Broad swathe of taxes and cuts hits almost every adult in State

Almost every adult in the State will be hit by a range of budget measures including a property tax, reduced child benefit, extended PRSI and cuts in the entitlements for the elderly.

Other elements of Budget 2013 include a rise in excise duty on alcohol and cigarettes, increased motor taxes, a higher student registration charge and an increase in Dirt tax on savings.

Two of the more controversial measures were a cut to the respite care grant, which is provided to carers each year, and the treatment of maternity benefit as taxable income from July 1st next. The carer’s grant will be reduced by €325 to €1,375 per annum. The change to the treatment of maternity benefit will generate €40 million in income for the exchequer in a full year.

The cuts in spending are €300 million less than initially planned in order to minimise the impact on health and social welfare, and the shortfall in the overall adjustment of €3.5 billion was made up in extra taxation.

Taoiseach Enda Kenny said the budget was about jobs, opportunities and businesses” with an emphasis on the small and medium enterprises sector.

“The decision of the Minister for Finance to bring in a particular package for small and medium enterprises will have direct impact for the benefit of many middle income families and those currently on low incomes to get out of the particular sector.”

Minister for Finance Michael Noonan expressed the hope this was the last austerity budget, and he predicted the adjustments in 2014 and 2015 would be much smaller. He also said this was the last December budget and he hoped to publish the 2014 budget next October.

Property tax

Minister for Public Expenditure and Reform Brendan Howlin said that when he took office last year he could not be certain the country would make it through the economic crisis, but he no longer held that fear. “In time, future generations will be proud that we, as a people, tackled this crisis head on,” he said.

Announcing the detail of the property tax, Mr Noonan said it would be levied at a rate of 0.18 per cent a year on properties worth up to €1 million. A higher rate of 0.25 per cent will only apply to the portion of a property valued at over €1 million.The tax will be introduced next July for a half year and the full impact will be felt in 2014.

People will be able to pay the tax in a number of ways including deduction at source from salary or pension.

The abolition of the standard PRSI allowance means most workers will pay an extra €264 a year. The minimum contribution from the self-employed will rise from €253 to €500. The PRSI changes will bring in €339 million to the exchequer per year.

Excise duty is going up by 10 cent on pints of beer and cider and measures of spirits, and by a full €1 on a bottle of wine.

Motor tax

Motor tax will rise by between €10 and €126, with a carbon tax on peat and coal to be introduced on a phased basis. Among the main spending cuts announced were a €10 a month reduction in child benefit.

Jobseeker’s benefit will remain the same but will be available only for nine months rather than 12. The reduced rate of USC for those over 70 with an income in excess of €60,000 will be discontinued at the end of the year. Changes to the telephone element of the household benefits package for the elderly will involve cuts in the phone and electricity allowances.

Access to medical cards for over-70s will be restricted with individuals with an income of €600- €700 per week (€1,200- 1,400 per couple) now qualifying for a GP-only card rather than the full card.

Fianna Fail finance spokesman Michael McGrath said low and middle income families and elderly citizens were the “biggest losers” in this budget.

Fine Gael and Labour TDs last night backed the measure by 108 votes to 49.

However, Labour Party chairman Colm Keaveney said it was fortuitous the vote on the Social Welfare Bill was not being taken until January. He said he was unhappy with the changes to PRSI allowances and children’s benefit.

Speaking during a debate on a resolution that eliminates tax relief on lump-sum payments of over €200,000, former minister of State Róisín Shortall asked Mr Gilmore: “On what basis do you believe it’s in any way fair that a person should be able to receive a lump sum of €200,000 entirely tax free? What’s the basis for continuing with that kind of regime?”

Main points

Property Tax

Self-assessed property tax introduced, 0.18 per cent of value up to €1 million, 0.25 per cent for properties of higher value. The tax comes into force from July, 2013 and the first full year will be 2014

* Child benefit cut €10

* Motor tax up 15 per cent

* Maternity benefit taxable from July 2013

* Prescription charge up 50 cent to €1.50

* €1 excise increase on bottle of wine, 10 cent on pint of beer/ cider and measure of spirits

* 10 cent on 20 cigarettes

* Third-level registration fees increasing by €250 a year over next three years

* Dirt tax on savings up 3 per cent to 33 per cent

* Capital gains tax up 3 per cent to 33 per cent

* Universal Social Charge applied at standard 7 per cent rate for those aged 70 and over earning more than €60,000