What's In 

€600m Health Cuts

After being cut by €1bn last year, the health budget is set for a further €600m cut in December. As health accounts for €1 in every €4 of government spending, further cuts are inevitable. Harney and her officials will spend the next few months deciding how the cuts can be made in such a way that the least pain is inflicted on patients and frontline services.

€250- €300m Education Cuts

Following her move to the Department of Education and Science, Tánaiste Mary Coughlan faces into her first budget in her new role. She will be charged with finding a further€250-300m. The cuts cannot affect pupil-teacher ratios, as the Green Party has secured that in the Programme for Government, so the cuts are likely to particularly hit the third-level sector.

€200m Social Welfare Cuts

Among the €200m cuts to be made in this area is reform of the unemployment benefit payment system. Under the current social welfare system, unemployment benefit is calculated on the basis of a six-day week. People who currently work three days a week get dole payments for the remaining three days. Under the budget reform, there is a good chance that the week will be calculated on a five-day week basis from now on. So if a person works three days, they will only be in receipt of unemployment benefit for the remaining two days. The reason for this reform is employers are having difficulty in getting staff to return to work a five-day week.

Second Home Tax

The €200 tax on non-principal private residences or 'second-homes', announced in the October 2008 budget, has brought in €100m to date. As it has been met with little or no resistance it may be increased.

Pensioners

Under the current taxation system the state offers generous tax credits to pensioners so these credits may be reduced. Dirt tax may be introduced for pensioners.

Pension relief

The government has already signalled its intention to reduce pension tax relief for those on the top rate of tax from the 41% to 33%.

Widen the tax net

Half of the workforce pay no tax at all. So Brian Lenihan is likely to widen the net to bring in more low income earners. This is likely to be achieved by reducing tax credits. As signalled in last year's budget, a "Universal Social Contribution" will be introduced which will replace employee PRSI, the health levy and the income levy. This will further widen the tax net.

What's out
Old age pension cut

In the weeks before last December's budget, a succession of government TDs proclaimed that "the old age pension is sacrosanct". The mantra was repeated over and over ahead of the budget and it looks like we will hear it again as a cut to the old age pension will not happen. It is so politically unpalatable that the government cannot realistically contemplate it.

Road tolls

A series of new road tolls have been mooted but will not happen.

Tax rate changes

It has been mooted that the government could tinker with the tax rates and even introduce a third rate of tax. But Lenihan has effectively ruled this out.

Property and water taxes

The government will not press ahead with these controversial measures but a flat rate service charge, incorporating the two, is a strong possibility.

Public sector pay cuts

Public servants will not be forced to take another pay cut as the Croke Park deal has been agreed but the government will look at trying to get more efficiencies in the public sector. They are difficult to deliver and are unlikely to yield large savings.