The Republic of Ireland imposes a new property tax and cuts in child benefit in latest hairshirt budget
Ireland – the "poster child" for the International Monetary Fund and EU's bailout programmes – endured its sixth hairshirt budget on Wednesday with the imposition of €2.5bn (£2bn) of cuts as its finance minister insisted the country is emerging from the fiscal crisis.
The Republic imposed a new property tax and cuts in child benefit as it strives towards no longer relying on IMF and EU funds to run its public services and social welfare.
The Fine Gael-Labour coalition, which has been praised in Brussels, Berlin and across the world for introducing painful deficit reduction measures while coming increasingly under fire domestically from a public fed up with austerity, did not raise direct taxes or cut most social welfare payments.
However, the government in Dublin did introduce a new property tax which would range from payments of 0.18% on homes worth up to €1m to 0.25% on properties valued over the €1m mark. It will come into effect in July 2013.
As well as cutting child benefit by €10 a month there were €61m cuts in other household benefits. University fees are also to rise next year by €250 a student while motor tax will also increase.
Wine lovers were among the biggests losers in terms of the "old reliables'" of indirect taxation. An extra euro has been levied on a 750ml bottle of wine from midnight whereas there has been a 10 cent increase on a pint of beer or cider. The cost of a pack of cigarettes in Ireland will go up by 10% as well.
Finance minister Noonan told the Dáil during his 45 minute budget speech: "Ireland has consistently achieved – or exceeded – all of the targets set in the EU/IMF programme of assistance. We have implemented over 160 separate conditions of the programme and are determined to emerge from it at the end of 2013 and to return to sustained market access. "
Noonan claimed that "significant progress has also been made to restoring investor confidence" in Ireland as the Republic implemented the type of cost cutting programme that has provoked riots and civil disorder in other EU states particularly in Greece.
He predicted that "the worst is over" for the Irish economy after six years of recession and enduring austerity.
"Today, markets and foreign lenders are willing once more to lend to Ireland and to Irish businesses. This is essential for our businesses and our economy to continue its path to recovery," Noonan added.
Overall, the budget statement projected that Ireland will experience 1.5% growth next year rising to 2.5 % in 2014.
The delivery of the budget for 2013 mirrored the make up of the coalition and was essentially a double act with the Labour Minister for Public Expenditure and Reform Brendan Howlin then outlining the extent of the cuts and savings the government proposes to make after Noonan's main speech.
To deal with the blight of the so-called ghost estates across Ireland (vast private housing complexes built during the Celtic Tiger boom and never inhabited due to the property crash), Minister Howlin announced that the government would allocate €10m to deliver empty flats and houses to families on the housing list. The "ghost-estates" have becoming physical symbols of the boom and bust Irish property market that continues to haunt the economy.
In an Irish version of David Cameron's consistent line that "we're all in it together", Howlin also announced cuts to the special allowances of Irish parliamentarians with the practice of unvouched for expenses abolished and public funding to party leaders cut by 10 %.
The budget was likely to be endorsed by the Dáil although a small number of Labour Party TDs were likely to rebel against their leadership and vote against it.
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