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Budget planning and bailout talks continue

Today the cabinet will meet to finalise plans for the four-year budget, as rescue talks with the IMF, EU and ECB continue.

Image: Donald Townsend via Flickr

THE CABINET WILL meet today to discuss plans on to make a €15 billion budget adjustment over the next four years.

The details of the plan are tipped to be published this Tuesday, and are expected to include €4.5 billion in cuts and €1.5 billion in new taxes for next year alone.

Meanwhile, discussions between the Irish state and the IMF, EU and ECB have entered their fourth day. Officials have cautioned that the talks could stretch into early December, after the details of the state’s budgetary plans are revealed, the Press Association reports.

Yesterday, German Chancellor Angela Merkel appeared to relieve the pressure that has recently been building on Ireland to raise its corporate tax rate, saying that it would not be a condition of a European bail out.

French President Nicolas Sarkozy reiterated that it would not be a condition of assistance – but added that he expected Ireland to raise the rate regardless, saying:

It’s obvious that when confronted with a situation like this, there are two levers to use: spending and revenues. I cannot imagine that our Irish friends, in full sovereignty, (would not use) this because they have a greater margin for manoeuvre than others, their taxes being lower than others.

However, EU bailout guidelines do not require tax increases from countries that receive European aid – and the government has said several times that Ireland’s corporate tax rate is non-negotiable. The opposition have also made it clear that they would not support a raise in the rate.

Ireland’s corporate tax rate is 12.5 per cent, higher only to EU countries Bulgaria and Cyprus, both of which have set their rate a 10 per cent.

Unrest

Meanwhile, tempers are flaring across Ireland. Yesterday one of the country’s largest trade unions, the Technical Engineering and Electrical Union, voted to pass a motion of civil disobedience if a general election was not called. General secretary of the TEEU, Eamon Devoy, said:

When the draconian measures being proposed are heaped on top of the €14.5bn of cuts already implemented in the last three brutal Budgets, life in Ireland will be unbearable.

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