German MPs told Irish VAT set to hit 23%
Ministers scrambled to regain credibility, pointing the finger of blame at the troika, which oversees Irish financial decision making, after opposition leaders accused the Government of treating taxpayers with contempt.
The embarrassing row erupted after it was revealed Government documents sent to the troika stating that Irish VAT was set to rise by two points to 23% in the December 6 budget had been circulated to German politicians.
The information came to light within hours of the Taoiseach meeting German Chancellor Angela Merkel in Berlin. It is believed to be from a draft “letter of intent” from Finance Minister Michael Noonan and the governor of the Central Bank, Patrick Honohan, to the troika.
Asked how the document ended up in front of German MPs, Mr Kenny said “I have no idea”, before refusing to comment on what he called “speculation”.
He insisted that no budget measures had been finalised or given to Berlin — but the opposition accused the Government of “shocking” disregard towards voters.
The document presented to the budgetary committee of Germany’s lower house of parliament, the Bundestag, states that the VAT hike would raise €670 million for Irish state coffers, with another €330m coming from indirect taxes.
The story was flashed around the globe under headlines such as “Germany inspects Irish budget”.
Public Reform Minister Brendan Howlin expressed irritation at the revelation and appeared to blame the troika, saying: “The Government will be deeply concerned and will be anxious to find out the source of that document and to ensure that any correspondence or dialogue or interaction we have with our funding partners is kept in the confidence that is expected.”
However, Mr Howlin insisted no budget decisions have yet been taken.
Fianna Fáil finance spokesman Michael McGrath said German MPs being given details of the Irish budget in advance amounted to “a staggering and unprecedented breach of faith with the Irish parliament and Irish people on budget plans” and demanded to know if other information had been given to foreign MPs but not Irish voters.
Sinn Féin finance spokes-man Pearse Doherty said: “The revelation confirms that Angela Merkel really is pulling the strings. Having it discussed by a German budget committee undermines the Irish parliament.”
The Government’s three-year economic blueprint drawn up with the troika indicated VAT would not rise above 23%, but gave no timetable for increases.
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