This site uses cookies to improve your experience and to provide services and advertising. By continuing to browse, you agree to the use of cookies described in our Cookies Policy. You may change your settings at any time but this may impact on the functionality of the site. To learn more see our Cookies Policy.
OK
Dublin: 15 °C Saturday 24 August, 2019
Advertisement

Your USC is being cut, but what else do we know about Budget 2016?

With a month to go, the Budget leaks have begun in earnest.

14/10/2014 Budget Day 2015 Michael Noonan delivering the Budget last October Source: Mark Stedman/Photocall Ireland

THE BUDGET IS now less than a month away and will be the coalition’s last opportunity to deliver a few sweeteners for the voters ahead of the next general election.

With parties gathering for the annual think-ins over the last few days, it’s no surprise that the speculation about what ministers Michael Noonan and Brendan Howlin will announce on 13 October is starting to intensify.

Here’s the lay of the land so far…

What’s in the kitty? 

EU fiscal rules mean that we know the government will have between €1.2 and €1.5 billion in extra spending available to it. Some argue for prudence and believe that this money should be used to pay down the remaining debt pile.

14/10/2014 Budget Day 2015 These lads have a bit of money this time around.

But the government argues it can still achieve a deficit of less than 3 percent of GDP, while still reducing the tax burden and increasing spending on public services.

Having spent its first three budgets wielding the axe, taxes were cut for the first time in many years last year and there were moderate social welfare increases. More is on the way in Budget 2016.

The split 

The indication is that the government will go the whole hog and deliver €1.5 billion in extra spending in Budget 2016.

This will be divided evenly, meaning that up to €750 million will be available for tax cuts with the other €750 million to go on increased spending on public services and welfare supports.

USC

The government’s overall aim is to take half-a-million workers out of the USC tax net altogether. It’s been long-flagged that the 7 per cent rate of Universal Social Charge on salaries between €17,000 and €70,000 will be cut.

Michael Noonan said in July that it will be by at least 1% and possibly more. A 1% cut would mean, for example, that a person on €35,000 a year would be €175 better off.

screenshot.1442245379.65094 Source: www.thejournal.ie

Yesterday, the Sunday Independent reported that a 2% cut is on the cards. But this would cost around €540 million to the exchequer and would therefore account for a huge portion of the maximum €750 million the government has to deliver tax cuts.

The coalition also wants to help the self-employed who currently pay 3 percentage points more USC on earnings over €100,000 than PAYE employees on the same money. Noonan said last week there is “an obvious inequality” that the coalition wants to address.

Other taxes 

Changes in income tax could also be announced with Tánaiste Joan Burton saying yesterday she wanted to adjust the income level at which people enter the higher rate of 41%. This currently stands at €33,800 having been increased by €1,000 last year.

Child benefit 

The government cut child benefit by €10 in Budget 2013. Last year, it was increased by €5 to €135 and the coalition has signalled there will be at least another €5 increase this year. This will bring child benefit back to the €140 level it was when the coalition took office.

Other welfare payments 

rpcrlp-2-390x285 Source: RollingNews.ie

The Christmas Bonus – which was abolished in 2009 – was partially restored last year, providing a much-needed income boost for some 1.2 million long-term welfare claimants including jobseekers, pensioners, carers, lone parents and those with a disability.

The 25% restoration last year is set to be doubled. This would mean an extra €115 for a person on the State contributory pension, €94 for someone on the full rate of jobseeker’s allowance, and an extra €102 for a carer.

The Irish Times reports today that one of the government’s most contentious cuts, the €325 reduction in the respite care grant in Budget 2013, could also be reversed.

Childcare 

Having failed to adequately addressed the spiralling cost of childcare for many parents, the government has promised action in this area in Budget 2016.

Speaking last week, Noonan said that Children’s Minister James Reilly is preparing proposals for government. The Mail on Sunday reported yesterday that €200 million package of measures is being considered.

27/7/2015 Adoption (Information and Tracing) Bills James Reilly Source: Mark Stedman

Noonan said that childcare is a big issue in this Budget, as is making it easier for women to participate in the labour force and immigrants to come home.

Justice 

At least another 500 new gardaí will be recruited next year with justice minister Frances Fitzgerald also looking for extra money to enhance An Garda Síochána’s IT capabilities. Putting an extra 500 guards on the street would cost around €10 million.

The old reliables 

The government could create more space to spend beyond the €1.5 billion by hiking taxes on the old reliables: booze and cigarettes. Noonan indicated last week that an increase in duty on tobacco is on the cards. A packet of 20 cigarettes will cost you €10 at present.

Duty on alcohol didn’t rise in last year’s Budget and that’s likely to be the case again this year. If the government wanted to be bold and annoy the health lobby then they could reduce the cost of a pint by 5 cent, but this would cost around €41 million.

Follow all our Budget 2016 coverage here > 

  • Share on Facebook
  • Email this article
  •  

About the author:

Hugh O'Connell

Read next:

COMMENTS (101)

This is YOUR comments community. Stay civil, stay constructive, stay on topic. Please familiarise yourself with our comments policy here before taking part.
write a comment

    Leave a commentcancel