Budget ‘to mark decisive shift’ in fortunes
The Government will argue it marks a “decisive shift” in the economic fortunes of the country, and is a sign that the decisions made to date have stabilised the public finances and thereby paid off.
After a period in which €30bn was taken out of the economy, there will, for the first time since 2007, be a spending increase of around €600m, bringing the deficit, or sum borrowed, to well within the target of 3% of GDP.
The Government will press the message that the measures are aimed at getting working families and low- and middle-income earners back on their feet, while providing some extra supports for the most vulnerable.
A three-year plan for changes to tax rates and bands is expected to be one of the key elements of Finance Minister Michael Noonan’s announcements in an attempt to give some relief to families ahead of the next general election.
However, the People Before Profit party has warned that any boost to take-home pay will be “overwhelmingly outweighed” by water charges that will cost €278 next year for a family of two adults and two children.
Part of today’s measures will include a €100 allowance to help meet the cost of water charges which will be paid to the long- term unemployed, those out of work for 15 months and more, as well as those on the Farm Assist payment, the Single Parents’ Allowance, and the Widows’ Pension.
The subsidy, which follows a massive protest against the charge in Dublin on Saturday, will be paid to those already entitled to the Fuel Allowance.
A final Cabinet meeting will be held this morning to sign off on the budget plans, which will also include:
- An increase in the income threshold at which the universal social charge kicks in, that is currently on earnings of €10,036 a year;
- A reduction on the higher marginal rate of tax from 41% to 40%;
- A rising of the €32,800 income threshold at which that rate is charged;
- A tax relief on up to 20% — with an upper limit of €100 a year — to offset the cost of water charges for working families;
- A €250 increase to the college registration fee, bringing it up to €3,000 starting from the September 2015 school term;
- 1,000 extra teachers;
- A €200m-a-year package for the building of social housing;
- A retention of the 9% Vat rate for the hospitality sector and no change to the excise duty on alcohol.
The Department of Finance White Paper on tax receipts and expenditure, published on Saturday, says the government deficit, or borrowing requirements, will be 2.4% of GDP next year — or €4.7bn.
Tánaiste Joan Burton has said that the budget will target a deficit of 2.7% to 2.8% of GDP, leading to speculation that there will be an extra €570m to €770m of spending.
In an email to Labour TDs last night, Ms Burton said the budget “enables us to move to a new phase where we can begin restoring living standards for Irish families”.
She said it will mark a “decisive shift towards shared prosperity”.
