from midnight
- Car scrappage extended for six months
- Income/health levies to be replaced by single universal social charge. Rates on the charge will be 0% below €4,004 a year, 2% up to €10,036, 4% from €10,036 to €16,016 and 7% above this level
- Value of tax bands and credits to be reduced by 10%
- Abolition of the Income Levy and Health Levy replaced with Universal Social Charge
- Carer's Allowance for those under 66 to be cut by €8 to €212 a week
- Disability Allowance being cut by €8 to €186 a week
- Increase in the PRSI rate for the self-employed, higher earning public servants and office holders
-No change to Ireland's corporation rate
- Next President's salary to be capped at €250,000
- Business Expansion Scheme to be revamped
Where does the term “the luck of the Irish” come from?