Irish government prepares public spending cuts, lay-offs

The revelation comes as little surprise. Ireland has been hit in recent months by the global economic downturn, with a recession looming after a long period of economic expansion. Government finances have suffered, with an estimated 4 billion euro reduction in tax revenue resulting from stagnation across the economy, but particularly in the construction and property sectors. Overall, it is thought that the government will face a shortfall of 7 billion euros. Across-the-board cuts are anticipated from finance minister Brian Lenihan when the budget is announced later in the year, as well as an increase in borrowing.

This could force the government to exceed the limit placed on borrowing by the EU of 3 percent of GDP.

However, with the sum of the shortfall being so large, further measures would have to be taken. While most have ruled out income tax and VAT increases, there are a number of alternatives that would prove equally harmful to working people.

Cliff Taylor, writing in the Sunday Business Post, explained: One such way is by not fully indexing tax bands and credits for inflation, which effectively raises more cash as peoples incomes rise. This happened the last time the exchequer finances were squeezed after the last election and may well happen again. The full year cost of indexing bands and credits is around 500 million, a not insignificant sum.

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