WHAT’S IN THE 2012 BUDGET!

As part of the EU/IMF deal, the Government will now be forced to raise income taxes despite giving commitments to the contrary in the Programme for Government, The Sunday Business Post reports in its main front-page article.

The Government will use the December Budget to reduce income tax bands and credits as part of a €1.5 billion tax-raising exercise agreed with the EU/IMF, even though this is in direct contravention of the Programme for Government.

“The new Government will maintain the current rates of income tax together with bands and credits,” the Programme promised.

It now looks like a promise the Government can no longer keep. The newspaper says the revised agreement between the EU/IMF/ECB Troika published by the Department of Finance last week “bluntly contradicts this”.

“While income tax rates will be maintained, it stipulates that the December budget will include ‘a lowering of personal income tax bands and credits’ … such a move would increase the amount of income tax paid by all taxpayers. In addition, the agreement also says that further reduction in bands and credits will occur in the following year’s budget,” writes Political Editor, Pat Leahy.

In a longer analysis piece inside, Leahy gives further details of the agreement reached last week – which seems to have been missed by the other newspapers.

“So we know that – despite election promises and the Programme for Government – the budget to be delivered at the end of this year will see tax bands and credits reduced (it’s on page 32 of the document), increasing the slice of each person’s income the state takes in tax; a reduction in pension tax reliefs; a property tax; changes in capital gains tax; an increase in carbon tax combined with cuts in social welfare and other spending which will raise ‘at least €3.6 billion’,” Leahy writes.

“The following year’s budget (for 2013, delivered at the end of 2012) will see an increase in the property tax and will raise between tax increases and cuts, at least €3.1 billion.”

A Department of Finance spokesman said spending cuts could offset some of the proposed tax increases but whether the troika agrees to this would be quite a different matter.