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.
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.