All landlords may be hit with new tax

As Tanaiste Eamon Gilmore moved to ease union fears over a ¤1bn public service pay cut, his Labour colleague warned high earners could be forced to make more PRSI contributions.

"Everyone will be impacted by the Budget but we will try to lessen the impact on people who are in low-paid employment, social welfare incomes -- that the people who are well-off can bear proportionately more," said Ms Burton.

Ministers have attended three Cabinet meetings this week to discuss the Budget, which Enda Kenny described as an enormous challenge. Ms Burton revealed that rental profits and dividends were being considered for additional tax in an address to the Cork Society of Chartered Accountants Ireland,

She is looking to fill a ¤1.9bn gap in the social insurance fund, used to pay benefits.

"I can plug this hole either by increasing rates of PRSI, reducing benefits or reforming the system. My preference is to reform the system," she said.

BLOW

"One measure I am considering is widening the net to make certain types of unearned income such as rent profits and dividends liable to PRSI."

Of the ¤3.8bn savings in the Budget, around ¤700m will come from the Department of Social Protection.

Stephen Faughan, chairman of the Irish Property Owners' Association, said the Government should be on the same side as landlords, who provide more than 600,000 homes.

"We need balance, not another blow which will no doubt banish investors," he said.

Meanwhile, the Tanaiste has moved to ease fears over public servants' pay.

He said reductions to allowances, premium pay and overtime, make good management sense and will be made within the framework of the Croke Park Agreement.

"It will have to be done to ensure services are provided and continue to be provided. But I think anybody would agree it's good management to try to get down the cost in these areas," said Mr Gilmore.

hnews@herald.ie