Deficit-hit Ireland slashes salaries, welfare pay

[The Northerner]

DUBLIN — Ireland slashed pay for state workers, cut welfare benefits and imposed new environmental taxes on fuel Wednesday as it unveiled a record euro4 billion ($6 billion) in budget cuts to combat a runaway deficit.

Finance Minister Brian Lenihan said about 400,000 state workers — a fifth of the country's work force — would suffer pay cuts ranging from 5 percent to 15 percent and Prime Minister Brian Cowen will cut his salary a full 20 percent.

The plan — Ireland's biggest budget cut in history — aims to save more than euro1 billion ($1.47 billion) in salary cuts alone next year.

"By taking the difficult but necessary measures now, we will rebuild our nation's self-confidence here at home and our reputation abroad," Lenihan said.

Lenihan said the drastic measures were needed to put a dent in a deficit projected to top euro22 billion ($32 billion) this year, to restore Ireland's lost competitiveness as a base for foreign investment in the 16-nation euro currency zone and to stop a rise in unemployment that has reached 12.5 percent.

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[KT2000]

1. it is my understanding

that Ireland has one of the lowest corporate tax rates in the world.

[fasttense]

2. Why is the solution to national budget problems always fall on the backs of the middle class

and poor? Why don't they ever raise the uber wealthy's taxes 50%? Increase tariffs? Charge an extra 10% tax on stock trades? Tax inheritance and dividends much, much more?

This is so crazy, with a 12.5% unemployment rate they fire federal workers. That's like throwing water at a flood. Next they will be starting fires to prevent them.

But it gets better:

"The finance chief also unveiled euro760 million ($1.1 billion) in annual cuts for Ireland's relatively generous welfare system, while the struggling health service also suffered a euro400 million ($588 million) cut in services.

He also unveiled a new regime of "carbon taxes" on various fuels to generate an additional euro500 million ($735 million) annually. The new taxes will immediately raise the price of all fossil fuels, including gasoline, diesel, coal and even Ireland's bog-cut turf bricks, a major source for generating electricity here.

"Changing behavior takes time, but a start has to be made," he said.

Lenihan sought to offer one boost to public morale by cutting taxes on beer, wine and liquor. Ireland has the highest rate of alcohol consumption among major European nations, and sales in pubs and liquor stores represent an exceptionally high percentage of its economic activity."

So fire a bunch of federal workers, up their cost of living by increasing the cost of energy and give them all cheap liquor. Wow, just plain crazy.