Government revs up for a green budget

THE “greenest” ever budget is expected to be unveiled by the Government tomorrow with an overhaul of the vehicle registration tax system at its core.

Changes in the tax credits and bands which would bring those on the minimum wage out of the tax net are also expected, in addition to increases in mortgage interest relief and increases in VRT.

However, with the Government only increasing current spending by 8%, implementation of the pre-election pledge to reduce the top rate of tax by 1% and halve PRSI is not expected.

Yesterday, research published by IIB Bank and the Irish Mortgage Advisors Federation found that four-in-10 stockbrokers believe a cut in interest rates would help the housing market. However, more than one-third said a boost in confidence in the Irish economy would have the biggest impact.

Under the environment and climate change budget, the Government is expected to announce radical changes to the VRT system which would see tax reduced on 53% of cars and increased on 47% of new cars.

The measure will ensure that the heaviest levies will be borne by cars emitting the most CO2.

The first ever “carbon budget” outlining how much carbon emissions are being produced and how the figure can be reduced will be outlined on Thursday.

The Green Party hopes that by means of a new five-year climate change strategy the €290 million designated for the purchase of carbon credits can be substantially reduced.

Tomorrow’s budget comes amid last week’s tax receipts showing a €1.75m tax black-hole.

A significant decrease in stamp duty revenue due to the dramatic slump in the property market has been blamed on the lower than expected tax revenue.

It is expected that Finance Minister Brian Cowen, may borrow up to €1.7 billion, or about 1% of GDP, and commit to the main priorities in the National Development Plan and Programme for Government.

The state pension is likely to increase by about €10 to just over €210 for the non-contributory pension and €220 for the contributory pension.

If the Government is to maintain its target of increasing the pension to €300 over the course of five years, the pension will need to increase by the expected €10.

An increase in child benefit and the €1,000-a-year childcare supplement is also likely.