Kenny: we won't raise taxes or cut welfare
U-turn but ministers must still find €3.6bn in savings
THE Government last night categorically ruled out income tax rises or social welfare cuts in the Budget.
But stealth taxes and cuts to public services are now on the cards because spending must be reduced by €3.6bn under the terms of the bailout deal.
The tax pledge is being seen as an attempt to encourage consumer spending amid fears that further income cuts would damage prospects for growth.
Speaking to mark his first 100 days in office, Taoiseach Enda Kenny was adamant yesterday that there would "not be any income tax increases in the Budget".
He added: "I say that because it is fundamental to the Programme for Government and also because it is very necessary in difficult times, it's important that people be able to have some planning put into their lives."
Tanaiste Eamon Gilmore also ruled out any cuts in social welfare rates in the Budget and called for more spending to boost growth.
"In order to underpin that, I think there's an obligation on Government to provide certainty, because obviously people are looking at what their incomes are going to be like towards the end of the year -- whether they're on social welfare or whether they're in employment and paying income tax."
The two men's comments marked a dramatic turnaround by the Government.
Last week, Finance Minister Michael Noonan left open the possibility of income tax rises due to what he said was the "fraught" economic situation.
Social Protection Minister Joan Burton also refused earlier this week to rule out social welfare cuts.
That approach was initially maintained by Mr Gilmore yesterday when he said he could not rule out income tax rises.
"I don't think anyone can at this point give a guarantee as to what will or won't be in the next Budget," said the Tanaiste.
But the intervention by Mr Kenny and Mr Gilmore at Government Buildings eight hours later means that both income tax increases and social welfare cuts are now off the table for the Budget.
The Government will have to rely on its comprehensive spending review of public services -- due for completion in September -- to identify where cuts can be made.
Environment Minister Phil Hogan again stated his intention to impose an interim property tax -- called the household service charge -- on homeowners on January 1 next.
He also told the Dail that a "pay-as-you-use" water charge would be introduced as soon as the installation of meters in homes is completed. That is expected to take three years.
An official source said last night that the ruling out of both income tax increases and social welfare cuts had made it "very tight" to achieve the Budget targets and therefore "some very hard decisions" would have to be made.
The source said that further cuts to public sector pay were unlikely as long as the Croke Park agreement delivered more savings -- and that the focus was now more likely to be on reducing non-pay costs instead.
At Government Buildings in Dublin yesterday, Mr Kenny used a phrase previously employed by his predecessor Brian Cowen when he said: "We will have to do more with less."
Mr Kenny promoted the Government's record during its first 100 days in office.
But Fianna Fail leader Micheal Martin said: "If anyone examines the promises and commitments that were made in relation to those 100 days, one would have to say objectively that the performance of the Government has been somewhat underwhelming."