2011 Budget – Getting Closer

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.