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A budget of modest payback: The key announcements in #Budget18

10 October 2017 18:09
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A budget of modest payback: The key announcements in #Budget18

Ireland's working families and people on welfare are set to gain a fiver a week or more in a budget of modest payback.

But while the Republic lurches from one set of record homelessness figures to another, the minority Government took a hammering from opponents who accused ministers of repeating commitments on social housing.

And with farmers and food businesses reeling from the unknowns of Brexit, €300m of low-cost loans are to be directed at firms suffering from cash flow crises.

Taoiseach Leo Varadkar set the scene for €1.2bn package of tax and spending by heralding it as a chance to give back something to Ireland's two million workers.

But within hours of the pronouncement the government's PR spend came under fire as it emerged a new strategic communications unit, billed earlier this year as cost neutral, is set to be financed with €5m next year.

Finance Minister Paschal Donohoe told the Dail parliament the budget aimed to guard against three main threats to Ireland - Brexit, the potential impact of US trade tariffs and various geo-political threats.

Unveiling a war chest funding package, one big ticket item from Mr Donohoe was a move from midnight targeting commercial property deals with a tripling of stamp duty to bring in €400m.

That will help cover the cost of five euro a week increases to most welfare payments, including the dole and state pensions, but people will have to wait until the end of next March to reap any benefits.

And some of the money coming in will pay for modest changes to income tax, including the deeply unpopular Universal Social Charge (USC) that was created at the height of the recession.

Mr Donohoe said the top marginal rate of tax on income up to 70,044 euro will come down to 48.75% as a result of the changes.

The threshold for the higher rate of income tax is being raised by €750 to €34,550 while a new 2% USC rate will kick in at €19,372, up from €18,772, so minimum wage workers will not pay the upper rates and a second USC rate will drop to 4.75%.

Sinn Fein finance spokesman Pearse Doherty accused Mr Donohoe of repeating commitments already made for 3,800 new homes next year.

"This is a budget that tolerates and normalises mass homelessness of young people and children," he said.

* Spending on health to increase by 685 million euro (£612 million), bringing the total budget for the Health Department to 15.3 billion euro (£13.6 billion).

* A reduction in prescription charges for all medical card holders under 70 from 2.50 euro (£2.23) to two euro (£1.78) per item. The monthly cap drops from 25 euro (£22.36) to 20 euro (£17.89).

* The excise duty on a packet of 20 cigarettes will rise by 50 cents (44p).

* A sugar tax from April 2018 will see an extra 30 cent (26p) per litre of tax on drinks with over 8g of sugar per 100ml. There will be a reduced rate of 20 cent (17p) per litre on drinks with between 5g and 8g of sugar per 100ml.

* Education spending will reach over 10 billion euro (£8.9 billion) in 2018. There will be 1,300 moreFraine posts in schools next year and the pupil-to-teacher ratio will reduce to 26:1.

* A 1.7 billion euro (£1.5 billion) investment in special education, with more than 1,000 new special needs assistants being recruited before September 2018.

* In a bid to address the homelessness crisis, 1.8 billion euro (£1.6 billion) will be allocated for housing. Next year, 3,800 new social homes will be built and there will also be an increase to the housing assistance scheme by 149 million euro (£133 million).

* An extra 500 million euro (£447 million) for direct building programme will see 3,000 additional new build social houses by 2021.

* Stamp duty on non-residential property is being increased to 6% from midnight on Tuesday.

* A new agency, Home Building Finance Ireland, to use Nama’s experience and provide cheap loans to developers was announced.

* Mortgage interest relief for people with loans taken out in period 2004-2012 is being continued to 2020 but at just 75% the rate in 2018, 50% in 2019 and 25% in 2020.

* All weekly social welfare payments to be increased by five euro (£4.47) starting from the last week of March. An 85% Christmas bonus will be paid this year.

* Threshold for the family income supplement will rise by 10 euro (£8.94) per week for families with three children. Two euro (£1.78) per week rise in the rate of the qualified child payment.

* The home carer tax credit is to increase by 100 euro (£89) thnursesis year to 1,200 euro (£1,073) per year.

* For the self-employed, the earned income credit will increase by 200 euro (£178), bringing it to 1,150 euro (£1,128) per year from next year.

* The threshold at which people enter the higher, 40% rate of income tax will rise from its current level of 33,800 euro (£30,242) by 750 euro (£671) for a single person to 34,550 euro (£30,914).

* An extra 800 gardai and 500 civilians will be recruited next year. There will be 63 million euro (£56 million) more for Justice to develop a "modern police force".

* VAT rate on sunbed services increases from 13.5% to 23% due to link to cancer from use of sunbeds.

* The vacant site levy, due to take effect from 2019, will increase from 3% to 7% in 2020.

* Brexit loan scheme of up to 300 million euro (£268 million) is being made available to SMEs.

* VAT rate for tourism and services sector is being left unchanged at 9%.

* Help to buy scheme for first-time buyers, which offers an income tax refund of up to 20,000 euro (£17,893) for buyers of newly-built homes, is being retained.

* A Rainy Day Fund will be established in the coming year, with at least 1.5 billion euro (£1.34 billion) to be transferred to it from the Ireland Strategic Investment Fund.

For more detail around all these announcements see here and find out what the various Minister’s had to say at their respective departmental budget briefings.

Read reaction from the various political parties here and reaction from the various interest groups here.

Watch live coverage of the various departmental and ministerial press briefings.

Watch our interview with Minister for Finance Paschal Donohoe. Interview by Daniel McConnell, video by Moya Nolan.

Source: irishexaminer.com

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