Backlash predicted over Budget

Consumers and businesses will today begin to feel the real pain of Budget 2009, which will continue to be debated by TDs in the Dáil and Seanad.

The Government is likely to suffer the biggest backlash over the 1% income levy on all salaries under €100,100 and the withdrawal of automatic medical cards for over-70s.

An unexpected 10% pay cut by senior and junior ministers failed to take the sting out of the toughest Budget in two decades.

Finance Minister Brian Lenihan will attend today’s debate in the Dáil before leaving for the European Council summit in Brussels.

Opposition parties have accused Mr Lenihan of imposing wildly indiscriminate taxes and of hitting middle-income families the hardest.

But the Government insisted that tough measures were required to stabilise public finances and steer the country from recession towards economic recovery.

There was no expected redundancy package for the public service but Mr Lenihan said a cost-cutting plan may be introduced in coming months.

Government duty hikes on cigarettes, wine and petrol have already come into force.

Increases in motor tax apply from January 1 while the €10 airport departure tax comes into effect on March 30.

To promote enterprise in the Budget, the Government increased tax credits for R&D and introduced three-year tax exemptions for start-up firms.

Among the green measures, tax relief was provided to clean up polluted sites while commuters were encouraged to cycle to work.

Up to 41 state agencies were axed or merged and the remainder of the troubled decentralisation plan was deferred until 2011.

In his Budget forecast for 2009, Mr Lenihan predicted 7.3% unemployment and inflation to average out at 2.5%.