Troika warns of more tax hikes and welfare cuts
INCOME tax increases and more cuts in social welfare may be likely as the Government struggles to meet its international bailout commitments, troika officials have warned.
Irish people will be forced to carry an even heavier financial burden in the years ahead. Officials from the EU Commission and International Monetary Fund (IMF) believe the Cabinet will be unable to keep election promises not to adjust tax bands and credits in the 2013 Budget.
A team of officials from the international troika monitoring Ireland’s adherence to its bailout promises will arrive in Ireland next week to scrutinise the Government’s fiscal performance.
Householders are facing new property tax bills which will be far higher than the new €100 household charge. The value-based home tax is expected to place a significant burden on struggling families.
Experts in the IMF and the Commission believe ministers will come under increasing pressure to make bigger welfare cuts and change tax bands to meet its targets of a €3.5bn adjustment in the nation’s finances next year.
The Government is planning €2.25bn in further spending cuts and €1.25bn in new taxes to meet the bailout agreement target of a deficit of 7.5pc of Gross Domestic Product in 2013.
The details of the Budgetary measures must be revealed and passed by the troika members as the Government accepts former pre-Budget secrecy measures not longer apply.
The Government in the recent past has promised the troika members a range of measures to meet its targets, including:
further increases in alcohol and tobacco;
reductions in tax-related cost of private pensions;
more changes in PRSI;
increases in motor tax;
higher carbon taxes;
hikes in Capital Gains Tax and Capital Acquisitions Tax.
The troika is believed to be unhappy that ministers appear to be taking the politically easy measures of cutting capital spending in favour of deeper cuts in day-to-day spending.
The international experts also believe the Government is not tough enough on unemployed people who refuse to look for work.