Cabinet in pre-Budget meeting

The Cabinet is gathering tonight for one of its final meetings on next week’s Budget.

The likelihood of further meetings is uncertain because Finance Minister Brian Lenihan and Taoiseach Brian Cowen will both be abroad on business tomorrow and Sunday respectively.

The Government will be studying tomorrow’s Exchequer Returns for March which will present a stark snapshot of the public finances for the first quarter of 2009.

The Budget document will have to be signed off by the Cabinet by Monday morning to allow it to be proofed and printed for the following day’s publication.

Finance Minister Brian Lenihan will tomorrow hold talks on economic issues with his EU counterparts at the EU-US summit in Prague.

The Taoiseach will attend the international gathering on Sunday.

Earlier the Taoiseach told the Dáil that the tax base needed to be redesigned in an innovative way to replace lost Exchequer revenue.

“Some of those changes [in the Budget] will relate to increased income tax, while others will come about in due course on foot of a broadening of the tax base,” he said.

Fine Gael leader Enda Kenny appealed to the Government to consider his party’s proposals to establish a super state agency to fast-track infrastructure which would create 100,000 jobs over four years.

Mr Kenny also called for a reduction in the current VAT rate from 13.5% to 10% to boost activity in the construction, tourism and hospitality sectors.

Mr Kenny said: “Nobody in the EU would deny Ireland a VAT reduction because of the forthcoming Lisbon Treaty referendum.

“I will go out with you there myself in order to assist you, in the national interest.”

Mr Cowen said there will be a need to consider other means of raising taxes in the Budget.

“We will also be obliged to cut expenditure programmes that are no longer regarded as necessary or to redesign them in light of the new circumstances in which we find ourselves.

“The challenge the Government faces not only in the context of next week’s supplementary budget, but also in the coming years, is to redesign the tax base and the systems relating there-to in order to ensure that they will be sustainable.

“The gap that has emerged cannot be bridged by relying on the sources of income on which we relied in the past. That is what we mean when we refer to closing the structural deficit.”