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Budget as harsh as predicted
[Posted: Wed 09/12/2009 by Niall Hunter, Editor www.irishhealth.com]
Public service pay has been reduced in the Budget from between 5% and 10% on salaries up to €125,000, Finance Minister Brian Lenihan has announced in his 2010 Budget.
The severe cuts imposed were largely as expected in what has been the most "leaked" Budget ever.
A prescription charge of 50 cent per item on medical card prescriptions will be introduced from April, the Minister has confirmed.
On public sector pay, there will be a 5% cut on the first €30,000 of income, 7.5% on the next €40,000 and 10% on the next €55,000. Those earning more than €200,000 will have a cut of 15%.
The Minister has reduced salaries of higher paid public servants from between 8% and 15%.
An 8% cut will apply on income between €125,000 and €165,000, 12% between €165,000 and €200,000 and 15% for more than €200,000. These measures will apply to hospital consultants, who received a major pay rise earlier this year.
The Minister has also announced major planned changes in public service pensions.
The Minister announced a cut of 4.1% in the social welfare budget.
The jobseekers and supplementary welfare allowance for those under 21 has been reduced to €100 per week. and to €150 per week for those aged 22 and over.
Child benefit has been cut by €16 euro per month.
Rates of child benefit are being introduced to 2006 levels. However, old age pensions have not been reduced.
A carbon tax of €15 per tonne has been imposed on petrol, diesel and home fuel.
An investment programme for mental health services from the sale of property assets has been announced.
The Minister has cut 12 cent from the price of a pint of beer and cider, 14 cent from a half-glass of whiskey and 60 cent from a bottle of wine.
He did not increase tobacco taxes and VAT is to be reduced by 0.5%.
Mr Lenihan said tax increases in last two budgets have placed the heaviest burden on those best able to pay and we have reached the limit with taxation levies.
He did not increase PAYE or PRSI rates.
The Minister said the effective minimum tax rate for higher earners benefiting from tax reliefs would rise from 20% to 30%.
In another measure aimed at tax exiles, those with worldwide income above €1million and Irish-located capital above €5 million will be subject to an 'Irish domicile levy' of €200,000 a year, regardless of where they are resident.
A universal social contribution is to replace PRSI and other levies and a new simplified taxation system will be introduced from 2011.
On the property tax work will shortly begin on registration and ownership of land. Also, plans will be put in place for water charges.
The Minister said tax revenues had begun to stabilise and the the unemployment rate had not increased to the level expected.
He said the worst is over in terms of the world economy and the indications were that the Irish economy was turning the corner and positive economic growth may return within the next six to nine months.
The Minister said tax revenues had begun to stabilise and the the unemployment rate had not increased to the level expected.
The Irish Heart Foundation (IHF) criticised the decision not to increase tobacco tax, saying that it is well proven that price is the most effective deterrent to young people taking up smoking and to encourage smokers to quit.
However, the Foundation welcomed the Minister's commitment to tackle the issue of tobacco smuggling, which accounted for 20% of the cigarettes smoked in Ireland. ASH Ireland echoed the sentiments of the IHF.
Meanwhile, Alcohol Action Ireland said it was 'shocked and surprised' at Budget plans to cut alcohol prices by as much as 60 cent.
“At a time when the Minister is cutting supports for the most needy and vulnerable, he is proposing major cuts in excise on a luxury good. Drink is not a necessity," said acting director Cliona Murphy. “Cutting excise on alcohol won’t put food on a family’s table, won’t put clothes on a child’s back and certainly won’t support the most vulnerable in our society.”
Ms Murphy stressed that the cut is coming at a time when over half of Irish drinkers are drinking at harmful levels, and that reducing excise will increase consumption and the burden on our hospitals.
The Children's Rights Alliance has also criticised the budget saying that it weighs heavily on children, with a 10% drop in child benefit and the introduction of a 50c prescription charge. It also said that the young are being asked to pay a higher price as young unemployed people will see their job seekers' allowance slashed.
“Today’s Budget, and its cuts, will be an accumulative weight on children, young people and their families, from which they – and our society – may take years to recover," said Jillian Van Turnhout, chief executive of the Alliance. "Today’s Budget is not in the best interests of the child, it is therefore not in the best interests of the country."
Fine Gael's Alan Shatter described the Budget as a 'beer for children' budget.
"The decrease in excise duties on beer together with the decrease in child benefit payments gives an interesting insight into this government’s warped and exotic value system. It seems that their answer to hard pressed young families who are finding it difficult to make ends meet is straight out of the Marie Antoinette school of politics. With regard to children, their message is “forget the food and milk – let them drink beer," he said.
Insider Posted:
09/12/2009 17:09 |
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So, can someone correct me if I am wrong here: The pay cuts up to 125,000 are tiered, but the cuts after that are absolute - right? So, if someone who currently earns 201,000 takes a 15% paycut, and someone on 199,000 takes a 12% paycut, doesn't the current lower earner end up better off??? The govt does not save a lot by such salary cuts at the higher end of the payscale, but it softens the blow of the cuts they are introducing in general. A political strategy! Well the govt can cut my salary, but I won't give them a penny more than I have to. I will NEVER buy a new car again. I will buy second hand so the govt doesn't get their big slice of VAT. And while I have not been a Northern shopper, I will now be (even though I know the price differences won't be as marked since the UK are raising VAT in their upcoming budget). Also, I don't want to support private workers in Ireland, after only the public workers took the hit in this budget. Call me selfish, but in crisis, it's every man / woman for themselves! |
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buzz Posted:
10/12/2009 11:28 |
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Also, I don't want to support private workers in Ireland, after only the public workers took the hit in this budget.
It wasnt the private sector workers who took your money. It WAS however the private sector who took redundancies, cuts in hours and cuts in wages. Of the near half a million people on the live register, the vast majority were privately employed prior to that. There are very few public service workers on the dole. As angry as you may be with the government right now, taking your business elsewhere is only going to make the situation worse. |
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buzz Posted:
10/12/2009 11:34 |
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I think most of the cuts were fair (though I still maintain that taxing the childrens allowance instead of an overall cut would have been fairer as it would weed out the very high earners who dont need it and leave more in the pot for those who do) but I have to say (even though I am a private sector worker with a close relative who is self employed and as such is entitled to NOTHING in illness or injury) I actually dont think the 5% cut on the first 30k was fair. I think they should have left all those on salaries up to say 25k alone, and then maybe targetted those on 25k and over. Having lived on a salary of 25k in the past, I know that it affords very little "living" and a lot of simply existing. For this reason I am opposed to the first band of cuts of 5%. |
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scapegoat Posted:
10/12/2009 12:42 |
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I find it completely bewildering that the governement think that a public servant earning under €30k a year can afford a 5% pay cut, while a private sector employee, earning €80k or €90k a year with no children and no health issues only pays the extra cost of petrol for their Merc. The majority of people paying out of this budget are the ones who can't afford it and will hurt most. |
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Anonymous Posted:
15/12/2009 10:38 |
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I thought cutting social welfare for young people, the perscription charges and cutting salaries of those on less than 30,000 was just wrong. Not to mention the childens allowance. That said I had expected tax increases. Insider, you don't want to support private workers in Ireland? Well when your actions result in them being unemployed, you'll be supporting them when they're on social welfare. Afterall it is the private sector who have been taking MASSIVE paycuts over the last couple of years while the public sector were protected. |
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