Property tax deferral for low-paid mortgage holders
Mortgage holders will be allowed to defer payment of the new property tax under a means test if their monthly loan repayments are high enough.
The new tax to be unveiled in the budget next Wednesday will be levied at a rate of 0.2 per cent of current market value, but the Cabinet has agreed to permit deferrals for homeowners with low incomes and high mortgages.
Single people on an annual income of €20,000 and couples on €30,000 are expected to qualify. Payment can be put off until the property is sold or low-paid homeowners’ personal circumstances improve.
No blanket deferment
For those in difficulty with mortgage repayments, deferments may be possible if gross income is less than €15,000 for single people and €25,000 for couples after 80 per cent of the annual mortgage interest bill is paid.
There will be no blanket deferment for those in negative equity, however.
Meanwhile, in an effort to boost job creation, Minister for Finance Michael Noonan is planning to cut the VAT rate for the construction industry from 13.5 per cent to 9 per cent.
One of the main reasons the number of long-term unemployed has remained stubbornly high is because so many former construction workers are still out of work.
Mr Noonan told a meeting of Fine Gael TDs during the week that boosting job creation would be one of the central features of his budget. Tom Parlon, director general of the Construction Industry Federation, said when his organisation lobbied Mr Noonan in recent weeks, the Minister’s reaction indicated he was favourably disposed to the proposal.
“He rubbed his hands together and said, ‘How much money are you bringing me in’?” Mr Parlon said. The higher rate of VAT was increased last year from 21 per cent to 23 per cent and it may go even higher in this year’s budget. Excise duties on alcohol and cigarettes are certain to rise, with a substantial rise expected.
Mr Noonan has been encouraged by the drinks industry to impose a higher increase on imported wine rather than locally produced beer and spirits.
There may be some movement on the universal social charge. The Labour Party is pressing for a “symbolic” increase in the rate applying to incomes of more than €100,000 from 7 per cent to 10 per cent.
The Cabinet will meet again this afternoon to attempt to finalise outstanding contentious elements in the budget package relating to the so-called big-spending Ministers, James Reilly at health and Joan Burton at social protection.
Savings of €800 million will have to be made in health and €540 million in social protection. Tax increases will yield a further €1.25 billion to bring the overall savings up to the €3.5 billion target.
Other elements of the budget package are: a €10 cut in child benefit from €140 to €130 a month; a reduction in income tax exemption limits for the over-65s of €18,000 for a single person and €32,000 for a married couple; and a reduction from 12 months to nine in the period for payment of non-means-tested jobseeker’s allowance.