Hikes and cuts leave little cheer

Hikes and cuts leave little cheer

In the latest austerity onslaught, just weeks before Christmas, the Government has cut child benefits, tripled prescription charges and rubber-stamped the hugely-controversial property tax.

Tax hikes that will drive up the price of solid fuel, cigarettes, alcohol and the cost of running a car leave little cheer in the run-up to the festive season.

But despite the bad news, both Finance Minister Michael Noonan and Public Expenditure Minister Brendan Howlin claimed the country appeared to be over the worst and would prosper again.

“There are manifest signs that the country is emerging from the worst of the crisis and that the efforts of the Irish people, despite the hardship, are leading to success,” said Mr Noonan.

The main features of the sixth austerity Budget in five years include:

:: €10 wiped off Child Benefit every month.

:: A 0.18% value-based property tax – rising to 0.25% only on the value over €1m – starting next July.

:: Motor tax increases between €10 and €126 in the new year.

:: €1 added to a bottle of wine, and 10c on beer, spirits and cider.

:: Cigarettes up 10c per 20 pack.

:: A three-fold jump in prescription charges for medical card holders from 50c to €1.50.

:: Third level fees increase by 250 euro for each of the next three years.

:: €50 cut from back-to-school allowance, down from €250 to €200.

Among the few positive measures revealed were a freeze on petrol and diesel excise duties along with a three-year exemption for property tax for first-time buyers and the purchase of new or unoccupied homes.

There will also be a voluntary deferral scheme on the property tax for those hardest hit by the recession.

The Government is gambling on a 10-point tax reform package for smaller businesses in an attempt to drive up exports and create jobs.

In a bid to demonstrate politicians are not immune from the pain, TDs will now have to vouch for their expenses, while party leaders will have their special allowance cut by 10%.

However, the gesture made little impact with hundreds of protesters outside Leinster House, a small number of whom clashed with a heavy Garda presence.

Reaction

The Opposition and other campaigners were persuaded by the need for many of the punishing cuts.

Michael McGrath, Fianna Fáil finance spokesman, said the Government failed to learn from last year’s mistakes.

“I get no sense of empathy or understanding from the Government; nor do I get any sense that they understand what life is like for ordinary people and families,” he said.

Mary Lou McDonald, Sinn Féin deputy leader, said: “This budget is deeply unfair to those on low incomes, to children, to single parent families, to homeowners in negative equity and to the elderly.

“The treatment of children in this budget is disgraceful.”

Sinn Féin also said the property tax was flawed as local authorities will have to foot the bill for all the social housing on their books.

Head of children’s charity Barnardos Fergus Finlay joined a chorus of revolt who attacked the Government’s cut to child benefit.

“It is a blunt and brutal attack on family incomes with no sense of fairness or equity,” he said.

Changes to an employees’ levy, known as PRSI or stamps, mean a worker’s allowance of €127 a week has been abolished – cutting annual take home pay by about €260.

The sick have been further hit through the respite care grant, which will be cut by €325 a year – from €1,700 to €1,375.

Cut-rate VAT for the tourism sector, at 9%, and the 12.5% corporation tax will remain unchanged.

The latest Budget plans aim to save €3.5bn through generating a further €1.25bn in taxes, and cutting €2.25bn from public spending.

Mr Noonan said Ireland has made progress but still had a long way to go until it is over “the despair and despondency and lack of self worth” it was plunged into since the economy bust.

“We will continue to fulfil the conditions of the bail out programme, we will carefully plan full market return, we will build on the strong sectors of the economy and repair the weak sectors until they are strong again, we will grow the economy and create the jobs for which so many out of work and so many young people yearn,” he said.

Mr Howlin said: “When I took office last year, I could not be certain that we would make it through this crisis. I no longer hold this fear.”

Insisting the country would come through an almost unprecedented collapse, he added: “There remain difficult challenges ahead of us but Ireland and her people will prosper again.”

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