Monday, December 6, 2010

Ireland spending budget slashes contain a difficult $20 billion

The Obama administration definitely has a tough road ahead as it looks for ways to balance the U.S. budget, however imagine what it must be like for Ireland’s Taoiseach (Prime Minister) Cowen and Finance Minister Lenihan. Austerity measures drawn up by Ireland’s leaders may be unpopular, but they could be just what Ireland needs. To help solve the Ireland debt crisis, Cowen and Lenihan came up with a wide range of Ireland budget modifications amounting to a massive $20 billion cut within the next four years, reports the BBC.

A huge bailout for Ireland may be the only way

Among the $20 billion Ireland budget cut methods prepared 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.

An expected 25,000 jobs cut within the public sector

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. A boost from 21 to 22 percent in 2012 and then to 24 percent in 2014 could be added to the value added or consumption tax. By 2014 homeowner taxes are expected to boost by $267, also known as a site value tax.

So as not to drive business away, however, Ireland’s 12.5 % corporation tax – which is relatively low by European standards – would not be increased by the Ireland spending 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. The people of Ireland want to change the government in hopes of fresh minds helping the nation, but the austerity plan could be voted on, on December 7 and Cowen won't let anything happen until after that date.

“Then the people can decide who they want to govern the country,” said Cowen.



Back when 6 billion euros sounded good

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