Middle-class are in the firing line for taxes attack
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THE country's middle class looks set to be slaughtered in this month's mini-budget.
Taoiseach Brian Cowen will have to raise at least another €2-3bn, which will come from middle income earners.
Latest exchequer figures revealed that the country is now facing into the abyss. The €2bn saved as part of the controversial pension levy plan will soon seem like a minor issue.
Minister for Foreign Affairs Micheal Martin said today that another €2bn is "the minimum figure" being talked about. He promised the emergency budget will be "very comprehensive" and hinted that thousands of low income earners may be dragged back into the tax net.
PAINLESS
However, one Green TD last night told the Dail of a novel and "painless" way to collect €1.4bn by taxing text messages.
Mary White has suggested that if phone users were charged one cent for every message sent it would raise more in a year than the pension levy.
The Government now needs to save billions more and middle income earners will be asked to carry the brunt of a new tax system. Tax collection is now 24pc lower than last year, despite the fact that spending has actually increased.
Minister Lenihan's review will try to plug the black hole created to a large extent by increased dole payments and fuelled by plunging retail sales.
Substantial
Minister Martin said that the tax base would have to widen in order to raise "substantial revenue" in "very unprecedented circumstances".
"The situation is constantly deteriorating, not just here but globally," he said.
Head of the ERSI John Fitzpatrick said: "Income tax is going to have to rise very significantly in both scope and rate."
And in a warning that will cause more despair for workers, he said that he does not believe the Government can keep borrowing below 10pc this year.
He predicted that €2-3bn will have to be raised in this way, along with other taxes such as a carbon levy.
Opposition parties were today attending a briefing with officials from the Department of Finance in an effort to reach a crisis cross-party consensus.
kdoyle@herald.ie
- Kevin Doyle
