Ireland's Budget.

Today, December 7th the government of the Republic of Ireland unveiled the budget that is designed to solve the country's economic crisis and is essential to secure an E85bn rescue package from the EU/IMF.

I have to say that this budget was nowhere near as brutal as I'd been expecting. Due to opposition pressure the government seem to have taken most of the pain themselves with a pay cut for government ministers, a salary cap for civil servants and efficiency savings like the replacement with the Income/Health levies tax system with an universal social credit which will save money by simplifying the tax system. This has allowed them to protect some of the most poor in society by leaving the state pension unchanged and taking minimum wage earners out of the income tax system.

However there is still plenty of pain to go around including;

• Lowering all income tax bands by 10%. Basically this means that lower rate taxpayers are now paying middle rate rate tax and middle rate taxpayers are now paying higher rate tax payers. This is actually quite fair because in a recession people normally end up earning less so unless the tax system changes the government loses a lot of money and needs to make even deeper cuts.

• Disability allowance cut by E8 per week. This means that people who are too ill to work will be paid 8 euros less by the government

• Carers allowance cut by E8 per week. The people who care for the disabled will also be paid 8 euros less by the government.

• Child Benefit cut by E10. The money the government gives to parents to look after their children will be 10 euros less a week.

• Student grants cut by 4%. The money the government pays university students to study will also be cut.

Even though in Britain, where the economic situation is not so bad, child benefit is being cut completely and the days of student grants have long since past these are still unpleasant cuts for Ireland to have to make. Unfortunately though the Irish economy is in an unpleasant situation and these cuts are the least worse option. The challenge now for the Irish government will be to get the Irish Parliament to pass this budget. This will take place in several stages. The tax elements of the budget should be passed in a vote by 00:00 GMT, the vote for the social welfare elements of the budget should take place on December 8th and the vote on the financial reform elements are scheduled to take place on December 9th. The omens are good that all elements will be passed.

While these dates coincide with the final days of the COP16 I don't think there is anything sinister about the timing. This budget is just a really important thing that Ireland needs to do now.