Ireland Hikes Taxes, Cuts Welfare
DUBLIN – Ireland is cutting spending and hiking taxes in the hopes of stabilizing the national economy.
On October 15th the Finance Minister of Ireland Michael Noonan presented the plan for government’s budget for 2014, with more than EUR 2.5 billion in new revenues derived from tax rises and spending cuts.
According to the Minister “…one of the primary tasks of this budget is to lay down the conditions for a successful exit from the bailout program at the end of this year”.
The main tax changes announced in the budget are the introduction of a new bank levy based on the tax paid on deposit interest in 2011, and a 5 percent hike to the deposit interest retention tax (DIRT), currently set at 36 percent, charged on interest earned by individuals.
The new bank levy is expected to bring in an additional EUR 150 million annually for next three years, while the hike to the DIRT tax will raise EUR 100 million next year.
The Minister also said that from next year onward the government will eliminate a rule which had previously allowed some Irish registered companies to be considered as not having any tax domicile.
As part of a tightening of spending, the government will reduce some expenditures on social welfare programs, cutting inefficient programs such a current EUR 850 bereavement grant, and the telephone allowance for inmates.
The Finance Minister said that the new budget will facilitate stable long-term economic expansion and a return to a fiscal surplus, and government expects that by the the budget takes effect in January, Ireland will no longer require additional bailout loans from the International Monetary Fund, and the country will be able to resume normal operations on the international bond market.
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