Opposition parties were invited by the Government to submit their proposals for this month's emergency budget during a briefing at the Department of Finance this morning.
Taoiseach Brian Cowen announced in the Dáil yesterday he would be introducing an emergency budget by the end of month and Minister for Finance Brian Lenihan last night invited the Opposition to make detailed submissions on what should be contained in the measure.
Fine Gael deputy leader and finance spokesman Richard Bruton, Labour Party finance spokeswoman Joan Burton and Sinn Féin's Arthur Morgan attended a briefing by officials in the Department of Finance this morning on yesterday’s disastrous exchequer figures.
Department officials revealed the Government needed to make savings of €5 billion this year. Mr Cowen told the Dáil the social partners would be briefed tomorrow.
The Taoiseach’s acceptance of the need for a new budget to raise extra taxes followed the publication of exchequer figures which show tax revenue has slumped back to 2004 levels. He said exchequer figures for the first two months of the year were so bad that “a combination of revenue raising and expenditure adjustments” would have to be made by the Government before the end of the month.
The Government signalled it will be seeking to reduce current spending this year by an extra €2.5 billion to €3 billion. This would be in addition to the €2 billion in cuts already in train.
Mr Cowen’s budget announcement came after he disclosed the exchequer returns for the first two months indicated tax revenue for the year will fall short of the €37 billion anticipated by the Government at the beginning of January. The figures show that the amount of tax collected in the first two months of the year was down almost 24 per cent on the figure collected in the same period last year. The biggest falls in revenue came from the property-related capital gains tax and stamp duty.
Corporation tax and VAT were also down substantially. Income tax receipts were also down, despite the 1 per cent levy, while social welfare spending is up due to the rapidly increasing numbers out of work.
Minister for Foreign Affairs Micheál Martin said the new budget will be "very comprehensive", embracing all aspects of taxation and expenditure.
He said Mr Lenihan would, in addition to announcing new measures for this year, outline plans for following two years. He told RTÉ's
Morning Irelandprogramme the Government intended to position Ireland so that it would be able to capitalise on any global economic upswing.
Mr Martin said Ireland’s income tax base was narrow and had to be broadened. He insisted tax increases would be “fair” and those on higher incomes would pay proportionately more than the less well-off. “Everybody has to make some contribution. It’s important that those on higher incomes pay the greater contribution.”
Earlier on the same programme, Ictu general secretary David Begg welcomed plans for tax increases but insisted they must be imposed in a fair way. He said the Government's reluctance to do this in the past has been a "major impediment" to negotiations.
"Everybody has to recognise that it's going to be pretty bad news all around. But the only thing you can do is ensure that it's going to be as fair and even-handed as you can be," he said.
"Where there's pain involved, try and ensure that the people who are best able to bear that pain are the people who do bear it, not the people who are least able."
