Families, middle income workers and social welfare recipients are set to bear the brunt of this years Budget, judging from the €6billion ($8 billion) fiscal adjustments announced yesterday by the Minister for Finance Brian Lenihan.
The first move as part of the four-year recovery plan will witness a four percent reduction in most social welfare payments, an increase in petrol and diesel prices and an increase in income tax across the board.
Members of the Irish parliament last night voted 82 votes to 77 in favor on the first motion of the Budget being passed.
With the introduction of the new tax measures a middle income family could lose as much as €300 ($396) a month.
The main elements of Budget 2011 are as follows:
Tax bands and credits will be reduced by 10 percent, resulting in more earners paying the standard and higher rates of tax.
Child benefit will be cut by €10 ($13) for the first and second child and cut by €20 ($20) for subsequent children.
The €10 ($13) airport tax is to be reduced to €3 ($4) in an attempt to attract more tourists into the country.
Job-seekers', carer's and disability allowance will be reduced by €8 ($10) per week.
The Prime Minister will suffer a €14,000 ($18,000) reduction in his salary and Government Ministers will see a cut of €10,000 ($13,000).
Public service and semi-State agency salaries will be capped at €250,000 ($330,000)
The current stamp duty regime will be reformed and a flat rate of one percent will be applied to all transactions of residential properties valued at up to €1 million ($1.3million).
The minimum wage will be reduced by €1 to €7.65 ($10.10).
Overall there was no change to the State pension but those receiving public service pensions above €12,000 ($15,000) a year will be reduced by an average of four percent.
Ministerial and State cars will see their fleet reduced by over a third over the coming two years as former office holders such as ex- Prime Ministers and presidents will use a car-pool system.
One of the two Government jets will not be replaced.
College registration fees will rise from €1500 to €2000 ($2642).
A work placement and training scheme will be unveiled for graduates and the unemployed .
Taxes on cigarettes and alcohol remain untouched but the price of a liter of petrol and diesel will rise by 4 cent and 2 cent.
The Minister announced there will be no change to Ireland's 12.5 percent corporation tax rate and the existing three-year corporation tax exemption for new companies will be maintained.
Speaking during the Budget presentation, Mr Lenihan acknowledged that this had been a “traumatic and worrying time” for Irish citizens.
“The budget cuts for the next four years are large, but if we postpone them then more wrenching adjustments will be needed at a later date," he said.
Fine Gael Enterprise spokesman, Richard Bruton criticized the measures saying they lacked the radical thinking required to kick-start the economy.
"The real issue with the Budget in my view is that it is very much the Budget of a Government leaving office. It lacks any real ambition to make changes for the future, there is no attempt to seriously reform the way we deliver public services, no strategy in respect of growth and they are still clinging to the same old banking strategy that has really been the source of our problems," he said on RTE radio this morning.
On the same program, the Minister for Foreign Affairs, Michéal Martin said that every section of society would be affected by the budget.