‘No Budget decision on pensioners’

Minister for Children Francis Fitzgerald has said the Government has made no decision on broadening taxes for pensioners or reducing child benefit.

She said the Cabinet wanted to produce a “fair budget” following reports that cuts will be made to subsidies for household bills for the elderly and that their taxes could be increased.

Finance Minister Michael Noonan had flagged widening the tax base for pensioners in last year’s budget, while Social Protection Minister Joan Burton has pointed to significant amounts being paid for electricity and television licence subsidies for households.

Both ministers’ departments yesterday refused to confirm or deny possible cuts and tax hikes for pensioners following reports in recent days.

It has been suggested that discussions have taken place in departments about increasing the contributions of over-65s as part of the €3.5bn budgetary adjustments.

This could include increasing the tax rates paid by pensioners. At present, over-70s pay a top rate of 4% on the universal social charge compared to 7% for others. Over-65s also benefit from better tax exemptions and tax credits.

Mr Noonan, in the course of last year’s budget, said he would keep indirect taxes under review.

He also signalled that he may broaden the base for PRSI to cover rental, investment and other forms of income from 2013.

Two Cabinet ministers in recent days have also signalled that there may be a cap on tax relief for pensions in excess of €60,000.

There was talk yesterday that cuts to household bill subsidies, paid by the Department of Social Protection, are being considered.

Ms Burton has previously spoken about the high costs of such subsidies.

Household subsidies amount to over €850 to each over-70 individual, for electricity, phone use, and television licences. This package costs the State a total of €335m per annum.

Ms Fitzgerald yesterday dismissed claims of increased costs for pensioners.

She also said that no decision had been taken on cutting child benefit.

Brian Hayes, the junior finance minister, has previously stated that he believes pensioners have escaped suffering income loss in the recession.

“I think we need to realise that the one group of people in this country who have come through this crash and still have their incomes intact are pensioners,” said Mr Hayes in an interview in September.

Budget 2013 No Euro contacts

There has been no negotiation between the Government and Ireland’s European financers in advance of what is expected to be one of the toughest budgets in recent history.

A spokesperson for the ECB said there had been no correspondence with the Government in relation to Budget 2013.

Director general of the Secretariat and Language services, Pierre van der Haegen, said: “Hhaving duly looked into this matter, we would like to inform you that to date the ECB has not received any documents from the Irish government on budget 2013.”

The European Council also said they had no correspondence with the Government. A European Council spokesperson said there had been no correspondence with the Government other than the Ireland Stability Programme Update 2012 in April of this year — which confirms the €3.5bn cuts planned for this year.

A spokesperson for the Department of Finance said that, as long as Exchequer returns remain on target, there would be no deviation from the planned cuts.

“Exchequer returns will be key. As long as they are on target there will not be any change. The Medium Term Fiscal Statement published in November states that Budget 2013 will introduce a consolidation of €3.5bn,” said the spokesperson.

The crucial medium-term fiscal outlook is expected to be published soon. The report will be influential in assessing whether or not the country can meet the baseline growth assumptions that the medium term fiscal statement requires to be sustainable. It is expected that the 2013 growth rate will come down from the previously projected 2.2% to 1.5% as the effect of fall in demand abroad hits Ireland’s export growth engine.