Property tax, child benefit cuts and duty hikes unveiled
A property tax and changes to the PRSI system likely to cost PAYE workers more than €250 per year were the key revenue raising measures outlined in the State’s sixth austerity budget in five years.
A cut to child benefit, increased duties on alcohol and tobacco products, a hike to the student contribution charge, and rises to the rates of motor taxes and DIRT tax on savings were some of the other headline announcements as the Government seeks to save €3.5 billion next year.
Minister for Finance Michael Noonan announced taxation measures which he expects to generate €1.25 billion and Minister for Public Expenditure Brendan Howlin has cut expenditure for 2013 by some €2.25 billion.
Mr Noonan said it was “a good day for taking stock of where we are” as a country.
He said the State’s general deficit would stand at 8.2 per cent at the end of the year, inside the 8.6 per cent bailout target. This would fall to 7.5 per cent in 2013, 5.1 per cent in 2014 and 2.9 per cent in 2015. The figures, he said, were based on economic growth of 1.5 per cent next year, 2.5 per cent in 2014 and 2.9 per cent in 2015.
The property tax, Mr Noonan said, is to be levied at a rate of 0.18 per cent on properties worth up to €1 million and 0.25 per cent on properties valued at more than that.
He said certain properties would be exempt from assessment for the tax, in a similar way to exemptions from the €100 Household Charge. There will also be a system of voluntary deferral arrangements to assist those facing difficult circumstances.
Speaking tonight, Taoiseach Enda Kenny said the Budget was the most challenging that would have to be delivered in the lifetime of the Coalition.
He told RTÉ News that he hoped it could move the country forward toward economic development.
Asked if the property tax was a fair measure, he said the Government had a straight choice between it and increasing income taxes and other taxes on employment. The tax was designed to be “fair” and “progressive” and there were a range of deferral options for those who could not afford to pay.
Mr Noonan also announced the abolition of the weekly PRSI allowance for workers, likely to mean workers pay an extra €264 annually, and increased the minimum level of annual contribution from the self-employed from €253 to €500. The PRSI changes will bring in €339 million to the Exchequer per year. Income tax rates went unchanged.