The dust was settling today after a merciless supplementary Budget that hit taxpayers with €3.25bn in levies, stealth taxes and spending cuts.
Finance Minister Brian Lenihan also pulled low-paid workers into the tax net, halved jobseekers benefit for under-20s and cancelled annual Christmas welfare bonus payments.
The Dáil debated the measures until after midnight when excise duty increases on cigarettes and diesel came into force.
A day-long discussion will start today beginning with statements by the Taoiseach and Opposition party leaders.
Labour deputy leader Joan Burton branded the measures as ’a Budget from hell’ while Fine Gael claimed ordinary citizens were being forced to pay for Fianna Fáil’s economic blunders of the past.
Mr Lenihan also signalled he would seek €5bn in spending cuts and €2.25bn in extra taxes in 2010-2011 to help correct the public finances.
Officials at the Department of Finance grimly forecast that the economy will shrink by almost 8% in 2009 while unemployment will soar to 12.6% before hitting 15.5% next year.
In the proposals, a national asset management agency will buy up over €90bn in bad loans from the banks in a move designed to restore investor confidence.
In a bid to cut public payroll costs, Mr Lenihan announced an early retirement scheme for workers aged 50 years or over.
Despite doubling the three existing income levy bands, Mr Lenihan failed to target tax exiles or plug lucrative loopholes.
The jobseekers allowance for people aged under 20 years was halved to €100 to encourage them to take part in training schemes.
Mr Lenihan also signalled that child benefit will be means-tested or taxed in the next Budget and the Early Childcare Scheme payment would be phased out by the year’s end.
Mr Lenihan concluded: “The resolute actions we have taking to reduce the Budget deficit and to boost competitiveness by driving down costs, prices and wages are needed to restore the confidence of potential investors.”
In an embarrassing u-turn on the pension levy, the minister also announced a sliding scale would be adjusted to reduce the impact on the lower paid.