Finance Minister Brian Lenihan has announced €6 billion of spending cuts and tax measures in his Budget speech in the Dáil. Mr Lenihan said his Budget was a 'substantial down-payment on the journey back to economic health'.
Among the measures are a 4% cut in non-pension social welfare payments, cuts in pay for top politicians, and a reduction in public service pensions.
Mr Lenihan told the Dáil the economy was returning to growth after a deep and prolonged recession - but the gap between Government income and expenditure must be closed.
Old-age pensions are untouched, but other welfare payments will be cut by 4%, and child benefit is reduced by €10.
€200m will create an extra 15,000 internship and work placement programmes, and another €14m will fund extra fuel allowance payments.
Civil service pay will not be cut - but the Minister warned that savings would have to be delivered under the Croke Park agreement. Taoiseach's pay will be cut by €14,000 a year, ministers by €10,000. The Government also wants a salary cap of €250,000 on all salaries in the the public sector and state agencies.
Public service pensions will be cut by an average of 4%, the employee PRSI ceiling is removed; and the value of tax bands and credits will be reduced by 10%.
More details on the tax changes and how they will affect people here
DIRT goes up by two percentage points, and pension contributions will be subject to PRSI and the new universal social charge. The latter replaces the health and income levies.
Stamp duty is being cut to 1% on residential property transactions up to €1m and 2% over that. It will apply to new and old houses.
The €10 travel tax drops to €3. Petrol goes up by four cent per litre, and diesel by two cent, while online betting will be subject to the same 1% betting duty as in bookie shops.
Mr Lenihan said under his proposals everybody pays - and those who can pay most will pay most.
He told RTÉ's Six-One the Government had done all in its power to protect social welfare payments, and any reductions were deeply regrettable. He said welfare could not be exempt from cuts because matters were too serious.
The Minister said levels of welfare payment were way out of line with our nearest neighbour and consume huge amount of public spending.
Measures to boost tax take by 10% next year
The Government's Budget document says the economy, as measured by GDP, should grow by around 0.3% this year and 1.7% next year. GNP, which excludes profits from multi-nationals based here. will fall by 2% this year, but grow by 1% next year.
The average unemployment rate will be 13.4% this year and 13.2% next year, the Government expects.
The Budget aims to reduce the deficit next year to 9.4% of economic output. It also expects tax revenue to grow by more than 10% next year to almost €35 billion, but the growth is mainly due to Budget 2011 measures, with underlying growth of just 1%.