2% VAT hike, €100 property charge and carbon taxes likely in Budget
Hikes in VAT, excise duties and carbon taxes are all likely in the massive €3.8bn savings package in the forthcoming Budget.
Finance Minister Michael Noonan suggested that VAT could rise to 23% from 21%, while a €100 property charge will also be brought in.
Along with increases in excise duties on energy products and carbon charges, he hopes the Government will claw back savings of €1.6bn through taxes alone.
“This Budget is going to be hard on people and we’re asking the people to stay with us because we have a clear plan,” he said.
But Mr Noonan promised income tax will remain at its current levels in an attempt to create jobs.
A further €2.2bn of savings will be made in public spending cuts to make up the €3.8bn adjustment.
However, the minister was unable to give details of cuts in public spending, saying those measures would be spelled out on Budget Day on December 6.
The Government also intends to slash the capital spending programme by €750m. The move has drawn criticism from the Opposition and the construction industry, who said it will cost jobs.
Mr Noonan said while the Budget would be “very tough”, his goal was to ensure it would be fair to all.
He added that any hikes in carbon taxes and excise duties would both free up revenues and encourage a behavioural change reducing Ireland’s greenhouse gas emissions.
The Budget for 2012 is the toughest outlined over the next four years.
The Government must make a total of €12.4bn savings from now to 2015.
Cutbacks are likely to be lessened and tax hikes reduced in 2013, 2014 and 2015, when projected adjustments will go down to €3.5bn, €3.1bn and €2bn respectively.
