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December 5, 2012 5:24 pm
Dublin has unveiled €3.5bn in tax rises and spending cuts in its sixth austerity budget since the economic crisis began four years ago, while pledging to meet all its international bailout targets.
The cuts outlined in the 2013 budget mean Ireland will have implemented €28.5bn in austerity measures since 2008 – equivalent to 17.5 per cent of the country’s current economic output.
“We will continue to fulfil the obligations of the bailout programme, we will carefully plan full market return,” said Michael Noonan, Ireland’s finance minister, on Wednesday. “There are manifest signs that the country is emerging from the worst of the crisis.”
Dublin forecasts its latest round of austerity measures will cut the budget deficit to 7.5 per cent in 2013, a key target in its EU and International Monetary Fund bailout programme.
The most controversial element in the budget is a new property tax, set at 0.18 per cent on the value of homes worth less than €1m and 0.25 per cent on homes over that figure. It should net the government €250m in extra revenue in 2013, and €500m the following year.
The budget left headline income tax rates and social welfare benefits generally untouched, but the government unveiled a wide range of “stealth” taxes and cuts to basic services.
Pensioners aged over 70 years with annual incomes over €60,000 face a 3 percentage point increase in a universal social charge – a tax on gross income. A cap on tax relief on pensions worth €60,000 a year and social insurance charges will be extended to rental, share and dividend income under the budget proposals.
The price of a pint of beer will rise by 10 cents, while excise duty on a bottle of wine will rise by €1. A packet of 20 cigarettes will increase by 10 cents.
Capital gains and capital acquisitions tax rates will rise to 33 per cent, from 30 per cent. Taxes on savings will also rise by 3 percentage points to 33 per cent.
The budget includes €2.25bn in spending cuts. A €10 reduction in monthly child benefit payments will save €136m in 2013, while restrictions on eligibility for jobseekers benefit will save €33m in 2013 and €82m in 2014.
Restrictions on allowances for free electricity, telephone and television licence schemes will save €81m, and some €323m will be saved on healthcare costs.
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