The Government has published its four-year plan for reducing the country's Budget deficit.
The 'National Recovery Plan' outlines how the Government will make €15 billion worth of spending cuts and tax-raising measures by 2014, €6 billion of which will take place next year.
Finance Minister Brian Lenihan says spending cuts are focused on the areas of greatest cost, which are public sector pay, pensions, social welfare and other programmes relating to capital investment.
European Economic and Monetary Affairs Commissioner said the four-year plan was an important contribution to the stabilisation of the Irish public finances, adding that it struck 'a good balance of durable expenditure and revenue measures'.
Mr Rehn said the plan was 'a sound basis for the negotiations on the fiscal and structural reforms of the policy programme underlying the international financial assistance that Ireland has requested to the EU and the IMF'.
The Government acknowledges that the measures involved will hit living standards in the short-term, but warns that postponing them will lead to 'greater burdens' in the future.
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The overall aim is to return the tax system to 2006 levels by 2014. The point at which people enter the tax net will fall by €3,000 to €15,300 a year by 2014.
One of the main measures is a phased reduction in the tax relief on pensions for those on the higher rate of tax. This will be reduced by 2014 to relief at the standard rate of 20%.
The minimum wage is to be reduced by €1 an hour to €7.65 an hour, while a review of registered employment agreements will also take place. The standard rate of VAT is to rise from 21% to 22% in 2013, and to 23% in 2014.
Cuts in social welfare and public service
Spending on social welfare is to be reduced by 14% over the four-year period, with cuts of around 5% next year, though the details are being left until Budget day.
Public service job numbers will fall by 24,750 from 2008 levels, cutting the public sector pay bill by €1.2 billion by 2014. New entrants to the public service also face a 10% pay cut.
There will also be deductions from current public service pensioners, ranging from 6% to 12%, though those below €12,000 a year will be exempt.
There are also plans to introduce water metering by 2014, while a site valuation tax to fund local services will also be introduced.
The Government says its four-year plan is based on an assumption that the economy will grow at an average of 2.75% a year from 2011 to 2014. It says the unemployment rate will fall from 13.5% this year to below 10% in 2014.
The deficit will be cut from 9.1% of economic output in 2011 to below 3% by 2014. Public debt will peak at 102% of GDP in 2013, falling to 100% by 2014.
