The Minister for Finance insisted Ireland was 'turning the corner,' as he introduced Budget 2010 - which cuts €4bn from public spending.
Main Points of Budget 2010
- Social welfare payments will be reduced by 4.1%
- Child benefit reduced by €16 per month (welfare-dependent families not affected)
- Jobseekers' Allowance reduced to €100 a week for those aged 20 and 21 with no children, and to €150 for those aged between 22 and 24 and in cases where job offers have been refused
- No change to State pension
- Tiered pay cuts for public servants - 5% on the first €30,000 of salary, 7.5% reduction on the next €40,000 and 10% on the next €55,000 of salary
- Public servants' pensions to be linked to average salary across career, rather than final salary
- VAT rate reduced - 21.5% rate dropped to 21%
- Excise duty on alcohol reduced - 12c cut on beer and cider, 14c cut on a measure of spirits, 60c cut on a bottle of wine
- No change to tobacco tax
- 50c charge for every medical card prescription from April
- Carbon tax of €15 per tonne - petrol to go up by 4.2c from midnight, and diesel up by 4.9c
- Hospital consultants will see their pay cut by up to 15%
- People with a certain level of assets at home and abroad will have to pay €200,000 per year to maintain their Irish passport
- New 'universal social contribution', which will replace employee PRSI, the Health Levy and the Income Levy
- Taoiseach's salary to be reduced by 20%
- Mortgage interest relief - Extended to 2018 for those who now find themselves in negative equity
- Flood relief - More than €70m to be given to help victims and stop future floods
- National Solidarity Bond aimed at small investors to be launched
- Discounted rail vouchers to be given to senior citizen tourists to Ireland
- Scrappage scheme announced - Get around €1,500 off your Vehicle Registration Tax on a new low-emission car, if you trade in a car at least 10 years old
- The minimum pension age for new public servants will be increased from 65 to 66 - then linked to increases in the State pension age
Brian Lenihan told the Dáil this afternoon that the Government's plan was working, and that the first signs of recovery could be seen.
As expected Mr Lenihan announced cuts in public sector pay and reductions in social welfare payments and child benefits.
The Budget will not do anything to improve the mood in the public sector where there have already been protest marches and a strike.
Those workers will now see wage cuts of between 5 and 8% up to €125,000.
Higher paid public sector employees, Ministers and the Taoiseach will have deeper cuts.
There will be changes to pensions too, but not for retired public servants. There will be tax on pension lump sums above €200,000 after next year.
But it is not just the public sector that is feeling the pain, social welfare rates are being cut by 4.1% but the old age pension is not being hit.
There are big cuts for the young unemployed.
20 and 21 year olds will receive €100 per week, those aged 22 to 24 will get €150.
Difficulties in taxing child benefit has prompted the Government to opt for a €16 cut per child per month.
The capital spending like roads and rail is being reduced by €1bn to €6.4bn - but it is still relatively high by international standards. It has been curtailed for future years too.
Every household can expect to pay more in the form of carbon tax. Brian Lenihan says it will change our behaviour - but it will also raise €250,000 for the Exchequer next year.
The cut in excise on alcohol is seen as an attempt to curb cross-border shopping.
His 0.5% cut in the higher rate of VAT is also meant to be a boost to the retail sector.