Friday 28 July 2017

Property, water taxes on table for the Budget

EU heaps pressure on FG and Labour to back four-year plan

Finance Minister Brian Lenihan (left) and EU Commissioner Olli Rehn arrive for a joint press conference at the Department of Finance in Dublin last night
Finance Minister Brian Lenihan (left) and EU Commissioner Olli Rehn arrive for a joint press conference at the Department of Finance in Dublin last night

Michael Brennan, Fionnan Sheahan and Maeve Dineen

A PROPERTY tax and flat-rate water charges are on the table as the Government strives to meet its €6bn Budget plan for this year, the Irish Independent has learned.

The development came as European Commissioner Olli Rehn last night piled pressure on the opposition parties to support the Government's savage package of spending cuts and tax hikes.

But pressure continued to mount on the Cabinet to back down over plans to cut the state pension.

Fianna Fail backbenchers are increasingly confident their revolt has forced senior ministers into ring-fencing the pension from cuts. And the Green Party has also come out against cuts to the state pension.

However, a government minister said backbenchers who thought the battle over the pension was over were being "overly optimistic".

While government sources are saying the pension is unlikely to be cut, the minister said the Cabinet was far from being able to come to a final decision.

And a coalition source said the package of social welfare cuts in the Budget had not been signed off on at this stage.

Despite previous promises to bring in metering first, flat-rate water charges could now be introduced in the Budget.

The Green Party is in favour of water charges, but only wants it to happen when metering is introduced, so the amount families pay is dependent on how much they use.

The Cabinet is understood to still be weighing up whether to bring in a tax on property.

A water charge of €175 per home per year has previously been mooted by the Department of Finance.

Such a move would raise hundreds of millions for the State's coffers and foist another tax on homeowners.

There are almost 1.5 million households in the country and, while any scheme would inevitably exclude local authority housing and those dependent on social welfare, even a relatively modest charge could raise €200m to €300m.

Fianna Fail backbenchers said their strong message about not voting for a Budget that would cut the state pension was finally getting through.

Fianna Fail Dublin North TD Michael Kennedy said: "There isn't one TD who has said, 'Go ahead, slash the old-age pension'. I think it's the one issue that would force people overboard."

The Government has a majority of just three votes, which could be cut to two if it loses the Donegal South West by-election before the Budget.

There is a consensus among party backbenchers that both the state contributory pension of €230 per week and the state non-contributory pension of €219 per week (which are paid to a total of 368,000 pensioners) should be left untouched.

Pressure

Fianna Fail Cork North Central TD Noel O'Flynn said he would resign the party whip and vote against any Budget that contained any cut to the state pension.

And the Green Party officially set its face against any such cuts, with its deputy leader Mary White saying state pensions should not be lowered.

Meanwhile, Mr Rehn put more pressure on Fine Gael and Labour to back the Government's budgetary plan.

Following a meeting with Finance Minister Brian Lenihan, the EU economics chief said a cross-party consensus was necessary in difficult times and was the best way "to overcome the crisis sooner rather than later".

Mr Rehn also warned that cuts of more than €15bn would be required over the next four years if the Government's optimistic figures for growth in the economy were not realised.

The commissioner also failed to rule out the Government being forced to increase our low corporation tax of 12.5pc.

He endorsed the Government's plan to cut €6bn in the Budget, describing the figure as "correct" for meeting the target of reducing the deficit.

Fine Gael has accepted the Government's €6bn figure as "prudent" but Labour has fallen short, saying a €4.5bn adjustment in 2010 would be better.

Ahead of his meeting with opposition parties this morning, Mr Rehn said it would be "of enormous benefit to the country" if there was cross-party consensus on the four-year budgetary plan. He said Ireland was taking steps that would pay off in the long term and the European Commission would support the country.

The Economic and Monetary Affairs Commissioner backed the €6bn worth of spending cuts and tax hikes.

But he did not endorse the overall figure of €15bn over four years and cautioned against economic growth figures not matching up.

"The rest of the measures in the course of the four-year period from 2012 to 2014 will have to match the target of 3pc budget deficit in 2014. On the condition the growth is as expected in the Government's plans, this is feasible," Mr Rehn said.

"I find it is important that at the same time there is sufficient flexibility to take further action if needed in case the growth scenarios do not materialise as expected."

Irish Independent

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