‘Modest’ tax cuts in the offing for Budget 18

Pensioners, carers and the disabled among others look set to get increases in the budget after government support party Fianna Fáil insisted rises “won’t be miserly”.

Government figures last night also confirmed a €5 increase for pensioners and others including the disabled was being discussed.

But such a rise across the board would cost €300m, government figures confirmed.

And while Social Protection Minister Regina Doherty remained tight-lipped, her officials said negotiations were still ongoing.

Fianna Fáil warned that tax reductions would in fact be “modest” but that those on fixed income and benefits, such s pensioners, had to get “something small” after making sacrifices during the recession. Tax cuts would be at a “gentle pace”, the party said.

Public expenditure spokesman Dara Calleary hinted at the levels of restored payments for pensioners and carers, as his party continues talks with the government they support.

Speaking at Fianna Fail’s own budget priority launch, he said: “In the context of a modest tax package, we think those on fixed incomes should also get an increase this year.

“We’re negotiating an across the board increase. The negotiations are ongoing.”

However, asked whether anything less than a €5 increase for pensioners, carers or the disabled might be seen as miserly, the Mayo TD responded: “It won’t be miserly.”

He later said increases would be small but were important in the context that people took benefit cuts to try and “lay the foundation for the recovery”.

“They have to get something if even small.”

Finance spokesman Michael McGrath said that no last minute changes were expected to the €350m space available for extra spending and tax moves.

He said tax cuts would be modest and Fianna Fáil still favoured a cut in the USC, as agreed in the confidence and supply agreement.

However, Fianna Fáil sources have told the Irish Examiner that the USC cut may not amount to the full .5% reduction it hoped across the three lowest USC rates and it may only reach two.

Mr McGrath said the tax cuts would be at a “gentle pace” next week.

While the Government also wanted to reduce income tax levels, this all had to be remembered in the context of the agreement’s commitment for a two to one ratio on services to tax spending in the budget.

Extra revenue options now seem unlikely too.

“The Government have made us aware of some options but it has been clear up until now that no decisions have been taken on individual measures,” said Mr McGrath.

He reiterated the bottom line was that Fianna Fáil were obliged to facilitate the passage of a budget provided certain priorities were met.

He said he would keep the low Vat rate for the hospitality sector for next year in light of Brexit, a sign possibly the coalition will not alter the special 9% level-despite the fact it could give them hundreds of millions of euro extra to spend in the budget.

“In the context of the overall amount of resources, taking it that no more than a third of it is going on tax and income tax isn’t the only one where there needs to be movement, then the sums are modest and we certainly haven’t been boosting expectations as to what differences it will make to people.”

Fianna Fáil also expect that mortgage interest relief, although at a lower level, will be retained next year, DIRT will be further reduced and the self-employed will get more reliefs.

Budget measures under discussion

  • A 50c cut to €2 for prescription costs is under discussion, as is a €20 monthly drug cost cap.
  • Across the board welfare rises of up to €5 for lone parents, dole recipients, and pensioners are being mooted, but may not begin until April or June.
  • A special social welfare payment for children living in poverty is being considered.
  • Increased supports to childcare providers to go towards administration costs and funds to help expand or refurbish facilities.
  • A long-planned sugar tax is almost certain to be introduced sometime next year.
  • USC will be cut but merged with PRSI, while the rate people enter the highest tax band will be increased.
  • Cigarettes and tobacco costs will rise again.
  • Moves to force nursing home residents to rent out or sell their homes have been scrapped. There will also be support for care packages to help people stay in their own homes.
  • A new anti-price-gouging hotel tax; gambling tax
    ring-fenced for addiction services; and hybrid cars tax relief may be introduced.

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