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Debt-stricken Ireland unveils 2011 budget

By the CNN Wire Staff
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Ireland's bailout
  • The budget includes more cuts and tax hikes
  • It is based on last month's four-year austerity plan
  • Ireland has accepted an 85 billion-euro international aid package
  • Ireland

(CNN) -- Debt-stricken Ireland unveiled a tough new budget Tuesday, changing the income tax system, raising taxes on gasoline and diesel fuel, and reducing benefits for parents.

Dublin is cutting 6 billion euros (nearly $8 billion) from its budget as it tries to claw its way out of massive debt.

But it held fast to its low corporate income tax rate of 12.5%, with Finance Minister Brian Lenihan calling it a "cornerstone of our industrial policy and our strategy for export-led growth."

Opposition politician Eamon Gilmore slammed the plan, saying the government had chosen to "slash and burn and create even more problems for the Irish people."

Irish lawmakers were due to vote on the budget Tuesday night. It seemed likely to pass by a narrow margin.

The new budget is based on a four-year plan of public spending cuts and tax hikes announced by Ireland last month as a way to tackle its massive debt.

Ireland agreed last week to 85 billion euros (about $113 billion) of financial support from the European Union, individual EU states, and the International Monetary Fund. The goal of the aid, the government said, is to return its economy to sustainable growth and restore the health of its banking system.

The four-year austerity plan achieves savings through welfare cuts worth 10 billion euros ($13.2 billion) and higher taxes, expected to bring in 5 billion ($6.6 billion).