Revealed: cuts that will make budget worst ever
Shane Coleman, Political Editor
Dole payments: 4% drop
Cabinet ministers: 15% pay cut
Prescriptions: 50c charge
Child benefit: 9% decrease
Professional fees: down 5%
Public sector: 5-6% decrease
Government ministers are to take a 15% reduction in pay, bringing their salaries to €191,417 a year, in the toughest budget since the foundation of the state.
Taoiseach Brian Cowen will take a hit of almost €60,000, or 20%, to €228,466, which actually represents a 30% reduction in his salary when the pension levy is factored in. This includes the voluntary 10% pay cut taken by ministers last year.
He will still be one of the highest paid leaders in the world, coming in ahead of Gordon Brown (€216,270) and Angela Merkel (€228,000).
Top civil servants and university bosses will also take a cut of 15%, while the salary of county managers will be reduced from €150,000 to €138,000 in finance minister Brian Lenihan's much speculated plan to be presented next Wednesday.
Following the breakdown in talks with the unions last Friday, the government will introduce an average 5% to 6% cut in pay across the public sector, although high earners will be hit harder as the pay cuts will be introduced on a sliding scale.
Although a small number of final decisions have yet to be made, including the idea of an additional tax levy on big earners, agreement has been reached on most of the major decisions. These include:
* A reduction of €8.40 in the basic dole payment and an equivalent 4% cut in all social-welfare payments, with the exception of the old age pension which will remain untouched.
* A €15/€16 (or 9% plus) per month reduction per child in children's allowance, with a claw-back provision for social-welfare recipients.
* A cut of €44 or 20% in the dole payments for under-23s who do not agree to participate in training courses.
* A reduction in the €490m rent allowance budget with some changes to eligibility.
* A&E charges to increase by €10 to €110.
* The cost of private beds in public hospitals to rise by 10-15%.
* A prescription charge of 50c for medical cards holders per transaction.
* A rise in the monthly threshold beyond which taxpayers don't have to pay for
prescription drugs from €100 to €120/€125.
* A 5% cut in professional fees paid by the state to GPs, dentists, lawyers and consultants, on top of the 8% cut in April's mini-budget.
* An increase in the minimum effective tax rate on the wealthy from 20% to 30%.
* Major cuts of up to 20% in politicians' and senior public servants' pay.
Based on the recommendations of the as yet unpublished report of the review body on higher remuneration, ministers will see their pay cut by almost €34,000 or 15% to €191,417, meaning their pay will have been cut by a quarter (including the pension levy) since the economic crisis began.
A number of ministers, including the two Green ministers, would still like to see the introduction of a new tax or levy on big earners over €150,000 or €200,000. While they accept the take from this measure would be limited, they argue that, with social welfare being cut, there is a need for a "demonstration effect" to show those at the top are also taking the pain.
However, there is serious concern in the Department of Finance that this "demonstration effect" could work the other way.
Its argument is that a high rate of marginal tax for top earners will deter multinationals from investing here because they will find it difficult to attract senior management to their Irish operations.
The possibility of an additional levy being introduced in the next two days cannot be ruled out but informed sources say "it is not as likely to happen as it was a week ago".
However, finance minister Brian Lenihan will target the seriously wealthy with a series of measures restricting their ability to access tax reliefs, exemptions and loopholes. This will push up the minimum effective rate at which they pay tax from the current level of 20% to 30%.
There will also be new taxes in the form of carbon taxes, which are likely to raise €350m-€500m. The Commission of Taxation report suggested an increase of 5c to 8c on a litre of petrol, 50c on a bale of briquettes and €60 on a tonne of coal.
Calls for a cut in vat rates will be resisted but fears of adding to the trend of shoppers heading north means alcohol will escape an increase in excise duty but there may be an increase in the price of cigarettes.
Nor will he change the current system of tax relief for pensions. However, this will happen in a future budget.
The budget will also include a cut of €1bn in the capital budget, although senior sources say a good percentage of this can be accounted for in falling input prices.
The breakdown of the €4bn in spending cuts is roughly €1.2bn from public sector pay reductions, €900m from social welfare, €1bn from capital spending, €350m from carbon taxes and the remainder coming from cuts in programmes across all government departments.
December 6, 2009
Advertise here
Click to create
Website by Maithú™
Searching
Print
E-mail
del.icio.us
digg
Facebook
Google
are we supposed to be grateful that mr.cowen is reducing his still lotto size salary?. its too little too late, the waste continues as we see today in another publication that the heating bill for all depts. is over e13 million a year, not a word about the co2 emissions on this from "the conscience wrestler" paul gogarty, but then i forgot that rubbish only applies to the ordinary people.