These are the main provisions that will affect you.
- A cut of one per cent in the top rate of income tax to bring it to 40 per cent
This is what is called the “marginal rate”. This means that when you add PRSI and the USC, someone earning the average industrial wage was taxed on some of that salary at 52 per cent. That is well above the European average and puts us at a disadvantage in attracting multinationals. Additionally, now that the employment situation is improving, we want to be able attract our recent emigrants back and not penalise them financially for doing so.
- Raising the threshold and changing the rate at which the universal social charge (USC ) is paid by low and middle income earners
Every penny that someone earned in excess of €10,000 was subject to the Universal Social Charge. The Government has now increased the point at which the USC is payable by another €2,000. This means that low and middle income earners will be able to earn up to €12,000 without paying any USC at all. Additionally, the Government will decrease the 2 per cent and 4 per cent rates by 0.5 per cent each. The Minister for Finance has also announced the introduction of a fourth band of USC targeted at those earning over €70,000. This will ensure that the changes announced will benefit those on low and middle incomes.
- A widening of the tax bands so the threshold at which people enter the high marginal rate will rise from €32,800 to €33,800
The entry point where you pay the highest rate of tax was too low. The Government has moved to increase the point at which it is paid to incentivise employment.
- The reduction or elimination of the levy on private sector pensions
Anyone who is retired or about to retire will be glad to hear that the Government will abolish the 0.6 per cent levy at the end of 2014. Additionally, the .15 per cent levy will be abolished at the end of next year. We realise that it is important to encourage people to invest in a pension and the Government are moving to phase out the levy entirely.
-Investment in Social Housing
A capital investment of €2.2 billion has been announced for social housing over the next 3 years. €800 million will be allocated next year which represents the first major investment in housing since 2009.
- Tax relief for those paying water charges
An income tax relief will be available at the standard rate on water charges. Additionally, a water subsidy worth €100 a year will be granted to all recipients of the household benefits package and fuel allowance.
- An increase in Child Benefit
Given the reductions in child benefit in recent budgets and the pressure on people with young families, the Government has announced an increase of €5 per child from January.
- Phased return of social welfare Christmas Bonus
The Christmas Bonus was a once-off end of year payment for elderly people, carers and long-term social welfare recipients that was abolished by the previous government in 2009. Given the improved economic climate, the Government has decided to reintroduce it on a phased basis over the coming years. It will mean that everyone entitled will receive a quarter of their weekly payment as an additional bonus this Christmas.
-Home Renovation Incentive (HRI )
The Home Renovation Incentive has been very successful in generating employment in the construction sector. 9,300 homes are currently benefitting from the scheme which represents €190 million worth of works involving 3,000 contractors. The scheme will now include rental properties owned by landlords.
- An extra 1,700 Teachers
An additional €60 million will be invested in the education budget. This funding will help provide 1,700 additional teachers, resource teachers and special needs assistants, mostly at primary level. This will ensure that demand for places is met and the pupil teacher ratio does not increase. The plan is to reduce those ratios in coming years. The annual budget for the Literacy and Numeracy Strategy will increase by €6 million to €13.8 million.
- Extra money for the Health Service
Minister Varadkar has received €305 million additional funding this year. The health service is demand led. We have an ageing population. Every year for over ten years the health budget has overrun. It is impossible to predict the annual demands that will be placed on the system. Minister Varadkar has taken a very pragmatic view of his Department’s requirements and has secured this money to ensure continuity of service next year to meet our health needs.
- Extra money for Gardai
Whether young or old, urban or rural, we all like to feel secure in our beds. In that regard Minister Fitzgerald has secured an increased budget of €2.2 billion which will include measures such as the purchase of 400 new garda vehicles. It will also ensure we continue the Garda recruitment drive we commenced this year. That means that we are actually increasing Garda numbers for the first time since the downturn.
This budget is the first step towards easing the heavy burden placed on citizens over the last few years. It is important that we have a sustained recovery and continue to grow our economy by getting more people back to work where the real benefits will be felt by all the citizens.