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Dublin: 10 °C Wednesday 19 June, 2013

Budget 2013: Minister refuses to rule out income tax increases and welfare cuts

Pat Rabbitte insists the govt hasn’t “engaged” yet on the budget, but he personally wants to sit down for talks “without any red lines”.

Image: Niall Carson/PA Wire

MINISTER PAT RABBITTE has dismissed speculation that an interview by Brendan Howlin suggests the coalition may look into increasing income tax and cutting social welfare in the next budget, but admits he would prefer to enter Budget discussions “without any red lines”.

Rabbitte told RTÉ’s The Week in Politics that the government is focused on the Mortgage Bill, on getting people back to work and on dealing with private bank debt.

The minister said that too much was being made of an interview his colleague Howlin gave the Sunday Business Post in which he hinted that the door remains open on making cuts to wider areas. Howlin said that although certain things had been agreed, he wasn’t “going to be prescriptive” by ruling areas out.

The Programme for Government 2011-2016 includes a commitment to “maintain the current rates of income tax together with bands and credits”. It also commits to maintaining social welfare rates.

Rabbitte insisted last night that the government has not yet “engaged” on the next budget, adding that it is going to be difficult to make further cuts from the public finances but “the process hasn’t even started”.

“My own personal view is that I’d like to be able to sit down whenever the process starts without any red lines – which is not to be interpreted as a signal that I’m in favour of more taxes on income or that I’m in favour of altering the basic rates of social welfare.”

The minister added that the “task is so major to comply with the strictures on us by the only lender we have in terms of furnishing money to the state to maintain social services that I think we have to put our collective heads together and see what is the fairer way to try and bring in a budget in December.”

According to the latest IMF review of Ireland’s bailout, some of the measures proposed by the government for next year include “a broadening of personal income tax base” as well as “a value-based property tax”, restructuring of motor tax and a “reduction in general tax expenditures”.

The report also signals an increase in excise duty “and other indirect taxes” in 2013.

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Comments (73 Comments)

  • Kick start the economy by taken more money out of it, smart people.

    I was watching a documentary on the The Tower of London yesterday, very interesting part on the Archbishop of Canterbury (Simon Sudbury 1381) – very different times but. He and the king imposed a poll tax in which everyone paid the same amount, the rich, the lords, the peasant s, etc.. The poorest rebelled and he lost his head, if only.

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  • Stealth taxes ahoy!!!

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  • Dear Minister, instead of further destroying peoples lives and crippling our domestic economy with your december budget, why don’t your government NOT pay out that billion euro to unguaranteed unsecured bondholders this week and use it to do the job we’re paying you to do instead?

    Reply
  • Got my letter today no more dole for me!! Can’t wait for next election! Worked since I left school now I have nothing thanks enda we will meet

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  • a race to the bottom. thank you Brian lenihan and uncle bertie for ruining my child’s future

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  • Well if anyone taught otherwise then you would have been foolish even if they promised not to do in there election campaign…

    Income Taxes to increase
    New taxes to be introduced
    Sw will be cut
    Public sector wages to be cut

    You might not like it but that’s some of the things that will happen and that’s what u get for voting yes in the stability treaty. They would also happen if we voted no but at least it would have been on our terms and with a chance to reduce the bank debt… Which is not in anyway my debt or your debt it’s bloody bank debt of a private bloody bank…. But this been said a million times before and guess what just yesterday in the latest poll FG gained support… Really what I think of the electorate is not worth writing here… You sold our country now and now we are all going to pay….

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  • Do these plonkers realise we all have our own personal debt? Taking more tax from us is going to hurt us more? Unlike the banks we can’t turn for bailouts. Our debt is fixed.

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    • Exactly!! Any company that makes a loss doesn’t get money to prop it up except banks!! If I made a bet on a horse and lost can i make other punters pay??

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    • That is because you don’t realise the implications of defaulting on our bank debt. It’s very easy to say “burn the bond holders” but what does that mean exactly? The important thing is we don’t let this situation arise again. We have to pay the debt. Hardly a comparison Brian in fairness.

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    • Bondholders took a gamble but they win no matter!? We don’t no until we no all the facts u can’t really say it’s good or bad to pay! Banks can’t fail but any other business can hardly fair is it?

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  • Ahh sure didn’t they inherit this mess from previous govs……tax away lads there’s nothing left!!

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  • No cuts or new taxes before the cost of politicians is cut by 30 to 40%.

