Childcare to suffer in tough budget

by Shaun Connolly and Paul O’Brien TAOISEACH Brian Cowen yesterday braced the nation for an austerity budget set to hammer hard-pressed families with a double blow of tax rises and childcare cuts. Mr Cowen warned he had no way of avoiding the “tough” decisions dominating tomorrow’s budget as the plunge in the nation’s finances had forced his hand. As well as a reduction in the childcare supplement and an possible income “levy” of 1%-1.5% on wages of upper middle wage earners, a big increase in DIRT tax was on the cards, while Green energy minister Eamon Ryan refused to be drawn on a mooted Cabinet pay cut. However, it appeared households already reeling from the credit crunch would be spared a new carbon tax. Finance Minister Brian Lenihan set the tone for the starkest budget for a generation by invoking the language of the Great Depression with Franklin D Roosevelt’s phrase: “We have nothing to fear but fear itself.” The Taoiseach used Fianna Fail’s annual Wolfe Tone commemoration at Bodenstown, Co Kildare, to announce he had been forced to make choices he wanted to avoid. Multi-billion euro spending cuts were set to fall across all Government departments, while means testing for child benefit and medical cards for the over 70’s had not being ruled out. A EUR10 per flight short haul air tax and increased medical and health charges were also set to feature. A temporary “levy” on PAYE and self-employed workers is being considered by Mr Lenihan as a key way to help cover the projected EUR14.8bn black hole in finances for 2009. Labour finance spokesperson Joan Burton questioned the honesty of calling it a “levy”, saying “it might be more honest if they were to actually call it a tax rise.” The EUR1,000 a year supplement to help pay for care for children under six looks like a prime target, as does child allowance itself. Controversially, the lottery-funded EUR85m capital grants pot for sporting facilities may be scrapped entirely with the cash diverted to health. Mr Cowen later flew to Paris for an emergency meeting of the Eurozone nations plus Britain.