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Budget 2017: Here are the main points you need to know

A €1.3 billion package of tax cuts and public spending was announced this afternoon.

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MICHAEL NOONAN BEGAN his sixth budget statement saying the Irish economy is in ‘good shape’ and that his government plans to cut taxes and spend more next year.

The first of this minority government, Budget 2017 – with a larger-than-anticipated package of €1.3 billion – has a stamp of approval from both Fine Gael and Fianna Fáil.

But just how does this year’s budget, delivered this afternoon, affect you? Read on to find out…

Source: TheJournal.ie/YouTube

Here are the main details of this year’s budget: Finance 

Noonan faced the Dáil first, giving details of how Budget 2017 would impact Ireland’s tax system, leading with a heavy warning about how a hard Brexit could negatively impact Ireland’s finances. He notes there will be €500 million worth of tax cuts.

USC

  • Three USC brackets will be reduced by half a percent:
  • 1% will go down to 0.5%
  • 3% rate will be 2.5%
  • 5.5% bracket reduces to 5%

Read more: USC will be cut in 2017

Housing

  • There will be a tax rebate of up to €20,000 in a new help-to-buy scheme for first-time buyers. This goes toward a deposit for a new home.
  • The Mortgage Interest Relief scheme will be extended beyond 2017.
  • The threshold for Capital Acquisitions Tax will be increased, thus lowering the tax burden for individuals who inherit a property.
  • The Home Renovation Incentive – a tax credit for house repair or renovations will be extended until 2018.

Renting

  • The rent-a-room relief is to be increased. With a higher tax ceiling of €14,000 (from €12,000), the government hopes to encourage homeowners to rent out a vacant room.
  • Landlords will also see an increase in their mortgage interest relief deductibility (from 75% to 80%).

Read more: Here are the details of the new ‘help to buy’ scheme for first-time-buyers

SMEs/Corporate

  • From January 2017, the Capital Gains Tax for entrepreneurs will be reduced from 20% to 10%. 
  • The earned Income Tax Credit will increase to €950 to benefit over 147,000 self-employed people.
  • Surprise! Ireland’s corporate tax of 12.5% remains unchanged.

Fora.ie: ‘The budget has failed to deliver for small businesses’

Capital Acquisitions Tax

  • The threshold for CAT will rise to €310,000 (to benefit those inheriting property, estates, money etc).

Sugar Tax

  • In April 2018, a tax on all sugar-sweetened drinks will be introduced – in line with when it is due to be implemented in the UK. A public consultation will begin today.

Read more: It’s official: Ireland is getting a sugar tax (but not for a few years)

Carers

  • The carers’ credit is to be increased by €100 to bring it to €1,100.

DIRT

  • A reduction of DIRT by 2% each year for the next four years was announced. This will reduce DIRT to 33% by 2020.

Cigarettes, Alcohol and Cars

Election California Cigarette Taxes Source: Rich Pedroncelli

  • A pack of 20 cigarettes will be 50c more expensive. That makes most brands now €11. That is the only tax increase in today’s budget. 
  • There is no change in excise duty on alcohol or petrol.
  • The relief from VRT tax on electric vehicles to be extended for another five years.

Reaction: Smokers have been hit hard again, but alcohol and petrol are staying the same

Tourism

  • The 9% VAT rate will be retained to help the tourism and hospitality sector.

Good news for tourism businesses? Their 9% VAT rate is safe

Farming and Fishing

  • A new low-cost flexible loan fund worth €150 million will be established.
  • There will be an increase in farmers VAT flat-rate addition. It will jump from 5.2% to 5.4%.
  • The farm restructuring relief scheme will be extended to end-2019.
  • A new income averaging ‘step out’ for farmers to commence immediately. This means farmers pay tax on an average of five years’ income to balance it out. If they have a bad year, they’ll be able to opt to pay tax on that year alone now to lower their tax bill.
  • Bog owners and rights holders will be exempt from Capital Gains Tax under the raised bog restoration scheme.
  • There will be a new fishers tax credit of €1,270 per year (if you spend at least 80 days of the 365 at sea).

Investment in sheep and protection from Brexit: Here’s what the Budget means to farmers

Rainy Day Fund

  • €1 billion annually will be set aside by governments, starting in 2019. The idea is to protect against Brexit or provide an initial shock absorption capacity if needed for other economic reasons.

