The Irish government has resorted to a number of tax hikes and spending cuts
in order to restore balance to its budget by 2013.
Income levies, introduced last autumn, were doubled, and the thresholds they
apply were lowered.
While capital gains tax and capital acquisitions tax were raised to 25%, the
low 12.5% corporate tax rate – a key driver for economic growth in Ireland – was
In all, the budget will show a deficit of 10.75% of gross domestic product
this financial year, and will blow out to nearly 13% next year.
The European Commission has given Ireland until 2013 to rein in its deficit
to the allowable level of three per cent of GDP.
Irish newspapers described the budget as the harshest in living memory.
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