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  • Bloody hell folks, some of these comments are very frightening. Is this the country I live in. If someone paid their taxes then they paid their taxes. What difference does it make where they came from? Should I look at an employed foreign national differently from an unemployed one! Are people so disposable! This is what our beloved “Celtic Tiger” left behind. These people hardly came here for the weather or a good looking partner, they came here to work. Lots of Irish went on similar expeditions before them. All we wanted was a fair shot and look at the good we did with it, or atleast would like to believe we did. Always great at patting ourselves on the back us Irish. Figure out what it is we’re really fighting here instead of turning on the easy target. It could well be you next on that list. It’s our own who have done the worst harm in all of this. Picking out the easy , stereotype conspirator to make a victim of yourself is lazy, ignorant and bloody dangerous. It’s a time for solidarity, not a race to the bottom on the tabloid commentary snake pit. Some of the comments here disgust me. I really hope this is not a true representation of this great little country. Cead Mile Failte me arse if it is.

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  • Motor tax in Ireland is exorbitant when you take into account the extortionate costs of new vehicles. Taxing everything that moves above ground will not save the economy. It will kill it. Rabbitte and Co. keep making the same mistake over and over again. It simply isn’t possible for Ireland with its small population and small to shrinking domestic economy to pay off the debts forced on it through the incredibly dim Cowen-Lenihan bank guarantee. The troika bailout copper fastened the madness. If the government had any sense and any guts it would make common cause with the other GIIPS and seek some form of arbitrated debt settlement.

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  • Jeff 25/06/12 #

    Why don’t we just stop public sector pay / pension increments bonus etc and cut pay ? Simple. In what other organisation if you employer goes bankrupt do you get them ?

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    • The moratorium in the public sector is having a huge effect on the current staff. They have taken their fair share of the pain. Our welfare system needs to be adjusted in line with the rest of Europe. When an individual/family receive more money from welfare than an actual job there is something seriously wrong with that situation. Where is the incentive to go back to work?

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    • Derek 25/06/12 #

      Not until the cost of living is also adjusted, that includes addressing upward only rent and rates. All well and good to cut SW but those on it are struggling at the moment and to cut it further is negligent to them when the price of everything remains as high as it is. Its ridiculous, Rip off Ireland is still very much here for day to day living expenses and household bills have all jumped up considerable in the last 3 years not helping the situation.

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  • The only reason non Irish are here for good is because it’s do cushy for them on welfare
    The average hourly rate is 4e an hour in Poland,about 160e a week whereas they get 188e a week here on dole also children’s allowance in Poland is 16e month and 140e here,why would they leave ,this isn’t counting rent allowance

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    • Kildare the only argument i need to make is that the English make up the single largest nationals on welfare in Ireland. Do you think we should stop the welfare payments to the English? What do you think will happen to the irish in England if that happens.
      You are arguing about the symptom rather than the cause of the people on the Dole in Ireland. If we fix this economy, then people will come off the Dole. The Celtic Tiger proved that, when we had 3% unemployment.

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    • I somehow think Kildare that the cost of living might be a little bit higher here than in Poland!

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    • censored 25/06/12 #

      Why *should* they leave? The vast majority have worked here and built up entitlements.

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  • It don’t matter we can not keep paying SW in this country to ppl who move here for high payments I’m on a new school being built ,,most of the staff working here live in NI Ireland and from east Europe drive up and down every day I wonder how they can under cut the Irish contractors cos they collect there dole in the ,,,,, so cal I’m waiting for you to call me a racist that’s what you normally do when someone points a fact out to you

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    • mel 25/06/12 #

      Your dead right there was a new school built in Kildare and not one local was on it all from NI and eastern Europe
      These guys can afford to work for peanuts

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    • censored 25/06/12 #

      Still waiting for the facts in this discussion. All you’ve done is provided a story. As in “cool story Bro”. How do you know they’re collecting dole? If you have have any evidence of this then what have you done about it?

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  • If social welfare was only paid to Irish nationals then we’d be out of this mess in no time. Problem solved.

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    • exactly, i’ve been saying that all along. granted, prsi stamps covers you for what? 52 weeks max claiming job seekers benefit? after that – cut, find work here or go home. you won’t get it in other EU states i can guarantee you that, you’d have to come home here to Mama, which is why they’re not going home to Mama, too cushy here. 90,000 non nationals on the dole here is quite high. “Oh my, come to Ireland, come, you get this, and that, and this and other”

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    • I’m not sure why those commitments weren’t questioned by economists last year! It’s always been painfully obvious that by taking billions out of the economy for the foreseeable future that income tax hikes and welfare cuts were inevitable! The so called ESRI report from a couple of weeks ago, stating that a high percentage of workers would be better off on welfare was just the beginning of the softening up process! Unfortunately this Government don’t have any compassion for the less well off, and ultimately they are the ones who’ll take the most pain! I can’t honestly see the poor people tolerating much more!

