People of Ireland have taken to the streets in protest of some of the more dramatic Ireland budget cuts proposed. (Photo Credit: CC BY-SA/William Murphy/Flickr)
The Obama administration certainly has a tough road ahead as it looks for ways to balance the U.S. budget, but imagine what it must be like for Ireland’s Taoiseach (Prime Minister) Brian Cowen and Finance Minister Brian Lenihan. They had to design austerity measures aimed at keeping their entire nation from careening into bankruptcy. To help solve the Ireland debt crisis, Cowen and Lenihan have come up with a wide range of Ireland budget changes amounting to a massive $20 billion cut over the next four years, reports the BBC.
Ireland budget cuts, massive bailout deemed necessary
Among the $20 billion Ireland budget cut measures planned are government spending cuts, tax increases, a reduction of Ireland’s minimum wage, the introduction of a new property tax and thousands of public sector job cuts. In addition to Cowen and Lenihan’s severe budget package, the Irish government is expected to negotiate a bailout with both the European Union and the International Monetary Fund that should be worth about $113 billion.
Nearly 25,000 public sector jobs to be cut
Cutting 24,750 public sector jobs, cutting social welfare spending by $3.7 billion and upping the income tax to generate about $2.5 billion are key parts of Cowen and Lenihan’s plan to staunch the bleeding of the Ireland debt crisis. Minimum wage would be decreased by $1.34, down to $10.23 per hour. The value added (consumption) tax would increase from 21 to 22 percent in 2013, then to 24 percent in 2014. Furthermore, a property tax the Irish plans calls a “site value tax” would cost homeowners up to $267 more per year by 2014.
So as not to drive business away, however, Ireland’s 12.5 percent corporation tax – which is relatively low by European standards – would not be increased by the Ireland budget cuts austerity plan.
Hope and conflict
Taoiseach Cowen said he hoped the Ireland budget cuts would “make sure (the people) have hope for the future,” but opposition parties are circling in already bloody financial waters. Calls for a general election to shake up the government have resounded, but Cowen has refused to comment on this before parliament votes on his austerity plan Dec. 7.
“Then the people can decide who they want to govern the country,” said Cowen.
