The Irish government is considering further tax increases and social welfare cuts in the December budget.
The Irish Independent reports that Finance Department Minister for State Brian Hayes has refused to rule out either move.
Hayes made his remarks just 24 hours after Minister for Finance Michael Noonan said: “We cannot rule out any tax initiative, tax increase or tax reduction.”
Those remarks are in contravention of an election promise by the government parties not to increase taxes when they came into power.
Hayes has now claimed that no Finance Minister in the history of the state had ever ruled out any tax initiatives six months into the year.
“And that’s in normal times,” said Hayes. “We’re in abnormal times, the eurozone is in crisis. The idea that the Minister could say there would be no increases in tax did not make sense.
“I acknowledge, however that the government can’t tax the hell out of people and that we’ll have to look at the social welfare system.”
He also warned that the same restraints faced by Finance Minister Noonan six months into the year also applied to Social Protection minister Joan Burton.
“We’re in an inordinately difficult financial situation. We have to move on expenditure cuts. We have to make the cuts next year,” added Hayes.
Already homeowners face a property tax in January and another rise in mortgage interest rates in July.
The Coalition is obliged to come up with €1.5bn in tax hikes in Budget 2012 to be delivered in December but the Government had promised there would be no increase in income tax rates or changes to bands or credits.
Under the EU-IMF bailout plan, a package of tax and spending cuts worth €3.6bn are to be made next year.
Minister Noonan said: “The national finances are in a fraught situation. There’s a fiscal correction of €6bn under way in 2011 and so far we’re on target.
“We are slightly under profile on tax collection and we’re also under profile on expenditure. So as we go into June, facing the end of the first half year, we’re on target to achieve the fiscal correction of €6bn.
“Next year the commitment under the programme is a correction of €3.6bn, so over the two years there’s a correction of €10bn. In those circumstances I am not going to rule out any tax initiative or any tax increase or any tax reduction. I say this at a level of principle. I have nothing in mind.”
However, during the 2011 general election campaign, Noonan repeatedly said his party did not want to increase taxes and would concentrate on spending cuts instead.
“If we tax we lose more jobs. So we want to keep tax levels the same as they are and eliminate waste,” he said during the election campaign.