Fallout of The 2009 Irish Government Budget - Important Budget Features

Important Budget Features

Irish government budget for 2009 introduced a number of new proposals which generated controversy in the weeks that followed. Ultimately a number of these proposals were either altered or abolished entirely.

The initial announcements included:

• A new levy of between 1% and 2% on all incomes.
• Excise duties on cigarettes, wine and petrol all increased. The price of 20 cigarettes and bottles of wine were both increased by 50c. The price of a litre of petrol increased by 8c. Betting tax doubled to 2%, whilst motor tax increased by between 4% and 5%.
• DIRT rates, motor tax and VAT all increased. The standard rate of VAT rose by 0.5% to 21.5%, whilst DIRT rose 3% to 23%.
• Automatic entitlement to a medical card for the over-70s was abolished.
• Old-age pensions increased by €7 per week.
• Limitations were placed on entitlements to child benefit and childcare supplement.
• A €200 levy was imposed on employer-provided parking spaces in urban centres.
• 41 state agencies and bodies were to be abolished, amalgamated or privatised.
• There was to be a slowdown in decentralisation.
• Stamp duty on ATM cards was halved, paid for by an increase in stamp duty on cheques.
• Extra stamp duty relief was announced for first time buyers as was an increase in the size of local authority mortgages, and a cut in stamp duty on commercial property.
• Ministers and Ministers of State took a 10% pay cut.

Lenihan expected the economy to decrease by 1.5% in 2009, as measured by GNP, with GDP contracting by 0.75%. He suggested that unemployment would increase to 7.3% but inflation would decrease to 2.5%. He suggested a budget deficit of 6.5% of GDP in 2009, (compared to the EU limit of 3%). Current spending was predicted to rise by 1.8%, with a current deficit of just over €4.7 billion and a capital deficit of €8.7 billion expected.