Budget 2014 - Austerity cannot be masked

When Finance Minister Michael Noonan and his sidekick Brendan Howlin took to the stage in the Dáil yesterday, it was expected that their double shuffle would mask the effects of a budget that will only emerge in the coming months.

Last year, it was mothers and young families who faced the onslaught of cuts and increased taxes. While child benefit has been left untouched this time round, it is the old who will suffer most from Ireland’s seventh austerity budget in a row. In coalition, Fine Gael now has the distinction of presiding over the most austere budgets in the history of the State.

It is hard to imagine how the Taoiseach can characterise this death by 1,000 cuts as anything other than an attack on our most fragile and vulnerable sections of society, notwithstanding elements that will assist growth and prosperity.

In a way, this year is simply a continuance of last year’s budget, where Mr Noonan justified the introduction of a property tax by arguing: “Property taxes are used across the world as they are better for the protection and creation of jobs than taxes that increase the cost of employment.”

This year, the tax will hit homeowners when they are least expecting it.

He also insisted that while Irish corporation tax is still considered untouchable, taxes on the elderly and local businesses are not.

Under Budget 2014, employers will have to cover the first six days of pay for a sick staff member. Until now, illness benefit kicked in after three days. The move comes into effect from January, placing an additional cost burden on companies. Hardly a job creation measure has been left untouched.

Mr Noonan acknowledged the budget was going to be tough and, as far as possible, the objective would be to leave people with the bulk of their take-home pay.

Brendan Howlin, the public expenditure and reform minister, said the objective was to have a budget that allows for recovery, is focused on maintenance and creation of jobs, and is fair and pro-family.

In fairness, the budget has seen no increase in income tax rates, Universal Social Charge, or Vat. The ‘old reliables’ have, of course , been cut, with excise duty up by 10c per pint of beer/cider, 50c per bottle of wine, and 10c per pack of cigarettes.

But at least there has been no increase in the duty on fuels, including petrol and diesel.

Taoiseach Enda Kenny said the budget is about making Ireland’s exit from the bailout programme and retrieving its economic independence.

He warned that it would contain some tough decisions but is framed “in the interests of the Irish people and the Irish nation being able to move forward and have a new future”.

That future includes:

* Scrapping of the phone allowance for elderly people;

* Cuts to invalidity pension;

* Scrapping of the €850 bereavement grant;

* Reduced dole for those aged under 26.

That’s only the start of it. The medical card income threshold is to be cut and 35,000 people over 70s will have to switch to a GP-only medical card.

Apart from that, there are restrictions in prescriptions charges, and an increase in DIRT tax on savings from 31% to 35%.

Whatever way they spin in, this is an austerity budget