| 13.4°C Dublin

'Softer' Budget lies ahead but tax cuts are out

A CUT in income tax in the October Budget is unlikely, Junior Finance Minister Brian Hayes has stressed.

An easier-than-expected Budget is expected because the Government is ahead of its target on closing the gap between the tax take and public spending.

Speaking on RTE 1's The Week In Politics, Mr Hayes said the Government expected to have a more 'precise' view of the Budget in September, when second quarter figures are in.

However, he also added that not raising income tax was a key issue for next October's Budget.

Three days previously, another Fine Gael minister appeared to call for a cut in the tax burden.

Minister for Enterprise and Jobs Richard Bruton said that ordinary Irish families who have taken so much pain in recent years needed to see a reduction in their tax burden.

Finance Minister Michael Noonan and Public Expenditure Minister Brendan Howlin are both said to be resisting calls from Cabinet colleagues for income tax cuts in Budget 2014 to avoid any impediment to Ireland's exit from the bailout scheme.

The two ministers are being supported by Mr Kenny and Tanaiste Eamon Gilmore, reports said yesterday.

Labour has dropped its demand for a 3pc increase in the Universal Social Charge (USC) for those earning more than €100,000 a year.

Senior Labour figures believed they were hurt by the failure to achieve this in the last Budget, because of opposition from Fine Gael ministers.

It was virtually certain that spare Exchequer cash, including €1bn from the promissory note deal, would be used to reduce the impact of the Budget, despite the objections of the Troika, senior political sources were quoted as saying.

But it has yet to be decided how to use the cash.

Some Labour ministers want to ease off on the planned €440m in social welfare cuts, while many Fine Gael Ministers are said to favour a programme of investment.

Last year, the Budget was almost entirely drawn up by the Economic Management Council (EMC), the inner cabinet of the Taoiseach, Tanaiste, Finance and Public Expenditure ministers.

Ministers are likely to seek an enhanced role in constructing October's budget, reports said.