| 5.3°C Dublin

Income-tax rise can't be ruled out, say ministers

THE Government has refused to rule out income-tax rises and social-welfare cuts, as it examines its options for the next Budget.

This time last year, both Taoiseach Enda Kenny and Tanaiste Eamon Gilmore reassured voters that two key general-election pledges would be met. These were keeping income tax and social welfare untouched in Budget 2012.

But with the continuing euro crisis creating economic uncertainty, government ministers have become reluctant to give a similar assurance for Budget 2013. It is due to contain €1.25bn in tax increases -- including a property tax -- and €2.25bn in spending cuts.

Last night, the Department of Finance refused to say that the commitments on income tax and social-welfare rates would be honoured.

A spokesman said the budgetary and estimates process for Budget 2013 had yet to begin. "All decisions will be taken by Cabinet," he said.

The Programme for Government published last year clearly stated that the Government would "maintain the current rates of income tax together with bands and credits".


It also said that it would "maintain social-welfare rates".

But Public Expenditure Minister Brendan Howlin refused to re-state these commitments, and Transport Minister Leo Varadkar also adopted a cautious approach yesterday.

He said he had not heard about any plans to increase income tax yet -- but warned, "nobody can predict the future".

Last night, Communications Minister Pat Rabbitte also declined to give an assurance on income tax or social-welfare rates, saying that the economic situation was "so difficult" and the task of complying with the bailout deal was "so major".

"Other than saying that fairness ought to be the central criterion, I really would not want to get in to ruling in or ruling out," he told 'Week in Politics'.

Children's Minister Frances Fitzgerald said the Budget presented an extraordinarily difficult situation. "Clearly there are huge challenges facing the Government and very tough decisions to be made," she said.

Fianna Fail finance spokesman Michael McGrath said the Government was rowing back on commitments.

"These were very attractive carrots for voters in the last general election, who had been battered by a number of really tough Budgets. I think people will be furious if the Government renege on these two commitments," he said.

Irish Independent