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    • That is a disgraceful comment, and is IMO bordering on racist. Ireland opened its doors to the non-nationals when times were good. They are here for good, get over it.

      The problem with the state of the economy right now is that FFg/Laboujr are continuing exactly the same policies of their predcessors from 2007 onwards.
      For some reasons the morons believe that the more you cut spending, and the more you increase taxes, the better off the economy will be.
      This is just so plain stupid, and almost every economist around the world is saying the same thing.
      China/USA/Russia/Brazil/India outside of the Euro Zone, as well as France to name but a few are demanding that all the Eurozone economies start spending money to grow their economies.
      But FFg/Labour being who they are, don’t understand basic economics. They are only interested in being seen as good litrle boys in front of Merkel, and trying to get to the pension line in 3 years.
      They are literally destroying our economy.
      All the recent economic reports are saying that unemployment is still increasing, our exports are decreasing, emmigration is out of control …. All the while Kenny and Gilmore are paying themselves remuneration packages worth over 500,000 euro per year.
      They are at best ignorant, and at worst traitors and financial terrorists.

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    • @ Cal1: Welcome, we’ve been expecting you. Opening doors has nothing got to do with disallowing payments after ones prsi stamps have been used up. So Italy, Portugal, Hungary are racist too? These are countries i’ve been to and you will not get the same welfare rules there. In fact, each and every EU state seems to employ different rules regarding welfare. This old racist card crap is for the bin. We’re talking about money, welfare, rules and regulations here. I think you’re in the wrong news section.

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    • Good idea. Send all the Irish on the dole in England back here too.

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    • John F 25/06/12 #

      @ Cal1 Mooney , What an idiotic comment! Please direct me as to where the race of these non-nationals was mentioned? Welfare should only be paid to non-nationals if they have previously paid tax and then for a limited period only! There are people in Ireland who worked for 20+ years and due to the fact that they were self employed, they receive zero benefits. On the other hand there are people who have arrived on these shores, may never have worked a day here and receive full benefit entitlement, this is a disgrace and should never have happened, by the way I blame the system and not the people and their race is irrelevant as far as I’m concerned!

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    • The rules are that you can’t have different social welfare rules for Nationals and other EU citizens.

      That is a fact.

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    • John,

      This is typical of FFg/Labour efforts to distract attention away from the real issue.
      Less than 12% of the people on the dole are non-Irish, and the English make up the largest number of Non-Nationals on the Dole. So if you are suggesting, for the good of our economy, to send all the English home, i think that you will find the back-lash from our closest neighbors extremely counter-productive.

      The real issue is that our economy is at best, stagnant. Growing the economy is the responsibility of the FFg/Labour Government.

      FF/Labour are paying over 1,100,000,000 (1.1 billion) euro today to UNSECURED bondholders. This is where the problem lies. Over 17% of all tax this year will be used to service unsecured bond-holders in the banks.

      This is where the problem lies. It doesnt not lie with some English people who came over here to work for years, lost their jobs because of the ineptitude and corruption of successive Governments in Ireland.

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    • Apologies, the figure is 17% Non Nationals ….
      The English are the largest non National diaspora in Ireland, and account for the largest non-national community on the Dole in Ireland.
      If you even think for one second about sending them home, then we will automatically have all the Irish on welfare in England sent back to us.

      Dont be so stupid and short sighted in these arguments.

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    • John F 25/06/12 #

      Actually the Polish are the largest non-national diaspora in Ireland.

      http://www.thejournal.ie/polish-families-reuniting-in-ireland-as-they-become-largest-non-irish-group-400769-Mar2012/

      And yes, any Irish claiming dole in England long term should be sent home and vice-versa!

      Reply
    • John,

      Here is the CSO link.
      I appreciate the Journal is a good source, but the CSO figures are hard to argue with. Read the whole report.

      http://www.cso.ie/en/media/csoie/releasespublications/documents/labourmarket/current/ppsn.pdf

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    • John F 25/06/12 #

      My comments are regarding largest non-irish group which links to data CSO published from the 2011 census, the document you linked is irrelevant to the point I was making and besides it’s based on data recorded between 2005-2009

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    • Dear John:

      Here is the link to the Q1 2012 CSO figures…

      http://www.cso.ie/en/media/csoie/releasespublications/documents/latestheadlinefigures/qnhs_q12012.pdf

      Go to annex 1
      It details the following statistics:
      Total Employment stats
      Irish 64.4%
      Non-Irish (10.8%) of which British Nationals make up 1.6%, and the remainder 9.2% are non-Irish or British
      I never once said that there are more British in Ireland than Polish. I said that the British make up the largest % of unemployed from a Non-Irish point of view
      Your link backs up my argument. Even though the Polish are the largest diaspora, they are not the largest % of non-Irish folks on the Dole. Thanks for supporting my argument. It makes it a little easier.

