Budget 2016: Families the focus as Coalition unveils election platform

Main focus of package on USC cuts and increases to pensions, Christmas bonus and child benefit

Fiach Kelly and Mary Minihan tell us how the coalition used their budget to deliver a message to voters. Video: Kathleen Harris

 

The Government has laid the ground for its re-election campaign with a budget designed to deliver increased income to every home in the State.

On a day of tax cuts, pension increases and special measures for parents of young children, the Coalition parties also sought to set the agenda for the election to come with a series of pledges for a second term if they are returned to power.

The centrepiece of Budget 2016 is a 1.5 percentage point cut in the 7 per cent universal social charge rate which applies to earnings up to €70,044. Workers on more than €70,044 gain from this cut, but earnings above that amount will remain subject to the 8 per cent USC rate.

The 3.5 per cent and 1.5 per cent USC rates on low income will each be cut by 0.5 percentage points.

“If people are wondering how much they will gain, it will be approximately a full extra week’s wages at all points of income. It is an easy way of assessing what the income gain might be,” Mr Noonan told the Dáil.

The package of USC cuts came on top of increases to child benefit, the extension of free GP care to all children under 12 and an additional year of free preschool childcare.

Self-employed

Mr Noonan said that the Government parties would work “progressively” to eliminate the USC if re-elected. Another election pledge was to complete tax equalisation for the self-employed and other measures to support job creators.

On RTÉ television last night, Taoiseach Enda Kenny made it clear that the election will take place next spring. Asked whether he might be tempted to cut and run after the budget, Mr Kenny said: “No, there won’t be an election this year.”

Earlier, Mr Noonan told reporters: “You can be absolutely certain there will be no election between now and Christmas.”

Mr Noonan raised duty on cigarettes by 50 cent a packet from midnight, the only tax increase next year.

A continuation for five years after 2016 of the €150 million annual bank levy will raise €750 million.

Among the spending measures set out by Minister for Public Expenditure Brendan Howlin were a €3 a week increase in the old age pension and a €5 increase in child benefit. The Christmas bonus will be reinstated to 75 per cent of the pre-abolition rate for all social welfare recipients.

Mr Howlin said the Coalition had, through prudent management of the State’s finances, brought the State back from the brink. “Who speaks of Syriza now?” he asked.

The package, predicated on a 4.3 per cent gross domestic product next year, was cast to reduce the budget deficit in 2016 to 1.2 per cent of GDP from 2.1 per cent in 2015.

The plan was cast to foster job creation as a cornerstone of budgetary strategy, making work pay for people taking up jobs.

Mr Noonan said the barriers to taking up employment included taxation, wage levels for the low paid and childcare costs, all of which were being addressed in the budget.

‘Unequal place’

His party colleague Barry Cowen strongly criticised the failure of Government to introduce rent certainty measures.

Sinn Féin finance spokesman Pearse Doherty said the cut in USC and the changes to PRSI would put three times more in the pocket of someone earning €70,000 a year compared to the average worker.