Child benefit and social welfare hit in Budget 2011

“With this budget we can get back to economic health in a stronger and fitter economy,†stated Minister for Finance, Brian Lenihan, when he introduced his budget in the Dail yesterday, Tuesday. However, Fine Gael Finance spokesman, Michael Noonan, accused Fianna Fail of being like the Bourbons “learning nothing and forgetting nothingâ€. Mr. Noonan claimed that the new budget had failed to include any measures for job creation and the restoration of the economy. As predicted the budget revealed cuts in Social Welfare and Child Benefit, the introduction of a new universal social charge which consolidates health levy and income levy into one charge. It will be levied at 0% below €4,000 a year, 2% up to €10,036, 4% from €10,000 to €16,016 and 7% above that level. The minister said that a recovery was taking place in the real economy, with exports up by seven per cent in the first half of the year and manufacturing output up by 12% in the third quarter. Tax revenues were ahead of target and spending had been brought under control. Actions to stabilise the public finances were being progressed and he forecast a return to growth shortly. Mr. Lenihan said that social welfare spending was now twice what it was in 2000 with state pensions having doubled during that time. It was clear that the state could no longer maintain this level of social provision. There will be no reduction in the state pension. However, for those of working age who are in receipt of social welfare there will be a reduction of four per cent. There will be a €10 reduction in child benefit for the first and second child and an additional cut of €20 for the third child. In view of the harsh weather conditions the government was contributing an additional €14 million to the fuel allowance scheme, which would represent a sum of €40 to those in receipt of social welfare payment. Minister Lenihan announced an additional 15,000 training places and revealed a series of internships with the private and public sector, which would have 5,000 places respectively. There would be an additional 5,000 work places for the community and voluntary sector. Mr. Lenihan complemented the commitment of those who work in the public service. However, the cost of delivering public services had to fall further. Despite the economic constraints the government would abide by the Croke Park agreement on pay. The taoiseach's pay was now being further reduced by €14,000 while ministers' pay was being cut by €10,000. There will be a 10% reduction in salary for those joining the public service. Public service pensions above €12,000 were now being reduced by four per cent. Those in higher pensions would pay most, he said. The minister described the Irish taxation system as not being fit for purpose. Those on the new minimum wage will not be brought into the tax net and there would be a top rate of 52% for all taxpayers. In relation to the universal charge Mr. Lenihan said that everyone would have to make a contribution as it was separate from the income tax. The minister explained that under his revised taxation measures a married couple with no children earning €25,000 a year would incur a reduction of €12; while in the case of a family with two children earning the same amount the reduction would be €5. Petrol is to increase by 4c a litre and diesel by 2c a litre. The €10 air travel tax is being reduced to €3.