THE CABINET has approved the Finance Bill which contains a number of adjustments to the Budget, including a 3 per cent levy on incomes over €250,000.
Details of the €200-a-year levy on car parking spaces in urban areas and tax relief of up to €1,000 a year for the purchase of bicycles and cycling equipment are also included in the Bill, which will be published tomorrow.
The Government decision to impose a 3 per cent levy on income over €250,000 is designed to raise €60 million, the same sum that will be lost to the exchequer as a result of the decision to exempt those earning less than the minimum wage of €17,542 from the income levy introduced in the Budget.
It means there will now be a 1 per cent levy on income up to €100,000, increasing to 2 per cent between €100,000 and €250,000 and 3 per cent above that.
The levy across the different pay levels is expected to bring in over €1 billion to the exchequer.
On that basis, the Government insists it has not made a U-turn, and sources said this type of adjustment was normal between the Budget and the Finance Bill.
The Bill will also detail how the €200-a-year charge on parking spaces provided for employees by their employers in major urban centres will work.
The scheme will operate in the centre of Dublin, Cork, Limerick and Galway. The areas covered will be designated in a ministerial order by the Department of Finance.
The charge will be collected by employers through the taxation system in the same way as benefit in kind is levied on other perks, including cars. Employees who give up their car-parking spaces will be exempt, and a lower charge will be levied on part-time workers. Disabled parking spaces will not be subject to the charge.
Tax relief for people who purchase a bike and safety equipment such as helmets will also be effected through employers, and it will operate like the tax relief on the public transport travel pass. The participation of employers in the scheme will be voluntary.
The potential saving for someone who gives up a car-parking space and buys a bike will be €600 a year. Both proposals were strongly advocated by the Green Party.
The Finance Bill will provide for an increase in Capital Acquisitions Tax, covering inheritance and gifts, which is expected to go up to 22 per cent. It will also give effect to the controversial €10 tax on airline passengers announced in the Budget.
The Cabinet also agreed yesterday on a plan to ensure that older people are not forced to pay far more for health insurance in the future as a result of the Supreme Court decision to strike down risk equalisation in the health insurance market.
The plan is expected to be announced shortly after it has been approved by the EU Commission.
It is designed to spread the cost of health insurance across all age groups, with tax relief for people over 50 one of the key elements.
