HOSPITAL CHARGES are to rise sharply and tax reliefs on pensions and medical bills are to be cut today in the toughest budget for over two decades.
Minister for Finance Brian Lenihan is to finalise the last details of his package of measures at an 8am meeting with Cabinet colleagues. Emphasising that the Cabinet has taken difficult choices, Mr Lenihan insisted last night that the poorest individuals in society will be protected.
A 1 per cent levy - which will be declared a temporary measure - will be placed on all income, thus raising over €800 million annually. Tax bands will not be adjusted in line with inflation, while taxpayers will pay 4 per cent PRSI on earnings above the current €51,000 ceiling.
The decision to opt for a levy raises twice as much money as would be received from a similar percentage rise in the top rate of tax, which stands at 41 per cent.
Middle and higher-income earners will lose out significantly in the Budget, and many middle-income workers will find their tax bills increasing by €1,500 or more.
Taxpayers will, in future, only be able to claim standard rate tax relief on all medical and dental bills, rather than at the top rate as those paying 41 per cent tax can do today.
An increase in the existing 1.5 per cent health contribution levy for those earning over €100,000 a year is also thought possible when Mr Lenihan addresses the Dáil at 3.45 this afternoon.
Child benefit payments for children aged over 18 but attending university are to be halved. Child benefit, currently €166 a month, is payable for all children under 16 and for those between 16 and 19 with a disability or in full-time education.
Last night, it was indicated that child benefit for older children with disabilities would not be reduced, but that it would be halved for children over 18 who are still in education.
The €1,100-a-year childcare supplement, which is paid quarterly, will be reduced for all children under six.
Modest increases in basic social welfare rates are expected to keep weekly payments broadly in line, or slightly above, next year's anticipated 2.5 per cent inflation rate.
All hospital charges are to increase significantly - by 10 per cent in many cases, including charges to be treated in accident and emergency, or to have a private bed in a public hospital.
Despite the fee rises, the Health Service Executive will be forced to make serious cuts in existing services to stay within budget - which will be €400 million more than last year, but still not enough to meet extra wage bills and other costs.
Registration fees for third-level students will jump from €900 to €1,500, but real cuts in third-level college services are going to be required, while the situation will be equally tight at primary and secondary schools.
The Drugs Payment Scheme's monthly threshold, which currently means that individuals and families do not have to pay more than €85 a month for drug prescriptions, will also be increased significantly.
Significant savings are to be made in the Department of Agriculture's milk suckler scheme, which is entirely funded by Irish taxpayers and which had been scheduled up to today to pay €50 million to farmers by the end of the year.
Farmers had until March 31st to apply for the promised €80-a-head premium, but it is understood the figure to be paid will be reduced following talks between the Departments of Finance and Agriculture.
Ministers and Ministers of State are also intent on displaying pay restraint, though, so far, it is still unclear whether this means they will abandon hope of ever claiming last year's controversial rises, or whether they intend to cut existing salaries.
Ireland's overseas aid budget will fall by €14 million next year, but still hold about the €900 million mark. In percentage terms, the spending will match last year's because of the fall in the size of the Irish economy over the last year.
