Ireland faced new tough budget action on Tuesday, with Finance Minister Michael Noonan set to announce tax increases to raise 1.6 billion euros ($2.1 billion) for the rescued eurozone member. Ireland has won praise as an example of how a debt-rescued country can enact convincing reforms, and Noonan will present the revenue-raising portion of the Irish government's budget before parliament in mid-afternoon. The first part of Dublin's 2012 austerity plans, comprising 2.2 billion euros in spending cuts, was announced on Monday by Public Expenditure Minister Brendan Howlin. The big-spending departments of social welfare, health and education, which account for over 80 percent of public expenditure, bore the brunt of the cuts. "Today sees the announcement of 1.6 billion euros of tax measures," said Conall Mac Coille, chief economist at Davy Stockbrokers in Dublin. "It has already been announced that the rate of value added tax will increase by 2.0 percentage points. "However, the government has apparently ruled out additional increases in income taxes while planning to introduce a new household charge." Mac Coille added though that developments in the eurozone debt crisis could have a larger impact on the Irish economy than Tuesday's tax changes. Ireland is still facing a huge task in getting on top of a mountain of debt and high public deficit, but its bite-on-the bullet attitude and policy drive is being watched with close interest. S&P credit rating agency warned the eurozone overnight that most of its members risk a debt downgrade if an EU summit on Thursday and Friday does not come up with a solution to the crisis which convinces investors. Irish Prime Minister Enda Kenny said on Sunday that bailed-out Ireland faced years of economic hardship. Regarding the tax rises, Noonan is expected to confirm an increase of 2.0 percentage points in the top rate of value-added taxation on goods and services to 23 percent. Dublin hopes the VAT rise will bring in 670 million euros although some analysts have suggested that figure could be optimistic. The minister was also expected to increase motoring and carbon taxes and to announce details of a property tax. Eamon Gilmore, deputy prime minister and leader of the Labour party junior partner in the coalition, said the overall 3.8-billion-euro budget would not increase income tax or cut the basic rates of social welfare payments. He added that the government had managed to achieve the reduction in public expenditure that is required by the IMF, EU and European Central Bank as part of Ireland's bailout deal. Massive debt and deficit problems led to an 85-billion-euro ($115-billion) EU/IMF rescue package for Ireland in November last year. "When you reduce public expenditure there are no easy ways of doing that," Gilmore told RTE state radio. "There is going to be a consequence for services. There is going to be a consequence for individual people. But we have set out to do it as fairly as possible, as reasonably as possible. I believe that we have achieved that," he said. David Begg, general secretary of the Irish Congress of Trade Unions (ICTU), said about 20.5 billion euros had been taken out of the economy in the last three years by austerity budgets. He said planned austerity measures up to 2015 would reduce the size of the Irish economy by a fifth. "You can't do that without having a huge impact on employment," he told RTE. Ireland's Celtic Tiger economic boom turned to bust when a property bubble collapsed and triggered a banking crisis. Kenny's government is struggling to bring its deficit down to 8.6 percent of GDP next year and to less than three percent, the EU ceiling, by 2015.