Top pensioners face budget take of €500m
Pensioners with high incomes will be one of the primary targets of today’s budget with an estimated €500 million in new taxes and cuts earmarked for the group.
A senior Government source last night said that a package of measures had been approved for high earners who have substantial pension provision or high assets.
One of the measures that will be announced by Minister for Finance Michael Noonan and Minster for Public Expenditure Brendan Howlin in the Dáil this afternoon will be a three-point increase in universal social charge (USC) for those over 70 with incomes of €60,000 or more.
This will bring the USC rate from 4 per cent to the 7 per cent that applies to the under 70s.
A new cap of €60,000 on the amount of annual tax relief available for pension contributions is expected to generate savings of €200 million.
An extension of PRSI to non-earned income such as rental income, share and dividend income is expected. This includes the private income of hospital consultants which is currently exempt from PRSI.
“All of these measures are particularly targeted at high-income earners and will make this a progressive budget,” said the Government source.
“It involves very significant amounts of money and will have a substantial impact on high incomes and assets.”
Much of the budget has been flagged for some time. Some of the key elements are:
A property tax averaging about €300 a year.
A cut of €10 a month in the rate of child benefit.
A big hike in excise duty on alcohol and cigarettes.
A 15 per cent rise in motor and VRT taxes.
The abolition of the €127 a year PRSI allowance.
A cut in the telephone, electricity and gas allowances for pensioners.
A significant increase in the €100 charge for attending hospital accident and emergency departments.
The doubling of the prescription charge for medical card patients to €1.
A clampdown on sick pay in the public service.
A reduction in the extra maternity leave available to teachers to the standard 26-week public service norm.
An increase in the pupil-teacher ratio.
A rise in third-level registration fees.
A cut in TDs’ expenses and perks.
In total the budget will involve €2.25 billion worth of spending cuts and €1.25 billion in tax increases.
Minister for Public Expenditure Brendan Howlin briefed Labour TDs and Senators at a special meeting yesterday afternoon and reassured them that the budget would be fair.
Some Labour backbenchers were dismayed that the party’s proposal for a three-point rise in the universal social charge for those earning over €100,000 was blocked by Fine Gael.
However, measures targeting higher earners that are expected to yield some €500 million appear to have settled nerves in the party.
Labour is relieved at the extent to which education spending has been protected. While many would prefer the €10 child benefit cut not to happen, they hope future budgets could look at taxing or means-testing the payment.
Meanwhile, it was confirmed last night that the Department of Health is to get a supplementary estimate of €360 million, despite repeated Government promises that no additional funding would be provided for overspending departments.
An additional €162 million is needed for the HSE regions and €234 million is required to offset the overrun on medical cards and community schemes, according to the supplementary estimate published last night.