More cuts and tax hikes on the way, says Noonan
Published 24/03/2011 | 05:00
FINANCE Minister Michael Noonan yesterday warned taxpayers increased charges and spending cuts amounting to €220m are be on the way in his "mini-Budget".
The Programme for Government contains a pledge not to increase income tax -- but there are many other indirect taxes that could be increased instead.
These include charges for state services -- for example A&E charges.
The Government has promised a "Jobs Budget" within the next three months which will cost €220m. But it has to raise this money in other ways to ensure that the funding from the EU-IMF bailout deal continues to flow.
In the Dail yesterday, Mr Noonan confirmed the Government would need money to pay for measures such as reversing the cut in the minimum wage, halving the lower rate of employers' PRSI and reducing the lower rate of VAT from 13.5pc to 12pc.
"These costs will have to be counterbalanced by offsetting measures to reduce expenditure or raise revenue," he said.
It means the Government is facing the prospect of having to raise €220m through either tax increases or spending cuts in the "mini-Budget", which will be implemented by bringing another Finance Bill through the Dail.
Mr Noonan said he would be examining the options available to him over the coming weeks -- and did not provide any further details.
Mr Noonan was quizzed about the impact of the measures by Sinn Fein finance spokesman Pearse Doherty, who said they would cost up to €779m in a full year.
But Mr Noonan said the actual cost would be €220m this year and €640m in a full year.
"We slightly overestimated our costs during the (election) campaign," he said.
Mr Noonan again stated that there would be no compromise on the 12.5pc corporation tax rate when Mr Kenny met other EU leaders at today's crucial bailout summit.
He said about 14pc of tax revenues would be required to service the interest on the State's national debt this year, rising to 18pc by 2014.
"While this is undoubtedly significant and high, the level of tax revenue devoted to servicing the debt in the 1980s was higher," he said.
The State's interest bill on its €95m national debt this year is expected to be €4.8bn.