Budget in doubt as Lowry, Healy Rae and McGrath threaten to withdraw support

Finance Minister Brian Lenihan warned failure to pass the Bill would put Ireland’s €85bn rescue package from the IMF and EU in danger.

“Any uncertainty, or worse failure, to have it (the Bill) enacted would have been damaging to Ireland internationally and could have jeopardised the arrangement we have reached with the EU and the IMF,” the minister said.

“This Finance Bill is being brought forward in an unprecedented set of political circumstances.”

Michael Lowry demanded a General Election be called immediately and warned he and Kerry TD Jackie Healy-Rae were unlikely to support the Finance Bill in its current form.

He called for changes to the Universal Social Charge – a new levy imposed in the Budget – to exclude medical card holders and civil servant pensioners.

Brian Lenihan has agreed to cut the rate imposed on medical-card holders, but said all of those who could afford to pay something, must do so, and did not entirely abolish the levy on those with medical cards.

“In the coming week, I will not participate in a charade designed, not for the national interest, but staged by those who want to gain party political advantage against a background of a collapsed and powerless Government,” Mr Lowry said.

“Stability needs to be restored and the only way that can happen is for a General Election to be called immediately.”

Fianna Fáil now lead a minority Government after coalition partners the Greens withdrew from power on Sunday.

The administration is relying on the backing of Mr Lowry and Mr Healy-Rae to help get the legislation through the Dáil. Support from rebel TD Mattie McGrath, who is resigning from Fianna Fáil to stand as an independent, is also not guaranteed.

Green Party leader John Gormley urged those opposed to the Bill to abstain on the vote.

Both Fine Gael and Labour have said they do not support elements of the Finance Bill and will table amendments, while Sinn Féin opposes it outright.

“They (the opposition) say they are facilitating this legislation, but they’re also saying very clearly that they’re going to vote against it,” Mr Gormley said.

“I think consistently demands that at the very least they would actually abstain on that legislation.”

Taoiseach Brain Cowen said he hoped there was sufficient support to pass the legislation to help send a signal that the country is still functioning despite the political flux of the last week.

“Albeit it is for a relatively short space of time, it is important that we send out a signal, send out a fact in reality that this Government is functioning as it is required to do, by seeking to have the legislation carried, and by carrying out our international obligations,” Mr Cowen said.

Fine Gael finance spokesman Michael Noonan said it was the responsibility of TDs who backed the Budget to ensure the Finance Bill passed the Dáil.

'Inherently unfair'

“While Fine Gael supports the new arrangements for the Bill, we do not support the Bill itself,” Mr Noonan said.

“We opposed the measures it contains on Budget night, and we continue to oppose the measures in the Finance Bill.”

His Labour Party counterpart Joan Burton said the weakness of the Bill was that it was inherently unfair.

“Many of the detailed provisions of the charge are blatantly unfair, not least the amazing and utterly perverse outcome that those on the very highest incomes actually come out of it with a net benefit,” Ms Burton said.

Sinn Féin’s Dáil leader Caoimhghin O Caolain said Mr Cowen should dissolve the Dáil immediately.

“This facilitation of the Finance Bill is absolutely crude and objectionable,” Mr O Caolain said.

Several amendments were made to the Bill at a Cabinet meeting today.

The biggest change will see the self-employed paying more tax as a higher rate of the new Universal Social Charge is applied.

Mr Lenihan said the 7% charge on business owners earning more than €100,000 will jump to 10%.

He claimed it is being imposed to ensure medical card-holders pay a cheaper rate.

Mr Lenihan said: “The Universal Social Charge represents a very substantial change to our tax system. It is based on the principle that everybody must pay according to their means.

“However, it is apparent that those who have medical cards have been adversely affected by the new charge and the Government wants to ameliorate their position while at the same time maintaining the principle that everyone must make a contribution.”

The Small Firms Association criticised the move, saying the Government did not seem to realise the importance of small businesses to creating jobs and boosting economic growth.

Ms Burton suggested the changes were made for electoral purposes.

Mr Lenihan said medical-card holders will see their contribution to the Universal Social Charge fall from 7% to 4%, the same rate as that levied on people over 70.

The new rate means people earning up to €10,036 will be hit with a 2% charge, rising to 4% for those earning more.

After more than an hour of crunch talks yesterday with Opposition parties, Mr Lenihan revealed all parliamentary business would be cleared for the week to fast-track the Finance Bill.

The Bill was expected to be debated until Thursday and then move to the Seanad on Friday and Saturday.

If it passes, the Taoiseach is expected to dissolve the Dáil at any stage between Saturday and Tuesday, when the Dáil is due to sit again.

A Cabinet meeting is due to take place next Tuesday and Mr Cowen said the Dáil was “down to meet” on that day.

Meanwhile in the Dáil tday, Mr Cowen took a swipe at those who claimed he no longer had a mandate, claiming the accusations were "vacuous and stupid".

“Frankly I’m a bit tired listening to the same old peddling rhetoric,” he said.