Another increase in motor tax is likely to be announced in the wake of next week's Budget, according to Mr Pat McArdle, chief economist at Ulster Bank.
On the basis of the money allocated for the roads funds next year, Mr McArdle says that another 5 per cent increase in the annual motor tax can be expected to be announced by the Minister for the Environment, Mr Roche, shortly after the Budget.
In a pre-budget briefing note, published yesterday, Mr McArdle also pointed out that the estimates have already pencilled in an increase in the employee's PRSI ceiling from €42,160 to €44,180, which he said was " the first taxation measure of Budget 2005."
The increase in the ceiling will expose more income to the PRSI charge for many middle to higher income earners.
Some concessions are likely for income taxpayers, Mr McArdle believes. However these may take the form of increasing tax bands and allowances to compensate for the non-indexation to inflation since 2002.
This would involve an increase in the single persons standard rate tax band by €4,5000 to €32,500 and a €230 rise in the single tax credit to €1,750.
Allowing for changes in other credits - including a reduction in the PAYE credit which only benefits employees - Mr McArdle estimates that this tax package would cost €530 million next year or €750 million in a full year.
The Ulster Bank economist forecasts that the Minister for Finance, Mr Cowen, will only announce minimal rises in excise duties, to keep inflation down.
Speaking yesterday the Minister again emphasised that controlling inflation was a priority. However Mr McArdle expects some further increase in tobacco excise duty for health reasons. Figures have shown a sharp fall in tobacco consumption, but despite this some rise in excise in this area is anticipated to continue the fall in smoking.
Mr McArdle is predicting a social welfare package costing about €800 million, somewhere below the €1 billion which the new minister, Mr Brennan, has been seeking.
This would mean an 8 per cent rise in the welfare budget for next year. Just over half of this cost would be borne by the exchequer, with the rest coming from the social insurance fund.
In addition to this, he is predicting an extra €150 million on current spending in other areas and an additional €100 million on capital spending, above and beyond what was already announced in the estimates.
The Minister may aim for an exchequer borrowing requirement of about €2 billion, Mr McArdle believes.
This would leave the general government deficit - the EU borrowing measure which excludes the State's contribution to the National Pension Fund - at about €700 million, or some 0.5 per cent of GDP.
Savings are likely on this as capital spending is again likely to fall below the levels forecast in the Budget, he says.
