Cabinet to resume work on emergency budget today

THE CABINET will meet at 8

THE CABINET will meet at 8.30 this morning to resume discussions on the emergency budget which will be published in the first week in April.

Separately, Fianna Fáil TDs and Senators will discuss the forthcoming supplementary budget at two special meetings of the parliamentary party this evening in Leinster House, Government Chief Whip Pat Carey said.

Ministers considered broad budget issues at their weekly meeting yesterday and today they will be briefed in detail by officials from the Department of Finance about the options facing them.

In the Dáil yesterday Taoiseach Brian Cowen refused to be drawn about the exact date of the budget but repeated that it would be in the first week in April.

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That suggests the date will be April 2nd, three weeks from tomorrow.

Mr Cowen also said that there would be a normal budget debate followed by the publication of a Finance Bill within the normal timeframe.

Ministers will have to decide on the balance to be struck between tax increases, cuts in public spending and a scaling back of the National Development Plan (NDP) in order to find an extra €4.5 billion for the rest of the year.

That figure comes to €6 billion in a full year.

An increase of at least 2 per cent in the lower and higher rates of income tax is expected in the budget but Ministers will have to decide whether to introduce a new top rate of tax which has been widely advocated.

A clampdown on the remaining tax shelters that enable wealthy individuals to avoid tax is another likely feature of the budget.

The huge administrative difficulties for employers and the Revenue Commissions in changing the rates during the tax year means that the extra revenue is likely to be raised by way of levies this year while converting into new tax rates for 2010.

Substantial increases in tax on the “old reliables” alcohol, cigarettes and petrol will almost certainly feature in the budget as will cuts in the NDP for projects not already subject to a contract.

A particularly sensitive issue for the Cabinet is how cuts can be found in the €20 billion annual social welfare bill.

Minister for Social and Family Affairs Mary Hanafin pointed out last week that the job seeker’s allowance in the Republic at €204.30 a week was almost four times that payable in the UK at between €53.90 and €68 a week.

Cuts in the benefit rates are unlikely in the emergency budget but may be considered later in the year for the 2010 budget.

Also on the agenda for next year will be the possible taxation of child benefit and a property tax but today’s discussions will focus on what should be in the package in three weeks’ time.

The parliamentary party’s special policy group on finance, chaired by Mayo TD Dara Calleary, will hold an open meeting where Fianna Fáil deputies and Senators will have the opportunity to raise budgetary matters with Minister for Finance Brian Lenihan.

Mr Carey said members would “explore ideas for the supplementary budget”. They had been invited to submit questions and suggestions in writing to Mr Lenihan for his consideration.

Members are expected to raise issues concerning tax rates, the current income levy and other measures that may be introduced in the budget to bridge the gap between exchequer returns and public expenditure.

A similar meeting is being convened by the party’s social welfare policy group which will be attended by Minister for Social and Family Affairs Mary Hanafin. Issues expected to come up include the maintenance of social welfare payment levels in a time of recession.

Stephen Collins

Stephen Collins

Stephen Collins is a columnist with and former political editor of The Irish Times