Labour helps bring in changes it warned against
ANALYSIS:There were no cheers and no jeers in the Dáil chamber as Michael Noonan and Brendan Howlin unveiled their tax and spending measures for next year. Instead of the rumbustious scenes traditional on budget day, an air of resignation permeated the House.
The only item that provoked any kind of noisy response was the announcement that the generous €40,000-a-year tax-free leaders’s allowance paid to each Independent TD would in future be audited. That prompted the Government benches to come to life in a bout of half-hearted jeering.
The muted response to the two Budget speeches was due partly to the fact there were hardly any surprises left, so thoroughly had the package been leaked over the past two weeks. More importantly it was a reflection of the weariness that, for the sixth year in a row, the country was being hit with another bout of austerity.
Noonan tried to cheer up his audience at the end by forecasting that if the 2013 package worked, then the adjustment for 2014 and 2015 might not have to be as severe as outlined in the bailout plan. It was scant comfort given the litany of cuts and tax increases that will hit the people of the country next year.
The property tax had been signalled from a long way back and there is no doubt it makes eminent good sense in terms of putting the tax system on a sustainable footing. However, it is still going to be an enormous imposition, and paying it will be widely resented by an already hard-pressed electorate.
People will be able to pay in instalments through a variety of methods, including having it deducted from their income or their State payments, but it is going to take time to convince people to sign up to seeing the tax as an everyday fact of life.
Ironically, the taxpayers of the country have taken the universal social charge in their stride, despite the fact it has hit them far harder than the property tax ever will, simply because they are used to deductions at source.
The Government will face a battle getting people to pay the property tax but ultimately the range of sanctions outlined by Noonan yesterday will probably see most people complying. It is noteworthy that in spite of all the negative publicity surrounding the introduction of the €100 household charge and the calls for a mass boycott back in January, about 70 per cent of households have paid. It was made clear again yesterday that the remaining non-payers will be pursued.
Noonan made a point of reassuring the majority of tax-compliant citizens that the Revenue Commissioners will strictly enforce the property tax and proceed to collect the household charge arrears. In fact, the outstanding charge will be doubled to €200 for those who have not paid by July 1st next.
There were a number of other talking points. The abolition of the PRSI allowance and the extension of PRSI to other forms of income, both earned and unearned, apart from basic pay, will raise a significant amount of revenue. So will the increase in the rate of Dirt tax on savings to 33 per cent as well as a rise in capital gains tax and capital acquisitions tax to the same rate.