Higher taxes for everybody will be introduced in Ireland, the Minister for Finance, Brian Lenihan has declared, but he rejected demands from the Opposition and other quarters for an emergency budget. “Yes, the wealthy groups will have to pay. But everybody will have to pay something,” the Minister told the Fianna Fáil ardfheis during a lengthy debate on the economy and the banking crisis this morning. The Taoiseach, Brian Cowen, is delivering the keynote address tonight.
“Yes, the wealthy groups will have to pay. But everybody will have to pay something,” the Minister told the Fianna Fáil ardfheis during a lengthy debate on the economy and the banking crisis this morning.
Ruling out heeding calls from some for an emergency budget immediately, Mr Lenihan said he had received “nothing but implacable opposition” in Dáil Eireann to the measures that have already been taken to cut public spending.
He stood by the decision to impose a pension levy on State workers, regardless of its unpopularity, saying: “This decision in no sense devalues the public service. If we do not take the pension action now greater sacrifices will be needed later."
The Government has to broaden the tax base, Mr Lenihan said, but he rejected arguments that the existing system is unfairly skewed against poorer workers, citing figures from the Revenue Commissioners showing the breakdown of the tax collected.
"Two in every hundred people earn more than €200,000 a year, and they pay 28 per cent of all the taxes; while six in every hundred earn over €150,000, and they contribute 28 per cent of the total; while 6 per cent earn more than €100,000, and they pay nearly half of the Exchequer’s returns," he said.
Offering what might be seen by some as a partial apology on behalf of the Government, Mr Lenihan “ if we could have foreseen the extent of the international crisis, we would have done things differently.Perhaps as a Government we were over-ambitious in trying to meet the understandable demands of our people for more and better public services when the resources were there."
"There is little to be gained in beating ourselves up over this. We have to get on and do what we can and do it in a united way,” he said.
Outlining the “inescapable” problems facing the State, he said the Government will borrow “four-and-a-half-thousand euro for every man woman and child”; while one quarter of all our day to day bills, including pay, will be paid for by borrowed money.
“The interest on this borrowed money will use up one third of all the income tax receipts we expect to take in this year: dead money that should be going to meet our public service needs,” he told ardfheis delegates.
“We have an €18 billion hole in the public finances. The world is looking on. We need to persuade those who might invest here that we are capable of taking the tough decisions now to get our house in order. If we cannot do that, we are in danger of losing all the gains we have made over the last 20 years,” he said.
He went on: “Last week, in the teeth of implacable opposition, this Government took an important step on the road to our recovery. We voted through the Bill that gives effect to levy that will see public servants pay on average 7.5 per cent to the cost of their pensions. We known this will be painful for public servants and their families. We know it has caused anger. But the choices facing us are stark. Unless we take the pain now, greater sacrifices will be needed at a later date.
"Let us be clear: this is not about targeting public servants. It is about asking those in secure, guaranteed pensionable employment to make the same adjustment that is taking place across the economy.
"The greatest tragedy of any recession is joblessness. Every day, workers in all our communities are losing their jobs. Each day last month, 1,000 workers became unemployed. Many others are maintaining their jobs only by taking cuts in their pay, in some cases of up to 25 per cent," the Minister said.
"The public service pay bill accounts for one third of all expenditure. To get our public finances back in order, there simply was no alternative but to make savings in the area of pay and pensions,” he said.
