Two Government ministers have refused to rule out income tax increases and social welfare cuts in the next budget. Any cuts and tax would marks a U-turn by the Government on its programme for government.
Minister for Communications Pat Rabbitte said he wanted no “red line” areas in discussions.
Minister for Public Expenditure and Reform Brendan Howlin said he would not be “prescriptive” in discussions on the budget for next year.
In its fiscal policy pledges in the programme for government the Coalition parties said the Government would “maintain the current rates of income taxes, together with bands and credits. We will not increase the top marginal rates of taxes on income.”
The programme for government also states: “We will reduce, cap or abolish property tax reliefs and other tax shelters which benefit very high-income earners. We will also ensure the implementation of a minimum effective tax rate of 30 per cent for very high earners.” On social welfare the Government pledged in its programme: “We will maintain social welfare rates.”
Both tax rises and welfare cuts were trenchantly ruled out by the Government for last year’s budget. However, to fulfil its pledges in the EU-IMF bailout the Government has to make cuts of €3.5 billion next year.
The comments by the two Labour Ministers have raised speculation that both areas are back on the budget agenda.
In an interview with the Sunday Business Post, Mr Howlin said: “What’s been agreed has been agreed, but I’m not going to be prescriptive by saying ‘we’re not going to touch that and that and that’ because then my manoeuvrability on anything is down to zero.”
Reacting to the comments last night on RTÉ’s The Week in Politics, Mr Rabbitte said that when discussions started he would like to do so “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. But it’s just that the economic situation and the fiscal situation is so difficult”, he added.
Fianna Fáil’s spokesman for public expenditure Séan Fleming called on the Taoiseach and Tánaiste to “flatly contradict” the suggestions and relieve growing public concern in the run-up to the budget. Fianna Fáil would be pushing them to do that, but he believed the suggestions and comments by the Ministers indicated a “possible U-turn” on the issue.
