The level of the savings needed in the 2011 Irish Budget are likely to be decided this week. After recent consultations with the EU Commission – the Cabinet are having a special meeting today to discuss the Budget requirements.
Last week – talks between the Taoiseach and the main opposition leaders about Budget targets ended without reaching a consensus.
The major decision is whether to aim for a reduction in the deficit of around €4.5 billion next year, or to aim for bigger savings of around €6 billion to try to reassure the financial markets.
Severe cuts in spending and increases in tax could drive the economy further downwards though . Green Party ministers are believed to be arguing that the figure for 2011 should be held to around €4.5 billion.
Between now and 2015 – overall budget cuts/savings of €15 billion will be needed in order to reach the EU target of budget deficit of 3 per cent of GDP
Some form of property tax is still possible in the 2011 Budget on December 7th . A flat rate would be the simplest option – with the possibility of changing it to be based on valuation in the future.
Water charges are still on the agenda – but maybe for for 2012 or 2013
For this December’s budget, big cuts in tax credits are also thought to be likely – rather than increases to actual rates of income tax.
A VAT increase may also be on the cards as well as Social Welfare and pension cuts. Social Welfare spending could be cut by as much as €2 Billion.
Mary Harney has also already stated this month that Budget 2011 cuts in the HSE could be between €600 million and €1 billion.