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Budget 2009 – my thoughts!

The Department of Finance release 150 pages of disastrous news for the country last Tuesday evening. The country is going to be crushed with extra taxes and reduced benefits for the next couple of years. The only light that seems to be at the end of the tunnel could be seen in the long lines for Lotto tickets the next day for Wednesday nights €10m Lotto jackpot draw.

Winning the Lotto is about the only way left to make money in Ireland without the Government taking a huge chunk out of it. That and being lucky enough to have picked Mon Mome to win the Grand National at 100/1 last Saturday.

In a budget where the man on the street was hammered by a reduction in take home pay of up to 9%, Minister Brian Lenihan gave a complete lie to his pre-budget promise of providing a fair budget that would take equally from everyone. For many of us who are already either losing our jobs or having to take even bigger pay cuts to stay working, the Minister really showed that he’s still really only out to look after his parties political friends.


And worse, in a radio interview on Wednesday morning, the Minister then rubbed our noses in it even further when telling us that it’s all our fault.

Nothing then to do with Government mismanagement of the economy for the past 7 years, or the fact that the banks and developers were allowed create debts so large and unmanageable that no one now except the Government can sort things out – with our cash.

It’s our fault, according to the Minister, that he had to raise taxes because we were all doing our shopping up north. He seems to be forgetting that he almost forced us to do that by raising VAT at a time when it was being decreased by the British government.

Silver Lining

So was there anything in the budget documents that that could give us even a glimmer of hope for the coming years?

The shocking answer is that there is nothing, nada, zilch. The best that can be said about Tuesdays budget is that it could have been worse, for now. But it will be getting worse in 2010 and 2011 based on what the Minister had to say.


No one has escaped this budget – from the low paid who are now having to pay tax where they didn’t before, to those on social welfare where even the simple act of cancelling the Christmas bonus is the equivalent of a 2% cut in payments.

The common consensus before this budget was that the Government needed to do whatever possible to get people spending money again to give the economy a boost. Yet all that the Minister has done is remove even more money from our pockets which will probably even further reduce demand for goods and will probably mean prices will fall even further.

Ah, a positive eventually – cheaper good, if we do decide we want to spent what little money we have left.

But falling prices are bad for business and ultimately bad for employment so it’s a never ending spiral of bad news we’re facing.

Even if we decided, which would be to the dismay of the Government, we can’t afford to spend as much as before, they’ve managed to screw us on our savings as well. The DIRT tax, a tax on the interest you make on your savings, was increased from 23% to 25%. But that stingy measure will only bring in a measly €70m in a full year.

What can be done?

Unfortunately, with a couple of exceptions that I’ll come back to later, we’ve just got to suck it up and move on. We can, and should, let our politicians know what they’re doing to us – write them a letter or send them an e-mail. We’ll have an opportunity with the local and European elections coming up to give them a strong message about how we think they’re treating us.

To find out more about the impact the budget will have on you and your family, you can call the Revenue or any of the particular Government departments you deal with such as the Department of Social and Family Affairs.

Don’t forget though, that there are still ways to get some of your tax back from the government. You can claim tax relief on certain expenses you have during the year such as medical and dental costs, rent and refuse charges.

If you have a budget for how you spend your money, you should review this to take into account your drop in income. If you don’t have a budget, you can very quickly set one up by simply writing down all your monthly expenses set against your income. It’s quite likely that you’ll need to cut your spending across different areas – many of the areas I’ve covered here recently such as mobile phone and tv costs, electricity, gas and grocery shopping.

For many of us it’s going to be very worrying when we sit down to check out the full impact of the budget on our finances. Depending on our circumstances, we’ll be worse off by between €600 and €6000 per year. You shouldn’t avoid or delay checking your finances following the budget – some of the changes were implemented immediately (diesel and cigarette increases) on Tuesday night and you could be paying out extra already.

2 comments On Budget 2009 – my thoughts!

  • They should just scrap public sector pensions altogether. That, or reduce the number of them (not front line staff – the admin side)or, god forbid, their wages (the average public sector worker earns almost a grand a week!)

    The only saving grace is that if things get any worse the IMF will have to come in and you can be sure they will make the spineless politicians grasp the public sector nettle.

  • my amendments to the budget –

    Start at the top – instead of cosmetic changes to TDs perks, a purge. For example, Dublin deputies get tax free ‘turning up’ money of €61.33 per day and this was reduced by 10%! Scrap it. no other workers are paid by their employers on top of salary to turn up for work. Scrap allowances for chairing committees as opposed to reducing them. No individual state cars and drivers for ministers – car pool used as required. Releases gardai drivers to fight crime. All expenses to be vouched and within guidelines (plenty of unemployed accountants around to do this in return for dole)
    TD salaries reduced to what they were earning in the real world ->big savings. Some TDs do have ability while the majority have little so why should they be paid the same? Why should a young one like Mary Coughlan elected straight out of college as her dad was a TD get the same as say Joan Burton or Richard Bruton? In fact Coughlan gets more as she is Minister for Enterprise (a very black joke) that.

    If we feel the Dail is taking some ‘pain’ then we might also.

    Public sector salaries should be capped at €100,000 and pensions at €50,000 per person with existing pensioners pensions being reduced where they are over the limit. Oh the pain for Bertie, ex presidents etc. Judges and consultants wont like this.

    Sick leave entitlements in public service should be slashed. Only a minority abuse but it has a cost in covering. Abolish full pay on maternity leave for public servants – just PRSI maternity pay as most workers get. In fact state could then perhaps afford to employ cover if they are not paying full pay to their employee on leave ie job creating!

    Targeted early retirement for public servants on capped pensions. No point in losing good people. Compulsory redundancy with good package for irrelevant public servants if they cannot be used in a different state body.

    Reduce VAT to 15% and 10% and have big campaign to shop local (not using consultants but existing civil servants).

    Restore Xmas bonus to those on means tested benefits. Many pensioners have other income in addition to the contributory state pension so loss of bonus does not cause hardship. It does where the state payment is their only income.

    12.5% corporation tax rate should not be sacred. Consider 15%.

    review payments to ‘single’ parents. It takes two. What efforts are made to get a contribution from the father. How many are actually cohabiting and working the system. Why should a married mother have to return to work if the money is needed whereas a ‘single’ mother is entitled to a state payment not to work?

    When dole (ie related to PRSI contributions) has run out I understand means tested social welfare is paid to EU (non Irish nationals). With 70,000+ unemployed being non Irish EU nationals can we bill the cost of means tested benefits to the relevant EU state in return for paying them for irish citizens there? Our benefits are attractive to EU nationals and this will become an increasing burden.

    The Budget took the most (relatively) from those in the €40,000 – €100,000) category, mainly families, mortgaged and with children – a large group that spends. The levies need to go, the seven year interest restriction reversed. This large group needs to be able to spend again.

    health – why not give all the chance to buy a medical card – dont know what the rate would be but feel many would welcome the chance to have the security – and brings in funds for HSE without pain to anyone.

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