The Government is planning another round of tax cuts and benefit increases in 12 months’ time, following the €1 billion budget giveaway unveiled yesterday.
Minister for Finance Michael Noonan confirmed last night that the tax-cutting package announced yesterday will be mirrored in Budget 2016, the last before the next general election.
Government sources confirmed that the plan is to continue the process in the next budget, with a further reduction in the top rate of tax to 39 per cent, allied to changes in the Universal Social Charge (USC) to reduce its impact on low earners while increasing the rate on earnings over €70,000.
Minister for Public Expenditure and Reform Brendan Howlin announced that the rate of child benefit, which will increase by €5 from January, would go up by another €5 in 2016 if circumstances allowed.
The Opposition parties have accused the Government of firing the first shots in the general election campaign.
The national debt is forecast to stand at €203.2 billion by the end of this year, down from €215.6 billion at the start of the year. The exchequer borrowing requirement will be €6.5 billion.
The key elements of the budget for 2015 announced yesterday are a modest reduction in income tax, an increase in child benefit, tax relief on water charges and a €2.2 billion investment in social housing over the next three years.
Mr Noonan told the Dáil in his budget speech that the top rate of income tax would be cut from 41 per cent to 40 per cent, with the standard rate income tax band rising by €1,000 to €33,800 for single individuals and by €2,000 to €34,800 for a couple. He also announced changes to the USC to reduce its impact on low and middle income earners, with a clawback for those earning over €70,000.
“These changes mean that everyone who currently pays income tax or USC, or both, will benefit from today’s budget changes,” said Mr Noonan. Mr Howlin announced that as well as the increase in child benefit, all recipients of core social welfare payments would receive a Christmas bonus this year of 25 per cent of their weekly payment.
He added that 180,000 older people would benefit from a €9 weekly increase to the living alone allowance.
Income tax relief will be available at the standard rate on water charges up to a maximum of €500 per household per year, while a subsidy worth €100 per year will be given to all recipients of the household benefits package and fuel allowance, with the measures benefiting 653,000 households.
Mr Noonan also announced plans to abolish the “Double Irish” tax loophole, which has created a lot of international controversy.
The only increase in excise is a 40 cent hike in the price of 20 cigarettes. Mr Howlin said extra spending this year would go to “critical areas” such as social protection, health, education, justice and housing.
He also announced that the public service embargo on recruitment would effectively end next year following the decision to recruit extra teachers and gardaí.
The Opposition parties attacked the budget, with Fianna Fáil finance spokesman Michael McGrath saying it was clearly motivated by the short term and failed to set out any credible vision for fairness and solidarity in recovery.
That party’s spokesman on public expenditure and reform, Seán Fleming, said there was a €460 million “hole in the health budget for next year before we get started”.
“The HSE deficit this year could hit €500 million by the end of the year and the one thing we need for next year is a realistic budget,” he added.
Sinn Féin finance spokesman Pearse Doherty described the Budget as “deeply disappointing” and said it did nothing for struggling families.
His party’s deputy leader, Mary Lou McDonald, was ordered out of the Dáil after clashing with Ceann Comhairle Sean Barrett during the budget debate.
