Budget 2015
It’s been hailed by certain sections of the media as a giveaway budget, and it’s no coincidence that this ‘giveaway’ budget is the last one before the general election. The Fine Gael Labour coalition government say that it’s business as usual, keeping one eye on expenditure while rewarding the public for putting up with austerity for the last four years. Predictably, the opposition are having none of it, accusing Fine Gael and Labour of populist tokenism, and that looking after the already well-off is more important than properly addressing the homeless crisis.
Minister for Finance, Michael Noonan and Minister for Public Expenditure, Brendan Howlin stood outside Government Buildings and smiled for the waiting media as they delivered Budget 2016, but who else will be smiling after yesterday’s announcements? Here are the main points…
The Universal Social Charge
The USC is, without a doubt, the most despised levy introduced by the government since 2011. The good news is that all the bands covered by the USC will see reductions and thresholds will be raised. The 1.5% rate will be reduced to 1.0%, which will realize an additional €500 in annual income. The 3.5% rate will now be lowered to 3.0%, to an increased threshold of €18,668 and the 7% rate will be reduced to 5.5%, to a new threshold of €70,044. The government has claimed that, because of these measures, around 700,000 workers will now fall outside of the Universal Social Charge net.
Employment
The minimum wage is set to increase by 50 cents from €8.65 to €9.15 from January, a change recommended by the Low Pay Commission last July. Someone working 39 hours on the minimum wage will see an extra €708 in their take-home pay over the course of a year. In addition, €500 Million will be allocated to enterprise agencies to foster the start up of small to medium sized businesses.
Social Welfare and pensions
While there’s no change on the rate of unemployment benefit and jobseeker’s allowance, pensioners will see an increase of €3 a week and the Christmas bonus will be increased to €75 of weekly entitlements. Child benefit will rise from €135 to €140 per month and the family income supplement goes up by €5 per week for one child families and by €10 for those with two or more children. Fuel allowance will also see an increase, from €20 to €22.50 per week.
Housing
The coalition is being criticised for its apparent lack of progress in the area of housing. The coalition says that NAMA will deliver 20,000 houses by 2020 even though the government’s own organisation, the Housing Agency says that 16,000 homes a year are needed just to keep up with current demand. Social housing projects will receive a budget of €414 million, that’s an increase of €69 million.
Health
Free GP care will now cover children up to the age of 12. Whether GPs will implement the changes remains to be seen. Home carer’s tax credit is to be increased by €190 to €1,000 and the respite care grant will return to its original value of €1.700. The Department of Health will see its budget rise to €13.2 billion next year.
Education
A Budget of €8.5 billion will be allocated to education in 2016 with 2,260 full-time teaching positions and 600 new resource teachers. These changes mean that pupil teacher ratios will decrease from 28:1 to 27:1 for primary classes, and 19:1 to 18.7:1 for secondary schools.
Policing and Justice.
The coalition has constantly been attacked over its decision to close almost 140 Garda stations since coming to power in 2011. Furthermore, there are many dissenting voices both in government and the opposition that see a direct correlation between the station closures and the rise in rural crimes particularly violent burglaries. The Department of Justice will have a budget of €2.2 billion next year. 600 new Gardai are to be recruited and improvements will be made to the force’s information technology structure.
Tax
Those of us who like a drink can rest easy because there will be no increase in excise duty on alcohol but there will be tears in the beer garden as the cost of a pack cigarettes is to increase by 50c to €10.50. The 9% VAT rate for the tourism sector is to remain unchanged. The haulage industry received a much needed boost at the news that the tax rates in the Republic will be simplified and reduced to fall in line with their counterparts, and direct competitors in the north. The amount of commercial motor tax rates will be cut from 20 to just five, ranging from €92 to €900, that’s quite a reduction in price given that current maximum is €5,195. This change will affect 28,000 vehicles.
The 0.15% pension fund levy, another unpopular tax introduced by the coalition, will be scrapped in January 2016. Those in the business of starting their own business will be buoyed by the decrease in Capital Gains Tax from 33% to %20.
Other notable points.
New fathers will have the chance to take a two-week holiday with the introduction of paid paternity leave. Presumably they’ll be slouched on the couch, gently cradling their sleeping new-born baby while watching, hopefully, an Irish movie success because as part of today’s budget, upcoming film productions will see a tax break of up to €70 million in eligible expenditure.
Reaction
The government is heralding the budget as one that’s fair and sensible, given the still precarious nature of the economy however, the budget has been criticised from all areas including the Fiscal Advisory Council who questioned the ultimate cost of Budget 2016, suggesting it be out of kilter with EU fiscal rules. Ex-Fine Gael minister Ivan Yeates, writing for the Irish Independent said that, “four years of prudence has been sacrificed at the altar of canny cute-hoor politics.”
Hashtags: #Budget2015 
