Excise duty targeted to fix finance shortfalls
EXCISE duties are expected to increase significantly at midnight on April 7, hitting all forms of fuel, tobacco and alcohol.
The Government is also likely to announce plans to raise income tax while simultaneously cutting public spending.
Taoiseach Brian Cowen announced the date of the mini-budget in the Dail yesterday -- while avoiding comment on any of the measures he had in mind.
Mr Cowen twice avoided talking to the media yesterday after a cabinet meeting that focused exclusively on Budget options.
However, well-informed sources suggested yesterday that the focus remains on income tax and excise as the quickest route to raise revenue.
But there were suggestions that a new third rate of tax -- pitched at 48pc -- could prove too difficult to implement quickly.
While Mr Cowen refused to offer any public remarks on the budgetary options, he indicated in the Dail that the amount of money to be found through tax hikes and spending cuts amounted to at least €4.5bn.
"The decisions that have to be taken, whilst necessary, will be difficult," Mr Cowen said.
He said he now expected the economy to contract by up to 6.5pc this year: a two-thirds increase on official forecasts as recently as January.
"As the year has progressed, we have seen a serious deterioration in the public finances taking place, which is mirrored by what's happening in the international economy," Mr Cowen told the Dail.
But as a report from the social partners' thinktank the National Economic and Social Council said yesterday, the fall in Ireland's output and national income will be much steeper than in any other advanced economy.
Decline
When last year's 1.8pc decline is added on, the expected fall of more than 8pc in the two years is worse than what took place over the six years from 1978 to 1983, the council said.
"With the sole exception of Iceland, the downturn in the Irish economy was the most severe of any experienced by a member of the 30-nation OECD area," the NEST report said.
Referring to the contraction in the economy, Mr Cowen said: "It was said at budget time it would be in the region of 2pc. We said in January it would be about 4pc. The indications are now it could well be 6-6.5pc."
Later Education Minister Batt O'Keeffe suggested there would be efforts to contain the Budget impact on working households.
"We have to take a look at the broader picture and how we are impacting on families," the minister said. "We have to look at the top earners and what they are contributing."
He made it clear that he would be presenting suggestions to Cabinet aimed at saving cash at third level -- which would suggest the option of the return of university fees, but also of a possible student loan system.
- Senan Molony and Brendan Keenan
