Budget 'could have been much worse'
Published 15/10/2013 | 14:56
The Irish Government has been accused of a cradle to the grave budget blitz after targeting jobless youth, pensioners and mothers in its latest austerity cuts.
Finance Minister Michael Noonan unveiled a 2.5 billion euro savings plan offering the country the cold comfort that it could have been much worse.
"As WB Yeats said in Easter 1916 , 'too long a sacrifice can make a stone of the heart'," he said.
"I know that there is a view that the consolidation should go further, but people have already made many sacrifices."
Among the deeper cuts, dole payments to young people are being slashed by nearly a third.
Anyone aged 25 and under who signs on from January will get just 100 euro a week, down from 144 euro, while 25-year-olds can claim 144 euro, reduced from 188 euro - the full rate which will still be available to those aged 26 years and over.
The Unite trade union warned dole and welfare benefits would cost 25,000 jobs and drive youth emigration.
Among the few winners are the aviation and tourism industries, with the abolition of a travel tax and retention of cut-rate VAT for hospitality traders.
Young families have been hit, with a rejig of maternity benefits expected to put some mothers 32 euro out of pocket - although others will receive more money.
A new standard rate of 230 euro a week will be bad news for those on the higher rate of 262 euro, but will be welcomed by those currently on the lower rate of 218 euro.
Prescription charges will be increased to 2.50 euro - up 1 euro, with a cap of 23 euro a month.
Lifestyles will also be hit as the old reliables increase from midnight - cigarettes up 10 cents a packet; wine up 50 cents a bottle, and beer and spirits up 10 cents.
The elderly have been targeted through a number of cutbacks.
The telephone allowance - worth 9.50 euro a month - will be abolished in the new year, while a tightening up of the eligibility for the over-70s medical cards will mean tens of thousands lose free health care.
Joan Burton, Minister for Social Protection, said she had been asked by older people to protect free travel cards and fuel allowances.
About 35,000 older people will lose their full medical cards, but in an attempt to avoid a repeat of the "grey army" revolt when pensioners forced a U-turn on a similar issue in 2009 the Government has offered free GP care.
Health Minister Dr James Reilly urged pensioners not to worry.
"I know that older people may feel they are having something that has been taken away, but they have been replaced with the free GP care card, so they don't have to worry about the cost of going to a doctor," he said.
Free GP care has also been granted for under fives, as expected.
In what will be a painful cut for grieving families, an allowance of 850 euro paid to about 22,000 people a year to bury loved ones, is being abolished.
But duty on petrol, oil, diesel and gas has been frozen.
Wealth was targeted on a number of fronts. In an attempt to slice money from the 8.8 billion euro put into savings accounts last year, the Dirt tax paid on the interest on savings has increased to 41% - up from 20% five years ago.
Some banking and finance experts warned that non-compliance could be an issue.
And while the warnings ring out of a pensions timebomb, the tax on lump sums in personal pension funds will increase from 0.6% to 0.75% next year before falling to 0.15% the following year, effectively making the levy permanent.
Irish banks will be hit with an annual 150 million euro levy from next year until 2016.
Mr Noonan said the levy - similar to those in other European countries - reflects the significant role played by the banking sector in the economic crisis.
A new renovations tax relief scheme will run for two years aimed at getting builders into work, and stemming the black market.
Despite international pressure, not least from the US Congress and German Social Democrats, Mr Noonan said Ireland is not for shifting on its 12.5% corporation tax rate.
But he warned multinationals using Ireland as a headquarters primarily to pay small tax bills, they will have to get their house in order over the next 18 months.
Brands such as Apple, Facebook and Google are being warned that a new tax enforcement strategy will be put in place to stop big business operating as "stateless" companies to avoid tax.
"Let me be crystal clear," he said.
"Ireland wants to be part of the solution to this global tax challenge, not part of the problem."
The October 15 budget is the seventh austerity budget to hit Ireland over the last five years and means nearly 30 billion euro has been sucked from the economy.
Ireland is due to exit the bailout arrangements on December 15.
Mr Noonan said: "We will have closed this chapter of Ireland's history that began for most of us with the Governor of the Central Bank announcing to the Irish public that the country would be forced to turn to the lenders of last resort.
"There will be no promissory notes, there will be no Anglo Irish Bank and there will be no bank guarantee.
"We will have exited the programme and Ireland will have been handed back her purse."