The Government has warned of further indirect tax rises following the biggest spending cutbacks in a decade. Speaking yesterday following the publication of the Estimates, the Tánaiste ruled out income tax increases in the coming Budget but signalled that some taxes will rise.
She said that some increase in indirect taxes, such as excise duties on tobacco and alcohol, was likely. However, the Government would not delay lowering the corporate tax rate to 12.5 per cent and she ruled out any increase in income tax.
"The PDs will not accept any increase in tax on employment," she told journalists at a ministerial meeting in Brussels.
Third-level education costs, health insurance rates and local authority charges are set to rise as a consequence of the Minister for Finance pegging next year's increase in Government spending at 2 per cent. This represents a cut in real terms, because inflation next year will top 4 per cent.
The Estimates feature a litany of backtracking on election promises. The Opposition says these promises have been now been broken but the Government insists they have merely been "deferred".
Capital spending has been slashed as part of a plan to hold spending next year at €29.6 billion. All but one frontline department - Health - face a cut in real terms because Budget increases are at, or less than, next year's projected inflation rate.
The Taoiseach, Mr Ahern, defended the cuts last night, saying: "We had to be realistic about what could be afforded in the light of the downturn in the international economy".
A number of new charges to make up the shortfalls have already been revealed and more are expected. A 9 per cent fare increase for CIÉ has been sanctioned and the threshold for the drugs refund scheme is to be increased for the second time in four months, meaning patients requiring significant amounts of prescription drugs each month will have to pay more for them.
The cost of occupying a private hospital bed is to rise, while local authority charges are also likely to be increased. Higher hospital bed charges will almost certainly translate into increases in medical insurance premiums.
There is growing speculation that the December 4th Budget may introduce further "stealth taxes", possibly through increasing the tax bands at a rate slower than the pace of inflation.
Acknowledging cuts in the promised level of public services, Mr McCreevy stated baldly that the promised funding of the €10 billion health strategy "cannot be addressed at this particular time, and won't be addressed next year or the year after".
The allocation to hospitals suggests beds may close during 2003. Fine Gael said yesterday such a development would be a "farce" at a time when the Government was flying people abroad to have treatment under the National Treatment Purchase Scheme.
The first-time home-buyers' grant has been abolished and the promised increase in the numbers eligible for medical cards will not happen next year.
The completion of the Luas light rail system for Dublin will be delayed and no work will begin on the promised metro system for the capital. Other road and rail projects promised in the National Development Plan will be delayed for several years.
Repairs and extensions to existing schools - many promised during the election campaign by individual Fianna Fáil TDs - will now be put on the long finger.
Pledges on child benefit are unlikely to be met.
The Estimates will make the agreement of a new social partnership deal even more difficult.
The general secretary of the Irish Congress of Trade Unions, Mr David Begg, last night reacted angrily, condemning the abolition of the first-time home-buyers' grant and what he called inadequate increases in spending on health, education and other areas.
In a move that will further anger public service unions, there is no provision for any payment of the benchmarking pay awards to public servants, although the Minister said this issue might be addressed in the Budget on December 4th.