Dáil resumes Budget debate

The Dáil has resumed debating the Government’s emergency Budget this morning as taxpayers come to terms with one of the toughest…

The Dáil has resumed debating the Government’s emergency Budget this morning as taxpayers come to terms with one of the toughest budgets in living memory.

TDs debated the measures, aimed at raising €3.25 billion in levies, taxes and spending cuts, until after midnight last night.

The Government won a series of votes on the financial measures contained in the budget, with TDs approving a doubling of income levies by 85 votes to 75.

TDs also approved a 25-cent hike in the price of 20 cigarettes and five-cent increase on a litre of diesel.

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Changes to mortgage income relief, capital gains and capital acquisitions tax were also passed by the House.

A day-long discussion will start today beginning with statements by the Taoiseach and Opposition party leaders.

Income levies formed the centrepiece of Minister for Finance Brian Lenihan’s budget with a doubling of the rates introduced last October and a significant reduction of the thresholds.

Last night, Labour’s Jan O’Sullivan said the levy increases would create hardship and take a lot of money out of local economies. “People simply will not have any money to spend.”

Taxpayers earning between €15,028 and €75,036 will pay a 2 per cent income levy, those earning between €75,036 and €174,980 will pay 4 per cent, while those earning more than that will pay 6 per cent.

On top of that the health levy has been doubled to between 4 per cent and 5 per cent and the PRSI ceiling has been raised significantly so that workers will pay the charge on all income up to €75,036 compared to €52,000 at present.

New levies on insurance policies, the phasing out of mortgage interest relief after seven years and the abolition of the early childcare supplement at the end of this year will impose added burdens on some of those already hit hard by income levies. Dirt tax also goes up.

For public servants the range of levies and charges comes on top of the pension levy of up to 10.5 per cent of their income.

Mr Lenihan told the Dáil that fairness was the cornerstone of the emergency Budget with a person on the minimum wage of €17,500 a year being asked to pay 2 per cent of their wages, someone on €50,000 paying 4 per cent of theirs and a person on €300,000 being hit for 9 per cent of their income.

“We are now facing the challenge of this nation’s life,” said Mr Lenihan, who appealed to people to set aside sectional interests. “Now is the time for the common good to prevail,” he added.

Fine Gael deputy leader and finance spokesman Richard Bruton said ordinary families were being hammered by the Budget. The total package of tax changes and spending cuts announced yesterday comes to €3.3 billion for the rest of this year. Extra taxes account for €1.8 billion of the package with cuts making up the balance of €1.5 billion.

Mr Lenihan also announced changes in pay and conditions for politicians, including the abolition of increments for TDs as well as pensions for former ministers who are still in the Dáil. He also announced a further reduction in expenses and reduced allowances for committee work. Former taoiseach Bertie Ahern could lose over €117,000 a year as a result of the changes.

Mr Lenihan also announced plans in his Budget to create an asset management company to buy between €80 billion and €90 billion of property and development loans from the banks in a bid to kick-start lending and repair the banking system.