Budget Case Study: Family better off by €400

Budget Case Study: Family better off by €400
Anna, David and Henrietta. Pic: Ray Ryan

By Joyce Fegan

For family of three Anna Forde, David Hosty, and their 16-month-old baby girl Henrietta, Budget 2019 means modest change, when what they would really have benefited from were big changes in childcare.

All things considered, this household will be about €400 better off in 2019.

The main things creating that difference, as a result of today’s budget announcement, are nominal changes to the annual income tax rates and the monthly universal social charge (USC), as well as increases to all social welfare payments.

For income tax, the higher rate of 40% will now kick in at €35,300 for a single earner or at €44,300 for a married couple with one earner. They will gain approximately €150 a year or around €2.88 a week.

Both Anna and David work full-time, so together they will take home €300 extra in 2019.

Changes to USC mean that on incomes between €19,300 and €70,000, workers will now pay 4.5% as opposed to 4.75%.

In cash, and on an annual basis, this means that 70,000 workers will have €127 more in their pocket, 50,000 workers will have €77 more, and 35,000 workers will have €39.25 more. In this double-income household, that means more than €100 extra in their 2019 budget.

“The USC change will not make a huge difference, nor will the change to the income tax rates, but it is great that they’re not taking things away,” said Anna.

What Anna and David had really been counting on to make a difference was changes to childcare support.

“Similar to a lot of families, childcare is the big thing. I work for a Canadian company and they have a childcare allowance. It’s very progressive and something Ireland needs to look at, because the reality is that nowadays both parents have to work outside the home,” said David.

For Anna, who co-owns Yourelles, a chain of three hair salons in Galway, with Carol Joyce, she sees firsthand the importance of childcare support for her mostly female staff of 33.

“Proper changes to childcare would be the biggest plus for every woman that works in my business.

I know lots of women who want to work extra hours and days, but because of the cost of childcare it’s not worth it.

"With childcare, the Government, 100%, needs to help people out,” said Anna.

In the 2019 budget, changes have been made to the Affordable Childcare Scheme, where families receive money towards fees. The changes mean that the earning threshold at which you can access financial assistance has gone from €22,700 to €26,000. However, the maximum earning threshold at which you can get assistance goes from €47,500 to €60,000. Under this scheme, a family can get up to €1,040 per year for children under three. This will benefit higher earners.

Another change to childcare is the roll-out of parental leave, which David sees as a social game-changer if Ireland was to follow the Canadian model.

“I would love to see the option where either parent could utilise leave after the birth of a child. I have Canadian colleagues who can split the maternity cover. If the wife made more money, they can go back earlier if they so choose,” said David.

Unfortunately, no such measure has been introduced. However, at the start of November 2019, both parents will benefit from an extra two weeks’ parental leave. This is on top of the existing maternity and paternity benefits already in place.

“From my specific situation, this cover, the extra two weeks as a father, is a good step,” said David.

The Government hopes to extend this to seven extra weeks “over time”. However, it is only available to parents of a child under the age of one.

Anna has been most affected by the change in the Vat rate from 9% to 13.5%, as hairdressing businesses are included in the hospitality sector.

“This is a massive jump, all in the one go. It’s a big change for anyone who gets their hair done as the increase will have to be absorbed somewhere,” said Anna, who is, however, grateful that the Vat rate was decreased to 9% during the recession.

“We had a lower rate at a time when we really needed it, so you have to be grateful for that; we knew it would come to an end at some point,” she added.

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