Income tax commitments made in the EU-IMF deal will have to be renegotiated, Taoiseach Enda Kenny said when questioned about Government pledges not to increase income tax rates or reduce social welfare rates.
Criticising the previous government, he told Fianna Fáil leader Micheál Martin that “what you people did was to commit in the MOU [memorandum of understanding] to an extra €250 million in income tax for each of the next three years”.
“This is a matter that has to be renegotiated with the Minister for Finance and the Minister for Public Expenditure with the troika,” the Taoiseach said, adding that they had already renegotiated positions, which were “very clearly to the advantage of the Irish taxpayer”.
Mr Martin had questioned the Government’s commitment to pledges made by Mr Kenny and Tánaiste Eamon Gilmore not to increase income tax in the next budget or to reduce social welfare rates.
The Fianna Fáil leader pointed to comments by Minister for Finance Michael Noonan that he was "'not going to rule out any tax initiative or any tax increase or tax reduction’. Seven days later, marking the Government’s 100 days in office, you categorically ruled this out saying there will not be any income tax increases in the budget”.
Mr Martin added: “Your own Finance Minister now says that the public finances are better than on track. There is now more money than when you specifically promised no more cuts in welfare rates or increases in income tax.”
But the Taoiseach said the Minister for Finance had referred to the programme for government, adding that “it’s our intention to implement this programme in full”.
Mr Kenny also said those on social welfare who refused to accept upskilling, retraining or jobs would have their payments reduced. He also said the Minister for Social Protection “has expressed the Government’s interest in keeping headline rates of social welfare intact”.
The Taoiseach also told the Dáil that pension and severance payments to senior public servants were set by the previous government.
He was replying to Sinn Féin’s Mary Lou McDonald who raised the payments made to the former secretary general to the government, Dermot McCarthy, and retiring county managers.
Mr Kenny said his Government had made significant changes already, adding that Minister for Public Expenditure and Reform Brendan Howlin was committed to reviewing appointments at senior level in the public service.
"This Government has honoured the situation which was put in place for the former secretary general to the government," he added.
Ms McDonald said there were reports that county managers were entitled to a €74,000 payment at retirement. “I understand that this is under the same severance scheme under which your government gifted €700,013 to Mr Dermot McCarthy,’’ she added.
“I do not have to tell you, Taoiseach, that the people of this country are suffering real hardship, not just in respect of the policies of this former administration but indeed at your hands now.’’
Ms McDonald said the Taoiseach should give a guarantee to the people and the Dáil that he would end the practice of those “outrageous payments’’.
She challenged Mr Kenny to say why an outgoing secretary general to the Government walked away with such a bonanza and how county managers on his watch were set to do likewise.
Mr Kenny said Minister for Finance Michael Noonan is "reflecting" on the issue of senior bonds in Anglo Irish Bank after meeting European Central Bank President Jean-Claude Trichet last week.
He also said Ireland had gained "significant" savings from the rate cuts on its bailout.