Disposable Income Cuts Threatens 'Depression'

The Opposition has said Tuesday's Budget has put the current recession at risk of becoming a "depression" after it slashed disposable income across the board.

The Finance Minister, Brian Lenihan, announced a 1% across the board tax levy, which when added to a 0% increase tax credits, is thought to slash take-home pay by up €290 in a year for the average worker.

Some analysts are arguing that in a Budget supposed to reinvigorate the economy will be slashing consumption, pressurising commerce, and fuelling unemployment as workers also try to wrestle with a cut in the tax relief on mortgages for non first-time buyer, a hike in VAT rates, an eight cent duty on petrol and higher motor tax, increased excise duty on cigarettes and wine, a cut in what he can be reclaimed on medical costs, and new travel tax and hikes in hospital charges.

In a somewhat ironic move, the risk-taking public have also been given a slap on the wrists, unlike the bailed-out 'foolhardy' banks, with an increase in betting tax from 1% to 2%.

Mr Lenihan also announced a reduction in the allocation for the Horse and Greyhound Racing Fund.

Fine Gael TD Richard Bruton said the cutbacks in vital infrastructure programmes threaten to turn the current Irish recession into a sustained depression.

"As a result of the Budget, taxes are way up, borrowing is heading up, spending is continuing to go up while levels of social services and capital spending are down. With more announcements due in the coming days there are undoubtedly more shocks to come," he said.

In the Budget, Mr Lenihan also revealed the expected wage-cut for Cabinet ministers of 10%.

However, it has since been revealed by an Irish newspaper that the wage cut will not affect their pension schemes, which will still receive the full contribution at normal pay.


Related Irish News Stories
Click here for the latest headlines.

26 May 2009
No More Income Tax Hikes, Claims Lenihan
The Finance Minister Brian Lenihan has said there will be no further income tax increases this year. The vow comes only a month after the Government doubled the income levies in the emergency budget. Despite the assurances, Mr Lenihan has confirmed that a property tax and a carbon tax were being considered.
19 February 2019
Urgent Action Needed On Outstanding Tax Payments Of €4.3bn
Labour has called for urgent action on outstanding tax payments of €4.3 billion owed to Revenue as of 31 January, 2019. According to Labour Finance spokesperson Joan Burton, a total of €969m is immediately available for collection and would make a significant difference to public services.
07 May 2013
Generous Tax Breaks Sought For Executives Of Multinationals
Generous tax breaks for executives of multinational companies were sought ahead of the 2013 Budget, the Irish Times have reported. Last Decembers Budget contained measures that would allow high-salaried executives to move to Ireland and benefit from a lower income tax rate alongside relief on expenses for private school fees and trips home.
24 April 2024
'Decision Week' For Executive To Agree 2024/25 Budget – UUP
The Ulster Unionist Party has said it is "decision week" for the Executive to agree a new 2024/25 Budget. Party leader and Upper Bann MLA, Doug Beattie, reiterated his warnings of the damage being inflicted to key services the longer the void in this year's Budget continues.
20 November 2007
No Tax Break In Budget?
The author of next month's long-awaited 2008 Budget won't give much away - literally. Although the details are still under wraps, Minister for Finance Brian Cowen has all but ruled out tax cuts due to 'the current economic climate'. In a speech earlier this week, Mr Cowen signalled that he will announce around €2.