* Budget agreed, exact tax figures yet to be signed off
* High value properties to be hit by "mansion tax" -source
* Minister says budget will depress domestic demand
By Padraic Halpin
DUBLIN, Dec 2 Ireland's government has agreed on
its latest austerity budget to be delivered on Wednesday, and
will keep election promises on maintaining social welfare and
income tax rates, a senior minister said on Sunday.
Finance minister Michael Noonan will detail 3.5 billion
euros ($4.5 billion) of tax hikes and spending cuts in the
country's sixth and toughest austerity budget since late 2008 as
it attempts to exit an EU/IMF bailout next year.
Dublin has said it will make 1.7 billion euros of the
adjustment through public spending cuts, with a further billion
coming from fresh tax measures, although transport minister Leo
Varadkar said the final tax figures were yet to be signed off.
"The good news is peace broke out at around 10 o'clock last
night. We have a budget and the details of that will be
announced on Wednesday," Varadkar told Newstalk radio, referring
to a cabinet meeting on Saturday.
"We all know the shape of it, but whether it's 1.1 (billion)
or 1.2 or 0.9, the detail of that will be kept very tight until
The government has already said it will raise much of the
revenue through a property tax, and a source close to the budget
talks told Reuters that this will include a higher rate, or
"mansion tax", on homes valued over 1 million euros.
Varadkar said some income tax exemptions and loopholes would
be closed, and in a hint that pensioners may be hit, said a
system in which a married couple in their 40s taking home 60,000
euros a year pay far more tax that a retired couple earning the
same could be seen as unfair.
The coalition's promise upon entering office at the start of
last year not to touch the basic rates of social welfare or
income tax still stands, he said. But he questioned whether that
would be the case in a year's time.
"The question does arise as to how long we can hold to that
commitment of not reducing welfare rates and not increasing
income taxes," he said.
With spending cuts and tax hikes worth 25 billion euros
already made - equivalent to 15 percent of annual output - and
Ireland relying on exports to spur growth, Varadkar said the new
measures would inevitably depress domestic demand.
"It's not the biggest or harshest budget we've had, far from
it. But it's on top of four or five very difficult budgets, and
as a result of that, people will less money in their pockets in
the new year," the minister said.