Minister for Finance Brian Cowen has announced a radical reform of stamp duty on residential property and a major increase in taxes on cars in his fourth Budget delivered to the Dáil this afternoon.
Budget 2008 is launched by Brian Cowen this morning.
Mr Cowen said a "measured deceleration" was required and "not a sudden slamming of brakes."
He told the House the global economy was "beset by uncertainty" but added: "We must not lose sight of the fact that fundamentals of the economy are still good".
The Minister announced that stamp duty will now not apply on the first €125,000 of the cost of a house. A rate of 7 per cent will apply between €125,000 and €1,000,000 and 9 per cent will be applied to the excess above €1,000,000.
The new regime takes immediate effect.
The current exemption for first-time buyers will be retained. However, the rule requiring those benefiting from this exemption to live in the house for at least five years will be changed. Under the new rules this will be changed to two years, Mr Cowen told the House.
Mr Cowen unveiled a new system of vehicle registration tax (VRT) for new cars, which he said was "not about penalising people" but about helping the environment.
The new system will see the introduction of a seven-band system based on CO 2emissions and not on engine size. Rates will range from between 14 per cent and 36 per cent, penalising larger vehicles, and will be introduced on July 1st, 2008.
Mopeds and electric cars will be exempt from VRT from January 1st next.
Annual car tax will be increased by 9.5 per cent for cars with engines that are 2.5 litres or less and by 11 per cent for vehicles with a bigger engines than this.
Public transport has been allocated €1 billion, and education has been given €9.3 billion, which includes €95 million in capital funding for primary school building projects.
The contributory old-age pension will rise by €14 a week to €223, and the non-contributory pension will rise €12 per week, bringing it to €212. The carers' allowance will rise by €14 a week.
Child benefit will rise €6 a month to €166 for first and second children, and by €8 for third and subsequent children, bringing it to €203 a month.
The early childcare supplement will rise by €100 bringing it to €1,100 per annum for children under the age of 6.
Cigarettes will rise by 30 cent per packet of 20 from midnight tonight, Mr Cowen said. Alcohol and the price of fuel are unchanged.
Mr Cowen has played his cards close to his chest on stamp duty despite continued pressure to reform the system in the climate of a slowing housing market. The exchequer had expected to collect €367 million in stamp duties during November. However, amid a slide in housebuilding, stamp duty receipts amounted to just €209 million, €158 million or 43 per cent below target.
Overall, the exchequer had planned to take in €10.9 billion in tax revenues during November, but the amount of tax collected came to just €9.7 billion.
Tax receipts during November - the busiest tax-collecting month of the year - fell short of official expectations by €1.2 billion or 11 per cent, according to the exchequer returns for November, published yesterday.
In concluding his speech Mr Cowen said Budget 2008 had been framed against "the most challenging backdrop experienced in a considerable number of years."
"Growth is moderating, the international financial markets have been turbulent and the global outlook is uncertain. Rather than adopting a conservative, cautious stance, I believe we must respond to the challenge by taking determined action and pushing ahead with renewed vigour.
"Today's Budget meets the challenge head on."