The 2009 budget in ireland was announced on October 14th 2008. Following the complete collapse of their property driven tax base and the recent €400billion bailout of their banking system, the Minister for finance Brian Lenihan has placed an additional 1% income levy on all workers.
In what effectively amounts to a 2.5% increase in the income tax rates (a levy is paid on every cent earned including your tax credits), the government hopes to plug a huge gap that recently appeared in the national finances.
Bad news for poor families in Ireland
Despite saying that the “vulnerable must be protected” in the run up to the budget announcement, Mr Lenihan has proceeded to tax the tax credits of low paid workers. Everyone, including those on or below minimum wage will be hit by the levy.
Property Bubble in Ireland
The current crisis in global financial markets is acutely worse in Ireland. Despite warnings from the OECD and the domestic Economic and Social Research Institute (ESRI) the Irish government continued to offer tax incentives to developers to increase production of housing while on the otherhand repositioning the tax base so that it was more and more dependant on that same housing production. A false economy by any standards. It may have won them the Irish National General election in 2007 but the crisis now unfolding will take decades to recover from in Ireland.