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# budget 2016
Budget 2016 - here are all the main points
Anything that affects you, you’ll find it here.
IT WAS TRUMPETED in advance as the giveaway budget, with the government relishing the opportunity to boost spending by €1.5 billion with an election on the horizon.
And the cash has most certainly been splashed. Naturally enough the opposition aren’t impressed mind you.
But just how does this year’s budget, delivered this afternoon by Michael Noonan and Brendan Howlin, affect you? Read on to find out…
Here are the main details of this year’s budget:
Finance minister Noonan was up first with details on how Ireland’s tax structures will work for the year to come, followed by Minister for Public Expenditure and Reform Brendan Howlin who outlined where the government’s increased spending is to be allocated.
USC
- The marquee event of the budget, and one of the first dealt with, the not-well-liked (to put it mildly) Universal Social Charge was in a for a kicking
- The 1.5% rate of USC will be reduced to 1.0%
- The 3.5% rate of USC will be reduced to 3.0%, to an increased threshold of €18,668
- The 7% rate of USC will be reduced to 5.5%, to an increased threshold of €70,044
Read: Here’s what’s changed with the Universal Social Charge in the Budget
- The entry point to the USC will rise from €12,012 to €13,000
- It’s expected that some 700,000 earners will be outside the USC net completely
- Noonan says these measures have been crafted to restrict the benefit to people earning more than €70,000 per year
- Layman’s terms? These measures will equate to an increase in yearly income of one week’s wages says Michael Noonan
Income Tax
- Inheritance tax threshold increases to €280,000 from €225,000
- Introduction of a ‘tapered PRSI credit’ with a maximum level of €12 per week to alleviate the ‘step effect’ across a range of incomes
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- What the Budget means for someone earning around €20,000
- What the Budget means to someone earning around €30,000
- What the Budget means for someone earning around €40,000
- What the Budget means to someone earning around €50,000
- What the Budget means to someone earning around €100,000
SMEs / Corporate
- Capital Gains Tax for the self-employed and entrepreneurs drops to 20% from 33%
- A new ‘Earned Income Tax Credit’ to the value of €550 for self-employed workers who didn’t previously have access to the PAYE tax credit. This is something small firms’ representatives have very much clamoured for
- Three year tax relief for startups extended until 2018
- Corporation Tax unchanged (no surprises there)
- Noonan is introducing a Knowledge Development Box – basically a means of accessing a lower rate of corporate tax – 6.25% - to incentivise R&D and unique enterprise
Pensions
- The pension fund levy, a trademark austerity measure, has done its job apparently and is no longer needed. The 0.15% levy as it currently stands will no longer apply from January 2016
Motor Tax
- Commercial tax rates on vehicles are to be made less complex – the range of brackets will reduce from 20 to five, ranging from €92 to €900
- Over 28,500 vehicles are expected to be affected by the change in the tax-rate bands
Cigarettes and Alcohol
- The cost of a pack of 20 cigarettes will increase by 50c to €10.50. This was well foreshadowed. It’ll raise €61.4 million for the exchequer in 2016, and is the only tax increase in the budget
- Excise duty on alcohol will remain unchanged
Tourism
- 9% VAT rate for the tourism sector to remain unchanged
Film
- Cap on eligible expenditure increased to €70 million
Banking Sector
- Bad news for the banks – the Financial Institutions Levy is to be extended to 2021
General Expenditure Figures from Brendan Howlin
- Gross state expenditure will be over €51.4 billion in 2016, with capital expenditure over €3.7 billion
- 4% increase in public expenditure as opposed to an 18% increase in tax take – Howlin is particularly keen to get this point across
Jobs
- The minimum wage is to increase by 50c to €9.15 as recommended by the Low Pay Commission
- The Department of Jobs is to receive €792 million in 2016, €500 million of which will go to enterprise agencies. 2016 will be a good year to be an entrepreneur
Childcare and Child Benefit
- Free childcare to be made available for children from age three to 5 1/2, or the beginning of primary school
- Child benefit increases from €135 to €140 per month, as expected
- The family income supplement is being increased by €5 per week for families with one child and by €10 for those with two or more children
- Two weeks paternity leave on the way for fathers in 2016. Good time to become a dad
- To support parents on low incomes 8,000 places are to be created for children via the Community Childcare Subvention Programme
- The Department of Children will be getting over €1.1 billion in 2016
Education
- Budget of €8.5 billion allocated to education this year
- 2,260 new teaching posts and 600 new resource teachers on the way
- Pupil teacher ratios to decrease from 28:1 to 27:1 for primary classes, and 19:1 to 18.7:1 for secondaries
Retail business
- In a fairly predictable budget, this is something of an anomaly: the €5 annual charge on such cards is to be scrapped, to be replaced by a 12c charge per ATM transaction, which is capped at either €2.50 or €5 depending upon the card.
- Hmmm. Moving the deckchairs around for consumers?
- There’s good news for retailers though, with Michael Noonan halving interchange fees faced for accepting debit card payments. The upshot of that is an estimated €36 million in savings per year
Christmas Bonus
- The Christmas bonus will increase to 75%, a threefold increase on last year’s payment
- That means an €141 bonus for jobseekers at Christmas time, and €173 for pensioners on a weekly rate of €230
Health and Older People
- The Department of Health is a big winner with €13.2 billion allocated for the year
- As expected free GP care is now extended to the under-12s
- The old age pension has increased by €3 per week
- The home carer’s tax credit is to be increased by €190 to €1,000 bringing it back in line with pre-2011 levels
- The respite care grant is to be restored to €1,700
- Fuel allowance has been increased by €2.50 to €22.50 per week
- There’s to be no tax on fizzy drinks though. Leo Varadkar won’t be happy
Housing
- €414 million allocated for social housing this year, which equates to an additional 14,000 households
- Allocation for emergency accommodation of the homeless is to be increased by €17 million
- The revaluation date for Local Property Tax (LPT) is to be moved from 2016 to 2019, suggesting that rising house prices will not hit homeowners in 2017 with greatly increased LPT
- Bad bank NAMA will build 20,000 social housing units by the end of 2020. This particular announcement lead to a deal of heckling from the galleries
Agriculture and the Marine
- €1.3 billion allocated to the Department of Agriculture for the year
- Stock reliefs for young trained farmers and farm partnerships, and stamp duty exemption for young trained farmers extended for a further three years to the end of 2018
- A new succession transfer proposal is being brought to table with the aim of bringing clarity to the transfer of ownership of a family farm to the next generation
Justice and Defence
- 600 new gardaí are going to be recruited
- Resources to be made available to improve the force’s IT capabilities, and for the new policing authority
- €2.2 billion allocated to the Department of Justice
- €903 million has been allocated to defence, with Howlin commending the work of our defence forces in dealing with the Mediterranean migrant crisis
1916
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€50 million has been allocated to the hundredth anniversary of the Easter Rising’s commemoration programme. So that’s almost three times the amount that the budget for emergency accommodation for the homeless has been increased by. Priorities?
Read: LIVEBLOG: Budget 2016
Read: All the breaking news from today’s Budget
Read: TheJournal.ie’s Budget 2016 coverage, in full
