Gambling smokers who are planning to buy a diesel car and like the odd meal in a restaurant or a night away in an Irish hotel are likely to be the biggest losers when measures rolled out in the budget kick in over the next 12 months.
The biggest winners, meanwhile, are likely to be middle-income couples where one is self-employed and the other is a stay-at-home carer. For everyone else it will be largely as you were with gains amounting to little more than €5 a week.
The Minister for Finance described his budget variously as caring, progressive and responsible although more apt words might be minimal, modest and cautious and while there will be no-one dancing in the streets as a result of it there is unlikely to be anyone taking to them in protest either. And on balance his modest proposals will be welcomed by most consumers.
With potential banana skins such as a chaotic Brexit and an unpredictable administration in the US making it virtually impossible to predict what might happen in the months ahead, Paschal Donohoe has been careful to put in place measures aimed at protecting the Irish economy including a sizeable rainy day fund and keeping tax cuts to a minimum.
Changes to the entry points for the higher rate of income tax mean people will not pay the top rate of tax until they reach €35,300, a widening of the band by €759. That will benefit people earning over the threshold by €150 a year or €2.88 a week.
Changes in the USC will affect the largest number of taxpayers with the main 4.75 per cent rate attached to income between €19,300 and €70,000 falling by 0.25 percentage points. To get the maximum benefit – €127 a year – someone will need to earn at least €70,000 while someone earning €50,000 will be better off by €77 and someone on €35,000 will pay €39.25 less in tax.
There was some relief for parents with the income thresholds for access to the affordable childcare scheme climbing to €26,000 and the tax credit for home carers looking after children or older people going up by €300 to €1,500.
The self-employed tax credit climbs by €200 to €1,350. With both those credits straight cash gains for qualifying taxpayers, a couple with someone in each camp earning €70,000 a year will be better off by €14.50 each week, making them among the biggest winners in the PAYE group.
If people in the private rental sector hoped to win a little something from the budget too they will be disappointed as an additional €250 a year will not cover even a week’s rent in many parts of the State.
There was better news for their landlords however and they did get a boost with the lifting of limits on how much mortgage interest can be deducted for loans used to buy, improve or repair rented properties.
Although that may make renting more attractive to landlords and could arguably keep some of that cohort in the rental market which could ease pressure on supply in some areas, it could equally incentivise landlords to carry out substantial works on their properties as it will cost them less which may give them a reason to move sitting tenants out.
Social welfare
Among the other modest measures rolled out is the €5 per week increase in all social welfare payments and the restoration of the Christmas bonus payment to what it was before being cut in 2011. There is also a €10 reduction in the monthly Drugs Payment Scheme threshold to €124 and a 50 cent reduction in prescription charges to €1.50 for medical card holders over 70 which are both likely to make a small difference to many people.
A tax on one old reliable will make a more substantial difference. The 50 cent increase on a packet of 20 cigarettes will see a smoker with 20-a-day habit worse off by €182.50 next year.
A 1 per cent surcharge for diesel vehicles which will apply across all VRT bands is likely to add about €400 on to the cost of a mid-priced family car.
The impact of a 4.5 per cent VAT increase across the hospitality sector is hard to quantify as businesses may or may not pass it on to their customers but if they do, it could see around €4.50 added on to every €100 spent by consumers.
Similarly it is unclear what impact the doubling of the tax on bookies' turnover will have on consumers although Paddy Power estimated it would cost that company about €22 million each year. If bookies passed it on to punters it could add an additional 10 cent to each €10 bet.
There was some good news – from an economic if not environmental perspective – for consumers as the carbon tax was not increased which will save motorists around €40 a year, but the long-term impact on the planet has yet to be assessed.
