A POLITICAL consensus is developing between Government and Opposition about the need for a new budget to raise extra tax this year to deal with the crisis in the public finances.
Minister for Finance Brian Lenihan told a Dáil committee yesterday that taxes would have to be increased, but he did not specify any timescale.
Fine Gael leader Enda Kenny and Labour leader Eamon Gilmore both called on the Government yesterday to bring in a new budget this year.
Last night, Government sources indicated that if there was a prospect of all-party agreement on the need for a budget, such a move would be given careful consideration.
The sources emphasised, however, that any new tax changes this year would have to be designed to protect jobs and competitiveness.
Writing in today's Irish Times, Fine Gael leader Enda Kenny said his party was prepared to look at budget options for this year such as increasing the current 41 per cent top rate of income tax, examining the scope for a new top rate of tax for those on very high incomes and introducing a carbon levy of €25 per tonne. He also suggested that stamp duty might be abolished and replaced with capital gains tax on the sale of houses of the super rich.
Infrastructure projects such as the Dublin metro would be deferred and Fine Gael would stick with its proposals to control public sector pay, with a two-year freeze on increments and bonuses as well as pay cuts.
Mr Kenny also proposed cutting the number of junior Ministers and the number of Dáil committees in addition to the staff in Ministers’ press and constituency offices.
Mr Kenny said the new budget should be wide-ranging and comprehensive in its scope, and not simply rely on the easy targets for short-term cash-raising. “The international markets need to see that there is a Government with a plan, one that is fair and one that is realistic about getting Ireland out of the mess it is currently in,” he said.
In the Dáil, Mr Gilmore also called for an early budget. “The Labour Party stands ready and willing to engage with the Government if the Government intends to introduce a new budget,” he added.
Later in a speech in Limerick, he repeated his call for a national recovery plan involving the whole of Irish society and not just the social partners. “In the Dáil on a number of occasions, I have specifically invited the Taoiseach to bring forward proposals to deal with the jobs haemorrhage which we could support.
“The response from the Taoiseach was a deafening silence,” he said.
Mr Gilmore said the Government had repeatedly spurned offers of constructive engagement from the Opposition. “In the 10 months since he was elected, the Taoiseach has never held a conversation with me on the economic situation, other than across the floor of the Dáil,” he said.
Separately, German chancellor Angela Merkel indicated that Germany would consider assisting Ireland and other euro-zone members in financial difficulty, but only if they made clear the true state of their banks’ finances at Sunday’s EU summit. “We have shown solidarity and that will remain. We should use Sunday’s summit for member states affected to give an honest report of their situation,” she said.
“We will have to discuss the situation in each individual country. It all depends on whether we are able to speak openly and honestly about the situation, because there are a lot of rumours flying around.”
The president of the European Central Bank, Jean-Claude Trichet, said in Dublin yesterday that “hard decisions” would have to be taken to overcome the severe challenges facing the Irish economy. An opinion poll conducted by Millward Brown IMS for today’s Irish Independent shows Fine Gael on 30 per cent (up three points since the last election), Fianna Fáil 25 per cent (down 17 points), Labour on 22 per cent (up 12 points), Sinn Féin on 7 per cent (no change) and the Green Party on 5 per cent (no change), while Others were on 11 per cent (up 2 points).