Ireland Slashes Welfare And Minimum Wage

Ireland's 'bone deep' austerity budget is living up to its promises, with a cut of almost €3 billion to welfare, a slashing of the minimum wage by €1 per hour and the loss of 25,000 public sector jobs.

The 140-page plan, published today, details the Government's plans to make €15 billion of savings by 2014.

The document contains a litany of highly controversial measures, including new levies on property, a hike in the basic rate of income tax and VAT as well as imposing a huge 30% rise in university registration fees.

Although not all the details of the welfare cuts will be spelled out until next month's Budget, it is understood the €2.8 billion chop will be made primarily through cuts to unemployment and child benefits.

The new property tax, called a site value tax is expected to cost homeowners up to €200 by 2014, while more workers will pay income tax by the same period as the threshold for income tax falls to €15,300 a year from its current level of €18,300.

Today's budgetary document said: "The measures contained in the plan will broaden the tax base by bringing in more taxpayers into the tax net. These changes will bring us back to an income tax structure last seen in 2006."

The document acknowledged tax and expenditure measures contained in the plan would negatively affect the living standards of citizens in the short-term, but said: "Postponing these measures will lead to greater burdens in the future for those who can least bear them, and will jeopardise our prospects of returning to sustainable growth and full employment."

Announcing the report during a press conference in Dublin today, Brian Cowen said agreements with the International Monetary Fund for the bailout are based on the stipulation that €6 billion of the total €15 billion cutbacks will be implemented in 2011.

Other measures include a reduction of public sector pay bill by €1.2 billion by 2014, abolition of tax reliefs worth €755 million, and the introduction of water metering by 2014.

"Those who can pay the most will pay most, but no group can be sheltered," the report added.

The report said the measures would help dispel uncertainty and reinforce the confidence of consumers, businesses and of the international community, however international trading is still reacting negatively.

(DW/BMcC)