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Budget 2018: Here are the main points you need to know

How does this year’s Budget affect you?

Source: TheJournal.ie/YouTube

PASCHAL DONOHOE BEGAN his first Budget as Finance and Public Expenditure Minister by saying the announcement would “build on progress that would have seemed impossible only a few short years ago”.

Earlier on today the Taoiseach promised to put money back in the pockets of “taxpayers, working people, families, pensioners, people on welfare” and to bring in “measures to reduce the cost of living”.

But just how does this year’s Budget, delivered this afternoon, affect you?

Read on to find out…

Donohoe said the Budget would promote fairness and allow for sustained improvements in the standards of people’s lives.

Describing the state of the economy as he began his speech, he said that, at 6.1%, unemployment was at its lowest point since 2008. The Budget, he said, was part of a process that would help minimise the exposure of the Irish economy to outside risk – including events like Brexit and possible changes to US trade policy.

He would be raising additional revenues worth €830 million, Donohoe said, giving a total Budget Day package of €1.2 billion. Expenditure will receive an additional €898 million and there will be tax reductions worth €335.

Social welfare

  • There will be a €5 increase in all weekly social welfare payments, including the State pension
  • This will kick in at the end of March 2018
  • The Christmas bonus payment of 85% will again be paid to all social welfare recipients in 2017
  • Also from March, payments under the One Parent Family Payment and the Jobseekers’ Transitional Scheme will be increased by €20 per week
  • A new weekly telephone support of €2.50 announced for people in receipt of both the living alone allowance and the fuel allowance

Need more details on today’s social welfare announcements? Find them here.

Income taxes

  • The point at which an income earner attracts the higher rate of income tax will rise next year by €750 per annum
  • The entry point to the higher rate for single earners will increase from €33,800 to €34,550
  • Donohoe will be reducing the 2.5% USC rate to 2% and increasing the ceiling for this new rate from €18,772 to €19,372
  • He will be reducing the 5% rate of USC to 4.75%
  • There will be a €200 increase in the Earned Income Credit, bringing it to €1,150 per year from 2018. According to the Department, “This increase will benefit over 147,000 self-employed individuals generating economic activity across the country”
  • There will be a further increase of €100 in the home carer credit, bringing the value of the credit up to €1,200 per year
  • The USC may be on the way out. A working group is to be set up “to plan, over the coming year, the process of amalgamating USC and PRSI over the medium term”

You’ll find more detail on all today’s tax announcements here.

Housing

  • An extra €500 million will be provided to the direct building programme 
  • This will see an additional 3,000 new build social houses by 2021 – that’s 3,000 more than the target originally set out in the government’s major housing and homelessness plan Rebuilding Ireland
  • Additional funding for a scheme that secures non new-build social homes will lead to an increase of 4,000 homes next year
  • The Housing Assistance Payment scheme will be increased by €149 million
  • Up to €750 million of the NTMA-controlled Ireland Strategic Investment Fund will be made available for commercial investment in housing finance. The funds are to be made available to a new vehicle to be known as Home Building Finance Ireland or HBFI
  • Funding for homeless services – including providers of emergency accommodation and other supports – will be increased by a further €18 million to over €116 million
  • The vacant site levy will more than double from 3% to 7% on land not sold by 2019. The message to so-called land hoarders: “You need to get on to developing your lands urgently.”

Mortgage interest relief (the tax back scheme to help those in negative equity) will be also be cut on a phased basis, starting next year. You can find further details of today’s housing announcements here.

Rainy day fund

  • Donohoe pledged to establish a Rainy Day Fund in 2018 and transfer €1.5 billion to it from the Ireland Strategic Investment Fund

We’ve been hearing about this Rainy Day Fund for a while now. Here’s a quick explainer on it.

Stamp duty

  • The level of stamp duty on commercial property transactions will increase from 2% to 6% from midnight tonight, as had been widely flagged

Health

  • There will be a reduction in prescription charges for all medical card holders under 70 from €2.50 to €2 per item with cap of €20
  • Donohoe also announced a reduction in the threshold of the Drugs Payment Scheme, down from €144 a month to €134.

Cigarettes

  • Excise duty on a pack of 20 cigarettes will rise by 50 cents, with a pro-rata increase on other tobacco products. This will increase the price of a regular brand packet of 20 to €12
  • This kicks in at midnight tonightmore detail here

Sugar tax

  • As promised last year, a sugar tax is on the way in 2018 - at a rate of 30 cent per litre on drinks with over 8 grams of sugar per 100 millilitres
  • There will be a reduced rate of 20 cent per litre on drinks with between 5 and 8 grams of sugar per 100 millilitres
  • The sugar tax will kick in in April next year

Sunbeds

  • Donohoe plans to increase the VAT rate on sunbed services from 13.5% to 23% – more on that here

Education

  • Donohoe pledged an additional 1,300 teaching posts in schools in 2018
  • As part of this hiring drive the pupil-teacher ratio will be reduced to 26:1
  • There will be a rise in the number of Special Needs Assistants – a 1,000 increase will bring the total number to over 15,000 next September

Gardaí

  • An additional 800 gardaí will be hired next year
  • 500 civilian workers will also be recruited

Childcare

  • The free pre-school programme will be further developed – ensuring entitlement to the full two year service from September 2018

Vat rate

  • The VAT rate in the tourism and services sector will not change

Brexit loans

  • Donohoe confirmed the State would launch a Brexit loan scheme for SMEs 
  • Up to €300 million will be made available at a ‘competitive rate’

You can read the entire Budget at the government’s dedicated site here. And you can find further coverage on TheJournal.ie  throughout the day.

Tomorrow, when you’ve had time to digest the facts and figures, TheJournal.ie will host a special one-off Facebook Live with Taoiseach Leo Varadkar and Minister Donohue.

Kicking off at 8pm from Facebook’s Dublin HQ, we will be putting some of your concerns and observations to the Taoiseach and the minister, and digging into the thinking behind the decisions made for the country and what it means for our collective future. Here’s how to get involved.

More: All weekly social welfare payments to increase by a fiver from March >

Revealed: Taoiseach’s new communications unit to cost €5m next year >

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