      You can extrapolate the numbers yourself.

      Are you really arguing that the English should ship the 160,000 Irish on the Dole in England back over here? Really? I thought FFg wanted all the unemployed Irish to leave Ireland.

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    • If non-nationals couldn’t claim SW then non-nationals couldn’t work..I guarantee that the number working far outnumbers (and pays for) the number not working.

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    • John F 25/06/12 #

      I never once said that there are more British in Ireland than Polish

      From your earlier comment:

      The English are the largest non National diaspora in Ireland

      This is the point I was correcting, Im not interested interested in the nationality of the non-irish claiming benefits here. The point I was making is that non-nationals should only recieve benefits if they have previous tax contributions and then for a limited period only! My view also extends to any Irish claiming benefits overseas without contributing to their host countries, There should be nothing for nothing in this world!

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    • John,

      You cannot claim welfare in this country, unless you have 2 years of PRSI contributions.
      That is why so many self-employed business owners are screwed. If their business fails, they are entitled to nothing.

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  • Mel, i was referring to people who have been claiming welfare for years and send one or two CVs per month. I know many people who have been unemployed for a year or two and have no intention to work whatsoever. Let’s face it, 2 years is more than enough to get a job if you are really looking, get up early and keep sending your cv daily

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  • by all means increase the tax and reduce the SW but only after all the inefficiencies have been removed and we still in trouble, start with the Croke Park Agreement, that will be the death of us in the long run

    Some of the things I hear going on in the hospitals / HSE would make you sick, if you do that in a private company and you would be out the door

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  • There needs to be a third band of income tax to replace the household charge and a wealth tax.

    Irish salaries are 40% above the Eurozone average and yet we still have one of the least income tax rates in the world.

    For example, in America, most workers pay 40% income tax.

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    • censored 25/06/12 #

      Or maybe 30% in America if you do the calculation correctly.

      Don’t forget that Irish people have to pay large mortgages. A lot of the money from those mortgages went straight into Government coffers through all their unsustainable once-off property related taxes, but we’re still paying the mortgages. I think you’ll find that Irish are actually taxed to the hilt if you look at all the tax money we fork out in a lifetime.

      Reply
    • @ censored

      Having a mortage is not a panacea for decision making. The government cannot ignore rich people earning more than €60,000 a year either. The Euro-zone average salary is €22,000 – €33,000. In Ireland, a “basic” salary is regarded as €40,000. This has encouraged moral hazard, loss of competitiveness and higher inflation. The Irish elected a Fine Gael government that gave tax breaks. Ireland gives tax benefits. Because Ireland thought, it would be a big business. In the end, the people voted yes to a fiscal treaty, than a small island economy could stomach. That was selfish thinking and now they have to pay the price.

      Reply
  • RaceLover and Johnny, do your homework before you comment, each EU Country needs to offer EU citizens the same level of welfare assistance as to its own citizens. In other words, if you go and work in Norway or Spain you are eligible for the same entitlements as Norwegian or Spanish people. The government needs to address the problem of long term welfare claims in general as it is a joke for anyone to be on Jobseekers Allowance for 2-3 years! In Germany where I grew up, you can only claim benefits for 18 months and after that the government don’t care. a year or two is a lot of time to get any job. Sadly, to some social parasites ( both Irish and foreign) welfare has become a lifestyle

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  • That actually isn’t true, it’s much harder for non-nationals to get the dole in this country. They will get their dues if they worked but as soon as that runs out JSA is strictly means-tested that and there are so many variables that non-nationals are often told to go home by SW office staff than give it to them.
    BTW wages in Poland are roughly 350E/month. The only people who earn more are the doctors, engineers and accountants. The only people who are allowed to enter those professions are families of those professions. Every one else has to work in multi-nationals on those wages. The black economy loses the Polish revenue something like 58bnE/yr, is that what you would like to happen here?
    Slovenia isn’t much different, all professions earn 1/3rd Irish wages but their unemployment is 14%. The Slovenes cut the dole @ 3mths, where do you think those people go to? What about the Spain, the dole is cut off after 3 months and they have the highest unemployment in the E.U. I suppose some of you think that none of them want to work either?
    The fact is that unemployment is a sad reality of badly managed economies is has nothing to do with an unwillingness to work but this government uses this excuse to cut SW rather than deal with the unemployment problem. So it really shows what kind of people work in the government, how much they know about anything and how close to reality they live.

    Reply

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