Dublin announces new EUR 3.5 bn austerity budget

(DUBLIN) - Bailed-out eurozone member Ireland on Wednesday launched its sixth consecutive austerity budget which seeks to claw back 3.5 billion euros ($4.5 billion) via painful taxation hikes and public spending cuts.

Irish Finance Minister Michael Noonan, unveiling his latest budget before parliament, said however that there were clear signs that the worst of the financial crisis was over for the stricken eurozone nation.

"There are manifest signs that the country is emerging from the worst of the crisis," Noonan told lawmakers.

He added: "The economy grew last year, will grow this year, and will grow again next year. The effort of the Irish people, despite the hardship, was leading to success."

Noonan revealed that the big-spending departments of health and social welfare would bear the brunt of the cuts.

He confirmed the introduction of a politically sensitive property levy, with an added "mansion tax" for houses valued over one million euros.

And the minister also announced a ten-point tax reform plan to encourage small and medium-sized enterprises, a key driver of employment in Ireland.

However, Noonan repeated his pledge to keep corporation tax -- which is levied on company profits -- at a eurozone low of 12.5 percent, despite international pressure to raise it.

Debt-plagued Ireland was bailed out with an 85-billion-euro EU-IMF rescue package in November 2010 after it was devastated by the global financial crisis and a domestic property market meltdown.

As part of the rescue deal, Ireland agreed to painful austerity measures including spending cutbacks, state asset sales and tax hikes.

This week's budget is the latest aimed at bringing the deficit down to less than the EU ceiling of 3.0 percent of gross domestic product (GDP) by 2015.

Dublin aims to reduce the deficit to 7.5 percent of GDP in 2013. This year, Noonan said it would come in at 8.2 percent, well within the 8.6-percent target set by the bailout programme.