Tuesday 23 January 2018

PAYE to rise by 1pc and child benefit drop of €15 in €4bn Budget cuts

TOUGH: No one will be spared as spending axed

Workers are likely to be hit for an extra 1pc in income tax in December's Budget.

And child benefit could be cut by as much as €15 across the board after the Finance Minister admitted Budget savings need to be "well above" €3bn.

The looming Budget now looks set to be far worse than last year's with no area of expenditure being spared.

Finance Minster Brian Lenihan admitted that the previously mooted figure of €3bn in savings had become irrelevant because of the deepening economic crisis.

Instead, he is looking at a number "well above" that, as experts warn it could be as high as €4bn. Sources said today that Mr Lenihan "would do what had to be done".

"There will be unpopular measures but that doesn't matter at this stage with regard to the Budget. Most people realise that things like child benefit and income tax are on the table," said one Fianna Fail TD today.


Child benefit was slashed by €16 a month in last year's Budget and the Herald understands that a further 10pc cut is being considered.

The cabinet has previously looked at the possibility of means-testing the payment but this would prove cumbersome compared to an across-the-board cut which could save up to €250m for the Exchequer.

Income tax is also under scrutiny. Mr Lenihan had previously stated that he believed tax rates were high enough but this opinion is shifting.

A 1pc hike in the 20pc tax rate would bring in nearly €353m next year, with the potential for an additional €126m from a similar measure on the 40pc rate.

The Green Party was continuing to press for all-party talks on the budgetary plans today after Mr Lenihan said that a "common analysis of what the problem is" would be "very helpful".

Minister for Communications Eamon Ryan said last night that he was "confident" parties from both sides would meet this week. However, opposition parties said they had not been invited to any talks.

And in an exclusive interview with the Herald today, Labour leader Eamon Gilmore outlined a vastly different approach to the Government.

Mr Gilmore revealed that if he was in charge there would be no changes to the existing tax bands and he would definitely not cut child benefit.

"If you look at any of the studies that have been done on poverty the people in our population that are worst affected are children.


"The cutting of child benefit makes that worse," he said.

Fine Gael confirmed that its leader, Enda Kenny, had been contacted by Green boss John Gormley, but said there was no discussion of an invitation to all-party consensus talk.

Green TD Eamon Ryan said: "No one has said 'no' and I think yes, understandably, other parties have been cautious about it; but I believe they will each come in and see the sense in this in the national interest."


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