Warning from Lenihan: Worse is yet to come

PEOPLE have been warned to absorb the heavy blows in this budget quickly because worse is yet to come.

Finance Minister Brian Lenihan said after taking €3.25 billion in yesterday’s budget he will look for another €4.75bn for 2010 and €4.6bn in 2011.

He warned that to reach this figure, he will look at taxing child benefit, introducing a property tax and cutting social welfare.

This was the first time plans for future years were included in a finance minister’s speech.

Mr Lenihan said nothing more would be spent on social programmes during the recovery and further cuts would be sought on top of scrapping the Christmas welfare bonus and the planned abolition of the Early Childcare Supplement.

“It was right that when times were good we increased payments to those who are vulnerable. Now that we are recession we must look at how we can use the e21bn welfare budget to afford maximum protection to those in need,” he said.

Mr Lenihan said the children’s allowance of e166-per-month was generous by international standards and was in his sights.

Next year parents will be means tested or taxed, he said. Figures were also produced which said general social welfare cuts of 4% could be justified but he was not willing to do this yet.

The minister also said the introduction of a property tax was on the cards and he wanted to get revenue from carbon emissions.

Tax relief which is deemed unnecessary will be abolished and all income which currently escapes the Revenue Commissioners is under review.

Mr Lenihan said he could do little in this regard in the middle of the year but would bring in these changes for his 2010 and 2011 budgets.

The scale and nature will be based on the Commission on Taxation, due to report this summer.

Other areas of government spending can also expect a significant hit. And while the exact nature of these changes was not detailed, the outline figures indicate the size of the cuts.

His projected gross spending for the various ministers will be cut on top of yesterday’s announcement.

The education allocation will fall by 8% next year.

Up to 35% less will be spent on agriculture and the marine. The arts, sports and tourism budget will fall by 20%.

And the amount available to local authorities and the environment will drop e2.6bn to e866m reflecting a drop in capital projects.


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