Budget 2016: €1,650 tax break for business and farmers
Self-employed business people and farmers will be offered a tax break worth €1,650 over the next five years starting in next week’s Budget
This is on top of the cut in the Universal Social Charge of at least 1.5pc – the start of a possible trend over coming years.
Finance Minister Michael Noonan said he will begin to extend the PAYE tax credit – worth €1,650 – to the self-employed and farmers in Budget 2016.
But it is understood Mr Noonan will commit to matching the PAYE tax credit in full over the next five years, starting with at least a fifth, or €330, in 2016.
The offer to business and farmers will be contingent on Fine Gael being returned to power in the upcoming General Election.
Fine Gael will also promise to continue to cut income tax, the USC, and PRSI over the next Dáil term. The USC will be the target of the cuts next Tuesday. Middle- income earners will pay less than 50pc tax on their salaries.
Every euro earned above €33,800 is currently hit with the marginal tax rate of 51pc. The Budget will see the total tax rate reduced to at least 49.5pc – and possibly 49pc. Mr Noonan will signal further tax cuts if the party gets back into office.
“The marginal rate of tax affects behaviour and economic activity. He [Mr Noonan] will present it as a formula towards securing economic recovery. The Fine Gael manifesto will set out a mix of USC, PRSI and income tax reforms and cuts,” a senior Government source said.
Mr Noonan told the Irish Independent the extension of the PAYE tax credit will be in the package.
“It will take a number of years, but we will start it,” he said. However, he did not provide any figures.
Mr Noonan said he will also be “tidying up” a number of taxation measures in the agricultural sector.
He said he has had discussions with farming representative groups, who he described as “easily the best lobbyists in the country” due to the detail of their presentations.
“They always come in and they’re very good,” he said.
“We’ll be doing some taxation measures for them, but we did most of what they were looking for, over the last three years in particular. There was a review of agri-taxation and all of the main points we have dealt with already. We’ll be tidying up a few things.”
The Budget is also expected to see the continuance of a number of income tax reliefs for farmers which were due to run out at the end of the year, including:
25pc general stock relief.
100pc stock relief for certain young, trained farmers.
50pc stock relief for registered farm partnerships.
The retention of the 100pc stamp duty exemption for young, trained farmers.
Meanwhile, a lower tax rate aimed at returning emigrants has been ruled out of the Budget plans, but Jobs Minister Richard Bruton insists it would have been an “innovative” idea to drive the economy forward.
The proposal which Mr Bruton wanted was seen as too politically difficult to introduce by the Department of Finance, who feared it would annoy workers who stayed in Ireland throughout the recession.
It is understood that Mr Bruton has proposed a 30pc flat-rate tax for skilled workers, in an attempt to lure home Irish emigrants who left Ireland during the recession.
The ’emigrant tax’ was a central plank in Mr Bruton’s pre-Budget submission, but Mr Noonan has ruled it out on the basis that it would have to be offered to all EU migrants.
“Our job every year is to look at new ideas that could impact on the growth of our economy. We have made a submission and that is one of the ideas in it,” Mr Bruton said.
He said his department had “a very good track record of producing new ideas”, but admitted some are seen as radical.
“We have a strong track record of delivering innovative ideas and this is one of them. I won’t comment on the individual proposal as that would have to be decided within government,” he said.
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