Sunday 26 January 2020

Households face taxes on property and water

Lower-paid will also be brought into the tax net in Budget

Michael Brennan Deputy Political Editor

HOUSEHOLDERS face a double whammy of a property tax and water charges next year after both were yesterday put firmly back on the table by a senior government minister.

Justice Minister Dermot Ahern made it clear that both measures were still under serious consideration as part of the plan to raise €3bn in increased taxation and cutbacks in the Budget.

The Cabinet is due to meet today for the last time before its summer break to sign off on the final details of the revised €39bn capital spending plan and the preparations for the December Budget.

"That may include a property tax and charging for water -- which are in every other European country," Mr Ahern said.

He also signalled that the Government was still examining plans to force more low-paid workers to pay tax.

"There's a relatively small percentage of people who are paying tax. But 50pc of people are not paying a bob of tax. That is not sustainable," he told Newstalk 106.

The original 2007-2013 National Development Plan (NDP) provided for €184bn in current and capital spending, but it has become unaffordable due to the crisis in the public finances.

In the revised plan that is set to be launched today by Taoiseach Brian Cowen, the Navan rail link and the final phase of the Western Rail Corridor will be cancelled and funding for new roads will also be cut.

However, two of the biggest construction projects in the history of the State -- the Metro North line to Dublin Airport and the DART Underground -- are likely to get the go-ahead.

Mr Cowen said the plan was exactly the type of stimulus that the economy needed in order to help rebuild confidence and accelerate economic recovery.

"It will not only greatly improve the lives of our citizens, it will help to create jobs now and to sustain jobs for the future," he said.

The Taoiseach said the plan would include a doubling of investment through the enterprise agencies -- such as IDA Ireland and Enterprise Ireland -- to build the 'smart economy' and create sustainable jobs.

Mr Cowen also said that upgrades of public transport and water services would get a greater share of capital investment.

A Green Party source said the party had worked hard to protect investment in this area and in the area of improving energy efficiency.

But the sectors most at risk of cutbacks include tourism (which had been promised €800m under the current NDP) and social housing (which was due to have 60,000 new units).

The construction industry has been pushing for the maximum spend possible on capital projects, pointing out that €100m invested in infrastructure per annum creates 1,000 jobs.

However, the Government is hoping to get better value for money because the cost of construction projects has fallen by 30pc. Sources say it expects to get more for less.

Economist Colm McCarthy, who chaired the 'Bord Snip Nua' group last year, backed the Government's decisions to cut back on capital spending.

"That makes sense, the economy is much smaller than we thought it was going to be and the pressure on infrastructure of various kinds is less than it's going to be and it's not going to recover in a hurry," he told RTE's 'This Week' programme.

When the National Development Plan 2007-2013 was announced three years ago by Mr Cowen as Finance Minister, he declared that it was based on an expectation of annual average economic growth of between 4pc and 4.5pc.

The Government was so confident of growth that it included €2bn per year of extra capital spending more than had been recommended by the Economic and Social Research Institute.


But due to the 15pc decline in output over the past two years, Mr Cowen is now presiding over the slashing of the plan in response to the huge deficit in the public finances.

However, he pointed out yesterday that several key NDP projects had already been almost completed, such as the inter-urban motorways.

Mr Cowen is due to cut the ribbon for the new €660m Limerick Tunnel tomorrow, which stretches 670 metres under the River Shannon.

Although the Cabinet will not make any Budget-related decisions until later in the year, one cutback which is expected is a reduction in the number of diplomatic staff in smaller embassies abroad.

Foreign Affairs Minister Micheal Martin plans to have more 'model embassies', with just an ambassador or diplomat -- instead of having two or three other diplomats as support staff.

Irish Independent

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