Statement on the Budget

we have known for several months that today’s
budget will be difficult. Many of the decisions that have been made are unpalatable and may prove extremely unpopular. Other measures are been adopted in this budget that give hope that economic certainty may still return.

The most obvious green contribution to this budget is the historic introduction of a carbon levy at €15 euro a tonne and this will apply to all fossil fuels. It is been introduced on a phased basis, transport fuels increasing immediately as of this evening. Liquid fuels and home heating fuels are to increase on the 1st of May. Solid fuels, coal and peat are to be introduced on 1st of September.

As part of our long standing policy, this levy will provide badly needed funds for future retrofitting of housing to become more energy efficient, social supports to prevent fuel poverty and initiatives in areas such as rural transport.

Our party leader, Minister for the Environment, John Gormley, will go into greater detail on this on Friday when he introduces the Carbon Budget to Dail Eireann.

Another interesting initiative is, while reluctantly accepting a car scrap page scheme. This has been limited to cars in classes A and B which are the most environmentally friendly vehicles and further incentives for electric cars to be exempt from VRT and for hybrid cars to qualify for up to €2,500.

While this budget has been limited in terms of taxation measures, it has highlighted the road map we will follow in terms of bringing greater equity into our taxation system. The minimum tax rate for incomes over 150k is to increase 30% and this does not include health levy and income levy contributions.

The abuse of tax residency is been further tackled with the induction of a domicile levy of €200,000 for those who earn incomes greater than €1 million outside of Ireland and have €5 million worth of assets in Ireland.

We are anticipating that several tax reliefs will be ended when the finance bill will be published in Jan 2010 and these will also affect high income earners.

The Minister has also signposted his intention in Budget 2011 to remove in its entirety the PRSI sealing of incomes over €75k. Also announced is the intention to tax from them pension lump sums and a standardisation of tax relief of private pension to 33%.

These taxation measures allow for some important employment initiatives to be in place to help reduce our unexpectedly high levels of unemployment. A twelve month PRSI holiday for employers will be introduced upon the creation of new employment for anyone who has been on the unemployment register for longer than three months. The tax holiday for newly starting businesses with profits of no more than €60k is to continue in 2010. Young unemployed workers will be given greater options in terms of employment training opportunities.

Unfortunately, this has been a budget that has been about addressing our deteriorating our public expenditure situation. The two budgets of 2008 took €8 billion out of the economy. Approximately €4 billion each in terms of public expenditure cuts and additional taxation measures such as income and pension levies. The priority in this budget has been trying to ensure that our level of public expenditure could be further reduced to reduce our dependence on borrowing.

This has lead to the most controversial decisions in this budget in relation to public sector pay and reductions in social welfare. In relation to social welfare we have sought to protect pensioners where no cut has been affected and we have ensured that the cut in child benefits is only carried by those for whom child benefit has been additional income while protecting those on social welfare or dependent on support such as family income supplement. The 4% cut in all other social welfare payments is perhaps the most difficult to accept, initial demands were that a higher level of cuts should be made only after difficult negotiations were we able to reduce it to this figure. It means that those dependent on social welfare will be reverting to a standard of living that existed in 2008. Given that our level of income is now at 2003 levels, this was felt to be the best that could be achieved on the basis that is a once off adjustment and this will begin to be corrected in budget 2011 onwards.

The collapse of talks between public sector unions has meant that while it would have been preferred to have secured agreement the level of savings that both Labour and Fine Gael agree with the Government has instead had to impose the measures included in the budget. Every effort has been made to ensure that these measures are proportionate and that those on higher salaries will lose proportionately more than those on lower salaries. Again this is seen as a once off adjustment.

The half a percent decrease in the rate of VAT will have a further deflationary effect that will help decrease prices. Some may be surprised by the measures been proposed in relation to excise duty and alcohol which seem to encounter the previous policy of pricing alcoholic prices in relation to there health costs to society. Those who live near the border with Northern Ireland will be aware of the extent to which alcohol has been used to attract tens of thousands of shoppers from the Republic to shop in Northern Ireland. That is resulting in a huge cost in terms of jobs and incomes here. It is hoped that this measure will help reverse the trend.

In the coming days, further details will become apparent as to how The Green Party has impacted on this budget in particular in departments where they has been party ministers. There is continued emphasis on water quality and protection measure especially in the light of the recent flooding, energy conservation, renewable energy, innovation and the green smart economy. Agricultural supports in particular to forestry are all real Green achievements in what could possibly be the most difficult budget in Irish political history.

Yours,
Dan Boyle