SkyscraperCity Forum banner

4 year plan to be published

2607 9
The 4 year budgetary plan will be published later today. It should give us some idea of what taxes will be introduced and where the axe will fall.
1 - 1 of 1 Posts
Here it is... :eek:hno:

Irish unveil tough austerity plan

The Irish government has unveiled the deficit reduction plan required for its EU and IMF bail-out, revealing deep cuts in spending and jobs.

The key announcements include:

* corporation tax rate to remain unchanged at 12.5%
* 10bn euros (£8.5bn) of spending cuts between 2011-2014, and 5bn euros in tax rises
* minimum wage to be cut by one euro to 7.65 euros per hour
* 3bn euros of cuts in public investment by 2014
* 2.8bn euros of welfare cuts by 2014, returning spending to 2007 levels
* reduction of public sector pay bill by 1.2bn euros by 2014
* the reform of public sector pensions for new entrants with pay cut by 10%
* 24,750 public sector jobs to be cut, back to 2005 level
* VAT up from 21% to 22% in 2013, then 23% in 2014
* raise an extra 1.9bn euros from income tax
* abolition of some tax reliefs worth 755m euros
* real GDP to grow by an average of 2.75% from 2011 to 2014
* unemployment to fall from 13.5% to below 10% in 2014
* the introduction of domestic water charges by 2014.

Corporation Tax
Despite pressure from other eurozone members to raise its corporation tax of 12.5%, Dublin said the rate would be held.

"The Irish Government's position on corporation tax is unambiguous," it said. "A low rate of corporation tax on export-orientated activity has been a cornerstone of our industrial policy since the 1950s and the 12.5% rate is now part of our international brand."

Tax and spending
The Republic has announced savings of 15bn euros to get its deficit below 3% of GDP by 2014.

The government said: "To demonstrate the seriousness of its intent, the government has decided that 40% or 6bn euros of the 15bn euros adjustment will be made in 2011.

"The adjustment will be made up of 10bn in spending reductions and 5bn euros in tax and revenue raising measures. These are demanding but realistic targets."

Minimum wage
The government said a cut in the minimum wage was essential because the 7.65 euros per hour rate "is out of step with an economy where GNP has fallen by 19%".

"Other labour market regulations are preventing job creation - especially in sectors where unemployment among younger and less-skilled workers is most prevalent. Decisive reform is required."

Welfare cuts
The government said a planned 2.8bn euros saving in welfare spending was needed because "working-age social welfare rates are now more than twice their rate in 2000. Over the same period, the state pension almost doubled".

"The substantial reductions in tax and increases in welfare were made possible by the very high level of property-related tax receipts taken in by the Exchequer during the boom years," it said.

"In these dramatically changed circumstances, it is clear the state can no longer afford the current levels of social provision and personal taxation."

The rise in VAT to 23% by 2014 aims to raise 620m euros a year. "VAT rates have increased across Europe in response to the current crisis with some 23 member states now having rates of 19% or more," the Irish government said.

"The government will also examine further rebalancing of the VAT system and zero rated VAT items."

Like the UK, the Republic is hoping that its planned 24,750 reduction in public sector jobs will be more than made up by job creation in the private sector.

Dublin said that labour market reforms were expected to create 150,000 direct and 150,000 indirect jobs over the next few years. "We have also set ambitious targets for new foreign direct investments, tourist numbers and exports," the government said.

Income tax
Dublin plans a "fundamental" reform of the income tax system because it says more than 45% of people are exempt from it. "We have eroded the income tax base to an unsustainable level. In 2010 we have reached a point whereby just 8% [of people] will pay 60% of all income tax."

The government wants to bring more people into the tax net by lowering thresholds, with the bulk of the money to be raised under the recovery plan falling in the 2011 tax year.

"The measures in this plan will be the equivalent of a reduction of 16.5% in the value of the credits and bands. It will rebase the income tax system at approximately 2006 levels," the government said.

Public sector pensions
The Republic's national recovery plan also includes another striking feature - a cut in the value of public sector pensions already in payment.

At 2.8bn euros a year, these account for nearly 15% of the total public service pay and pension bill and the Irish government plans to cut that by 4% by reducing pensions - knocking 100 million euro a year off this cost.

There were nearly 124,000 public sector retirees in 2009. They will see their pensions cut in 2011.

The cut in pensions will be graduated.

* The first 12,000 euro will be untouched.
* The next tranche up to 24,000 euro will be reduced by 6%.
* The tranche after that to 60,000 euro will be cut by 9%.
* Anything above that will be slashed by 12%.

The cuts will also apply to anyone who retires between now and the end of February 2012.

Those who retire after that date are going to have their pay cut by 7% which will cut their pensions and retirement lump-sums anyway.
1 - 1 of 1 Posts
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.