Saturday 25 November 2017

Government denies Germany inspecting our 2012 budget

Ed Carty and reporters

THE GOVERNMENT has been forced to deny it has allowed Germany to inspect the detail of plans to save €3.8bn in the upcoming budget.

Taoiseach Enda Kenny met Chancellor Angela Merkel in Berlin yesterday after which the Reuters news agency reported to have seen a document presented to the budget committee of the German lower house of parliament yesterday which highlighted an increase in the top VAT rate by 2pc to 23pc - it is expected to generate €670m.

The IMF/EU memo has also given a few other specifics expected in the budget - a property levy in the form of a flat rate €100 household charge to bring in €160m and carbon tax increased by €5 per tonne earning €108m.

The Department of Finance insisted that no decisions on taxation have been taken and that the leak had nothing to do with the Taoiseach's meeting with Mrs Merkel.

"The Government is currently considering Budget 2012 and its measures. No decisions have been taken on budgetary measures," a spokesman said.

He added that the Government had not given any budget documents to Germany and that the paper in question was a regular progress document.

Irish Government officials have also been demanding answers from the European Commission over the leak amid fears that the document may have originated from communications and discussions between Dublin and Brussels.

"We are trying to get the bottom of it but our concerns have been expressed to the Commission," a spokesman said.

It is understood that officials in Dublin believe the German parliamentary budget committee was examining plans on the back of increased powers the Bundestag was given by a Constitutional Court in September to decide on eurozone bailouts.

The Department of Finance could not explain why the document appeared to have been written by Irish officials.

The paper said: "After successive budgets in which income tax burdens were raised significantly, we have decided to focus on indirect tax increases to deliver the bulk of the €1bn additional tax effort required in 2012."

Tanaiste (deputy prime minister) and Foreign Affairs Minister Eamon Gilmore said he did not know how anyone could have a document of Irish budgetary measures.

The Government is to present a draft budget for 2012 under the terms of the bailout.

Radical reform of the social welfare system has also been suggested, including the possibility of employers paying the first four weeks of sick pay combined with efficiency and modernising schemes.

The aim is for the Department of Social Protection to save €700m next year and €2bn by the end of 2014 out of a €21bn budget.

The Government has committed itself to not cutting the main rates of social welfare.

Ireland's Budget 2012 is to be announced on December 6 with ministers traditionally refusing to answer public speculation about tax hikes or spending cuts in advance.

Fianna Fail’s finance spokesperson Michael McGrath said the Irish public needed to know what other, if any, budget information has been given to the German government.

"The minister now needs to clarify the precise nature of the budget information which has apparently already been given to German parliament," he said.

"In addition, for what purpose was the information presented to the German budget committee yesterday?"

The Irish Government is finalising plans to make €2.2bn in spending cuts while bringing in an additional €1.6bn in taxes.

The huge austerity measures, for a third year in a row, are part of the strict fiscal regime the Republic operates under following the €67.5bn bailout loan financed by Europe and the International Monetary Fund (IMF).

The VAT increase had been signalled in a Memorandum of Understanding, with the Government committed to have the reforms in place early next year.

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business