Families face €600 in new stealth taxes and more to come
€100 household charge, higher VAT and carbon charges in Budget
HARD-working families will be stung with €600 worth of new stealth taxes in next month's Budget -- and there are more cuts to come from curbs in public spending.
The taxes will hit consumers in the pocket through higher VAT, increased carbon taxes, and a new household charge.
And there is more to come on Budget day, as these new taxes represent just a quarter of the total cuts and savings the Government is planning for 2012.
Finance Minister Michael Noonan last night pledged the looming Budget would be tough but fair.
He ruled out hikes to income taxes again, but refused to rule out cuts to social welfare rates.
And the Government will still have to borrow €17.3bn next year just to run the country. A month-long pre-Budget softening up process began yesterday, as Mr Noonan revealed the amount of cuts and taxes next year would be €3.8bn, or €200m more than the previous estimate.
“These cuts are real. You know, one person’s cut is another person’s public service. We’re not making light of this. This Budget is gong to be hard on people,” he said.
Unveiling the Medium-Term Fiscal Statement yesterday, Mr Noonan revealed that €1bn in new taxes would be raised next year from:
- Higher value added tax (VAT) on consumer goods.
- A rise in carbon taxes on petrol, diesel and home-heating fuels.
- The new €100 household charge – also known as the property tax.
The three tax-increasing measures alone will suck €600 out of the spending power of the average household.
And this is before any cuts are counted – such as a reduction in social welfare payments or in health services. The €1bn in new taxes come on top of another €600m in taxes due to flow to the Government next year, mainly from the universal social charge. This means the total tax rise in the Budget will be €1.6bn.
But Mr Noonan promised that there would be no hike in income tax rates, credits or bands. The controversial household charge is set to come in next year. It will amount to €100 per house and will be levied on around 1.6 million homes. The taxes account for just part of the total €3.8bn worth of measures being planned in the forthcoming Budget.
Spending cuts will account for €2.2bn, including a further €750m reduction in capital spending. Over the course of the next four years, the Government will take out €12.4bn from its budgets through €7.75bn in spending and €4.65bn in taxes.
At the end of the four years, the Coalition plans to have reduced the level of borrowing to 3pc – in line with the target set out under the bailout. Mr Noonan said: “We’re asking the people to stay with us because we have a clear plan for getting the country out of difficulty. The essential elements of that plan are to get the economy going again and to get people back to work. But again in that plan, we want to make sure that happens.
“I don’t want people saying on December 7 ‘this was very unfair’. You know, I expect people to say ‘this was very tough’. “But if I can get people to say ‘well at least it was fair’, we’ll have achieved an improvement,” he added. Mr Noonan also publicly confirmed for the first time yesterday that the Government was trying to claw back money from its €19bn bailout of AIB. He said if the European authorities wanted to “help us”, they “could take equity in AIB, for example”.
Fianna Fail and Sinn Fein last night failed to produce concrete alternatives. The opposition parties insisted they would bring in their own Budget proposals in the coming weeks.