The Irish Government confirmed that the economic recovery is gaining momentum with a new budget that is designed to return a small amount of money to workers through modest reductions in income tax.
Minister for Finance Mr Michael Noonan said that the top priority of Budget 2016 is to “keep that recovery going, while providing relief and better services for the Irish people”.
Unveiling his €810m tax package; there was just one tax increase – a rise in the price of a packet of cigarettes by 50c.
The widely hated Universal Social Charge (USC) will see the entry point for those liable to pay it rise from just over €12,000 to €13,000.
There will be a reduction in the first three USC rates with the 7% rate cut by 1.5%, and the first two rates cut by half a percent.
50% tax rate reduced…but only just!
Today’s new tax measures would shave the marginal rate of tax to 49.5% for all earners currently earning €70,000 and under. This is the first time it has fallen below 50% since April 2009.
There is to be an increase to the threshold from €225,000 to €280,000 before a tax liability kicks in.
Freeze in property tax
Frozen until 2019!
Banks to continue paying for their sins
The Government is to extend the bank levy by five years to 2021.
Tax credit for self-employed
Farmers and the self-employed will receive a €550 tax credit. There is also to be a simplification of the number of rates for commercial motor tax. And not forgetting retailers, there will be a reduction in the fees for accepting card payments and for consumers with the removal of the €5 stamp duty on debit and ATM cards. It is being replaced with a 12c charge per ATM transaction and eliminated for debit card transactions.
There will be a 50c increase in the minimum wage and an increase of €5 per week in pensions.
The Christmas bonus is being restored to 75% and the fuel allowance is going to rise by €2.50 a week.
The Respite Care Grant will be restored in full and Child Benefit will be increase by €5 a month.
There was also an increase in the earnings threshold for family income supplement by €5 a week for families with one child and by €10 for those with two children or more.
The childcare package included two weeks’ paid paternity leave, free pre-school from three years of age with €15 million to facilitate children with disabilities.
€3 million to develop after school services in schools along with 8,000 places through the community childcare subvention programme.
In health, free GP care is being extended to all those under 12 (subject to negotiations with doctors).
More police, more teachers and more houses
600 additional police and 2,260 new teaching posts were announced. The teacher-pupil ratio in primary and secondary schools will be reduced.
Additional money for housing and homeless was also announced and National Asset Management Agency is being tasked with delivering 20,000 homes by 2020.