Country braced for austerity Budget

Country braced for austerity Budget

Ireland is today bracing itself for its sixth austerity Budget in four years.

Spending cuts and tax hikes worth €3.5bn will be announced today, which Government leaders insist will bring the country a step closer to economic independence and growth.

Finance Minister Michael Noonan and Public Expenditure Minister Brendan Howlin will announce €1.25bn in tax hikes and €2.25bn in spending cuts.

A new property tax of 0.18% of the value of a home will be among the measures. This could see the owner of a home worth the national average price of €157,400 paying nearly €300 every year.

Dole payments to jobseekers will also be hit, back-to-school allowances face the chop and some elderly people will be forced to pay for prescription drugs due to a cutback in medical cards for the over-70s.

Yesterday, Tánaiste Eamon Gilmore said while there was no doubt the austere cuts and tax hikes in the Budget would be tough, they will take Ireland to 85% of its debt bailout targets.

The country hopes to exit the bailout programme it entered with the Troika - the International Monetary Fund, European Central Bank and European Commission - by the end of 2013.

Ireland has been forced to endure massive budgetary adjustments every year since the economic collapse in 2008, the biggest of which was introduced in Budget 2011 with €6bn of cuts and new taxes.

But Minister Gilmore insisted such measures are nearly a thing of the past.

Some €24bn in cuts and new taxes have been imposed since the onset of the banking collapse and economic crisis.

This included adjustments of €3.8bn in last year's budget announcement - among them a VAT hike and a savage 60% motor tax increase for the greenest vehicles.

A further €3.1bn package is expected for 2014 and €2bn of savings for 2015.

Meanwhile, Exchequer figures released yesterday showed the state finances were behind target in terms of tax take, running at €171m behind profile at the end of November.

While VAT returns were ahead of target at the end of November, poor returns in income tax, corporation tax and excise duties led to the shortfall.

The Department of Finance said lower-than-expected returns from the self-employed were the main reason behind the monthly shortfall in income tax.

Corporation tax receipts in November - which is the biggest month of the year in terms of collection - were €46m below target.

Despite the tax take shortfalls, the Exchequer plugged its deficit with €8.4bn over the last 12 months. At the end of November it was €13bn in the red, compared with 21.4bn at the same time last year.

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