Income tax and motor tax are to increase in the December budget along with cuts to social welfare that will hit payments to the elderly.
A document from the Minister for Finance Michael Noonan to the EU/IMF outlines the Government plans for the December Budget.
Increasing the income tax take, increasing motor taxes and increasing excise duty on items such as alcohol, cigarettes and fuel are all on the cards.
The Government will also replace the 100 household charge with a full property tax based on the value of a home.
These tax measures will raise €1.25b in extra income for State coffers. On top of this, the minister for Finance said he will slash spending by €2.25bn through cuts in social welfare, reducing pay and pensions and cutting capital projects such as roads and other construction projects.
The memo confirms comments made by Junior Minister Kathleen Lynch to the Evening Echo and the Taoiseach Enda Kenny at Béal na mBláth that this budget will be the toughest ever faced by the country since the economic crisis hit in 2008.
In relation to social welfare, Minister Noonan made particular mention of containing “age-related” spending, suggesting pensions could be hit in the budget.
The Government is also considering hiring private companies to get people back into work.
Welfare payments will also be restructured to avoid situations where a person is better off not working and staying on the dole.
It will mean rent allowance will no longer be paid by the Department of Social Protection but instead by housing authorities.
Money will be used on “job-rich” projects to help create employment.
The new property tex will be based on hose valuation rather than square footage and water taxes will be introduced at the end of next year.