Fora.ie: “Not Brexit-proof” – there’s a deal of good news for the self-employed today, but is it enough?

Here are the main details of this year’s budget: Expenditure

Public Pay

  • There will be a fund of €290 million for partial-pay restoration agreed under the Lansdowne Road Agreement for civil and public servants who had cuts imposed after 2008.
  • Paschal Donohoe also said his government is proposing additional recruitment of close to 4,500 frontline staff – nurses, gardaí, teachers etc.

Old-Age Pension

  • The old-age pension will be increased by €5 from March 2017.

Social Welfare

  • All social welfare payments will also rise €5 per week from March next year. This includes jobseekers’ benefits, the one-parent family payment and carers’, jobseekers’ and disability allowances. This comes at a cost of €301 million.

More reaction: Up by a fiver

Christmas Bonus

  • The Christmas Bonus for social welfare recipients will be increased to 85%.

Childcare

  • Early years funding will rise 35% from €345 to €465 million in 2017.
  • A new childcare scheme will be set up from September. The introduction of a new Single Affordable Childcare Scheme promises both means-tested subsidies, based on parental income, for children between six months and 15 years and universal subsidies for all children aged six months to three years. The subsidies will be paid for children and young people going to a Tusla-registered childcare provider.
  • The Early Childhood Care and Education Scheme and the pre-school scheme will be extended with a further €86 million provided for the full year costs.
  • The Access and Inclusion Model will also be rolled out with this €86 million to enable children with disabilities to take part in pre-school education.

Are you a parent? Here’s what Budget 2017 will do for you 

Housing

  • €1.2 billion is to be provided to the Department of Housing to help tackle the current crisis with 47,000 new social housing units by 2021.
  • Capital allocation of €50 million for a local housing activation fund. The government wants this money (the fund is worth €200 million total) to provide 20,000 private homes by 2019.
  • There will be an extra €105 million for the Housing Assistance Payment Scheme and Rent Supplement (an increase of 220%). This will make the programme available to another 15,000 households.
  • The housing plan, Donoghoe said, will see the needs of 21,000 social housing applicants met next year.
  • There will also be another €28 million made available for emergency accommodation for homeless people. That means the allocation for 2017 is €100 million.

Health

The Health Department is getting its highest level of health funding in the history of the State

  • There will be an increase in spending of €497 million – bring total spend to €14.6 billion. 
  • All children in receipt of domiciliary care allowance will now receive an automatic medical card.
  • €15 million to be added to the National Treatment Purchase Fund NTPF to help alleviate waiting lists.
  • The €25 cap on prescription charges for those over 70 years of age will be reduced to €20 from 1 March.

Education and Communication

  • An increase in spending of €458 million will allow for an extra 2,400 teaching posts – of which 900 will be resource teachers.
  • An extra €36.5 million will be made available for the higher and further education sector next year.
  • €15 million will be put into the National Broadband Plan next year.

Farming and Rural Development

  • There will be 500 new places on the Rural Social Scheme.
  • Farm Assist will be increased.
  • An extra €119 million will be given to the Department of Agriculture allowing for investment in Foodwise 2025.
  • The Rural Development Programme funding will rise by €107 million, including €25 million for a new animal welfare scheme (with a specific focus on sheep).

In or out? Here are the winners and losers in Budget 2017

Flood Relief

Winter weather Dec 30th 2015 Source: PA Archive/Press Association Images

  • Major construction schemes for Cork and Enniscorthy in Wexford are planned as part of a €44 million package for flood relief.

Justice and Defence

  • There will be a budget put in place to allow for 800 new gardaí and 500 new civilian staff.
  • The Defence budget will be increased by €16 million.

Sports and the Arts

  • There will be a new round of the Sports Capital Programme in 2017. More details will be given later today by Minister Shane Ross.
  • The Arts budget will retain funding allowances made available for 1916 commemorations.

Roads

  • €319 million has been put aside for regional and local roads.
  • The LUAS cross city will be finished by the end of 2017 with money provided.
  • There will be three major public-private partner projects: Gort to Tuam road; the Gorey to Enniscorthy road and the New Ross by-pass.

Acting Green

  • There will be €90 million provided for the Renewable Heat Incentive, Better Energy Grant schemes and the Electric Vehicles Subsidy.

Read: Budget 2017 is on the way: stick with us and we’ll break it down for you

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