Budget 2015: Give and take
Budget 2015 marked the first time since the start of the economic collapse in 2008 when there were social welfare increases and tax cuts.
The Government began reversing some of the austerity measures that were introduced over the past six years with extra spending and tax cuts worth just over €1bn.
The Christmas bonus for social welfare recipients will be partially restored this year.
Child benefit will increase by €5 a month next year and another €5 in 2016.
Mr Noonan presented a complex taxation package, which featured:
• A cut in the higher rate of income tax from 41pc to 40pc;
• Increasing the USC entry point from just over €10,000 to just above €12,000;
• Raising the threshold for paying the higher income tax rate from €32,800 to €33,800;
• Cutting the lower USC rates;
• Bringing in a new 8pc rate of USC for those earning more than €70,000.
• Also bringing in a new 11pc USC rate for self-employed.
people earning more than €100,000.
Mr Noonan claimed the tax package was progressive as higher earners did not benefit as much.
But the opposition parties, trade unions and left-wing think-tanks said high earners benefited the most as their gains on income tax were not cancelled out by the USC rises.
The income tax and child benefit reductions are worth about €10 a week to average families.
The Budget documents show:
• A dual income family on €55,000 will gain €530 a year;
• A one-income family on €60,000 will be up by €600 a year;
• A single person on €120,000 will benefit to the tune of €690 a year
The Government also took actions to stimulate the housing market. The windfall tax on transfer of development land is being slashed. A social housing scheme worth €2.2bn over the next three years is planned.
The Home Renovation Scheme, which gives tan relief for work being done on houses, was extended to rental properties.
In an attempt to quell the growing anger over the introduction of water charges, a tax relief worth 20pc of the bill was introduced for taxpayers. And 650,000 households dependent on social welfare will get a €100 subsidy to help with the bills.
Taoiseach Enda Kenny denied the water charges relief package was a response to protests against the tax at the weekend and the outcome of two by-elections.
Mr Kenny said the Government had been given a mandate to fix the public finances and get the country back to work. He said the Budget targeted middle-income families earning between €30,000 and €70,000, “who have had to pay for everything”.
“This is not a bonanza Budget. This is not a blank cheque Budget. This is the start of a tax reform over three years,” he said.
To help get unemployed people off the dole and into work, €1.1bn is being spent on employment incentives, including extra child support payments.
Mr Noonan predicted unemployment will fall to around 10pc next year and expects the workforce to climb back to two million by 2016.
The controversial pension levy is being scrapped at the start of 2016, with the bulk of the tax being eliminated in 2015.
The old reliables were largely untouched with a 40c increase in the price of a packet of 20 cigarettes, which will now cost almost €10.
Mr Noonan promised to phase out the internationally contentious ‘Double Irish’ tax avoidance scheme, used by multinationals to reduce their tax bill.
From January, new companies setting up in Ireland will not be able to avail of the scheme and those already based here will have to phase it out by 2020.
But Mr Noonan did rule out conceding to pressure to increase the 12.5pc corporation tax rate. He said the rate “never has been and never will be” up for discussion.
The Finance Minister said the country had travelled a long road and was now at “a very important crossroads”.
“We are now facing a choice: do we return to the past; unwind the progress and structural reforms made and pursue boom and bust policies. Or do we look forward and continue to build for a better future with a new economic model,” he said.
Public Spending Minister Brendan Howlin said the delivery of the Budget was a significant day as it “marks the end of an era of budgetary austerity”.
“To be forced to reduce expenditure for the past six years and seven budgets was unprecedented. It is the scale of the damage inflicted on the Irish people by Fianna Fail in Government,” he said.
Fianna Fail claimed the Government failed to achieve its objective of easing the burden on low- and middle-income earners, but instead introduced “tax cuts for the rich”.
The party’s finance spokesman Michael McGrath rounded on the coalition for what he claimed was a budget aimed at “buying votes”.
He said the Government was spending money to “save as many seats as possible” when the country next goes to the poll.
Sinn Fein public spending spokesperson Mary-Lou McDonald accused the Government of being “out of touch” with the people and introducing regressive tax measures.
She called on the Taoiseach to consider the “recklessness” of a tax on a family home when many people are in arrears or struggling to pay mortgages.
Article Source: http://tinyurl.com/kbwqb42