Minister for Social Protection Joan Burton has hinted that people on very high salaries and pensions could be facing increases in taxation in next month's budget.
Ms Burton said she had not yet had an opportunity to study in detail an Irish Taxation Institute report which said the take home pay of an average Irish family has been cut by as much as €600 a month but she recognised how financially difficult things were for many people.
She said the economy has to return to growth and she was particularly concerned that while there has been some economic growth, there had not been in relation to jobs.
"We have some return to growth. As Minister, the thing that would concern me most is the difficulty with employment is still very, very intense. We have some recovery but we haven't yet had the kind of recovery that I would like to see on jobs," she added.
"Overall I think there is a very strong requirement to look at the way our tax system is structured – and in particular down the years…..about the imbalances in the tax system where certain kinds of tax breaks favoured particularly property development.
"There are still allowances there in respect of property development which are still being utilised and there are a number of areas there which I believe in the run-up to the budget offer scope for examination and consideration. The (IMF/EU) troika themselves pointed that out."
Ms Burton said that no decision have been taken yet in relation to child benefit reductions but the Government was looking at the figures and would ensure that the forthcoming budget was fair to everyone while at the same time working to regain our financial sovereignty.
"The publication of that (ITI) report should help to have a debate about fairness in the taxation system, for instance, the contribution very wealthy people in Ireland (make) - whether they are very highly salaried people in the public and private sectors," she said.
"Everything is being looked at - it doesn't mean that all of the areas which have been mentioned (unemployment payments and children's allowance) will be areas that the Government will actually make changes or make reductions in.
"The approach I favour is that we sort it out in a fair and balanced way. I think everyone will be impacted by the budget but we will try to lessen the impact people of who are in for instance low-paid employment, social welfare incomes - that the people who are well off can bear proportionately more."
Ms Burton also said she was examining how to plug a €1.9 billion hole in the social insurance fund used to pay some workers' illness or disability cover and jobseekers' allowance.
"This is the fund out of which benefits are paid to those who have made PRSI contributions," Ms Burton said.
"I can plug this hole either by increasing rates of PRSI, reducing benefits or reforming the system. My preference is to reform the system.
"One measure I am considering is widening the net to make certain types of unearned income such as rent profits and dividends liable to PRSI."
The option is being considered alongside plans to slice €1 billion off the public service pay bill by drastically reducing overtime rates and premium pay.
Tánaiste Eamon Gilmore said the huge salary savings would have to be discussed with unions as part of the Croke Park agreement. "All State organisations are well aware that there is a necessity to bring down costs of all kinds, including payroll costs," the Tánaiste said.
"What the Government is seeking to do is to get the savings in payroll where they can be achieved but that will be done in the framework of the Croke Park agreement."
The Cabinet has met three times this week to examine proposals for the €2.2 billion tax increases and €1.6 billion spending savings being lined up for the budget on December 6th.
In an address to the Cork Society of Chartered Accountants Ireland, Ms Burton said she opposed a special redundancy rebate scheme for profitable companies who lay off workers, citing the experience of workers at Talk Talk, Waterford and SR Technics in Dublin.
Under the current system businesses which make redundancies qualify for a 60 per cent rebate from the Social Insurance Fund even if they are in profit.
The Department of Social Protection is seeking €700 million savings in the budget. The Commission on Taxation recommended reforming the PRSI system in 2009.
Fianna Fáil finance spokesman Michael McGrath attacked Minister for Finance Michael Noonan's estimates that the hike in VAT would yield an additional €670 million after it was confirmed Revenue have not factored in business lost to cross border shopping.
"If you speak with retailers in any town, village or city in Ireland, they will tell you that a 2 per cent increase in VAT will lead to less consumer demand," Mr McGrath said. "In the border county areas, retailers are adamant the VAT increase will encourage more consumers to shop across the border. It is inconceivable the Minister has not taken this into account in calculating his figures."
Additional reporting: PA
