[caption id="attachment_68152" align="aligncenter" width="600" caption="Taoiseach Enda Kenny answers press questions Tuesday."]
Taoiseach Enda Kenny has been forced to admit that his government plans to impose further austerity measures to avoid breaching European Union spending limits, this following an embarrassing leak of budget plans by German parliamentary officials.
Kenny conceded that valued added tax would increase by two percentage points to 23 percent as part of the looming budget, which is designed to make savings of around €3.8 billion.
The taoiseach made the admission after German politicians sent the details to the finance ministries of all 27 EU member states before they were seen by politicians in the Dáil.
The leak caused a furor in the Dáil, with opposition members demanding Kenny explain how the draft plans sent to Brussels were seen by other member states before Ireland.
Fianna Fáil leader Micheál Martin called for Kenny to explain what he described as an "absolutely unprecedented situation," while Sinn Féin finance spokesman, Pearse Doherty, echoed comments from his party president Gerry Adams that "the sovereignty of this state had been handed over" and asked if German chancellor Angela Merkel was "pulling the strings."
"The increase in VAT has already been outlined in the memorandum of understanding. However, having it discussed by a German budget committee undermines the Irish Parliament," Doherty said.
"Enda Kenny needs to come into the Dáil and give a report on his meeting with Angela Merkel, including exactly what details and documents he gave to his German counterpart."
However, Mr. Kenny rejected claims that Germany had been allowed to inspect the plans but admitted he had "no idea" how the document ended up in German hands.
"I'm not in the blame game here," he said.
"I regret that these things which are speculative and are not signed off on should be the source of discussion in other quarters."
European Commission economic affairs spokesperson, Amadeu Altafaj Tardio, confirmed that officials in Brussels had sent the budget document to finance ministries in all 27 EU states.
"On behalf of the commission, the leaks are regrettable," he said.
"We insist this is a draft and we have a legal obligation to share the information we receive from the authorities in Dublin with the member states. This is actually our mandate."
Mr. Tardio said budget information must be shared among EU states as part of Ireland's €85 billion bailout loan deal.
"Ireland sees the same information from the troika about Greece, for example," he said.
In a later statement, the commission's office in Ireland said the documents "were not final and were not signed" by the government.
Analysts said the cuts were a signal the Irish recovery was running out of steam and could face a downgrade in growth forecasts. Fears were also raised that the rise in VAT might stop consumer spending and lead to an exodus of shoppers to Northern Ireland, where VAT is 20 percent.
