USC cuts and welfare boosts in budget

USC cuts, welfare boosts, and expanded childcare will form key parts of a more generous than expected vote-chasing budget.

Finance Minister Michael Noonan is expected to use at least €600m of the €750m he has earmarked for tax cuts to lessen the burden of the deeply unpopular USC.

Up to 100,000 low-paid workers are expected to drop out of the USC net altogether, with those earning €50,000 a year set to be €500 better off annually. With the Cabinet’s Economic Management Council set to put the finishing touches to the package today, the Christmas bonus for welfare recipients is set to be restored to at least 60% of its pre-crash level, but a total restoration has been ruled out.

The move is expected to play especially well with pensioners as the “grey vote” will be one of the key deciding groups in the general election now slated for late February.

Another key voting group, young families, will be targeted with moves to extend child care. The age for free pre-school education is expected to be lowered to three years, to bring more children into the net.

The childcare budget is to be boosted by €85m after the Coalition was dogged with complaints it had not done enough to ease the financial burden of creche fees.

Paid paternal leave of two weeks is set to come on stream in the summer in a bid to allow fathers to spend more time with their babies.

Carers are set to receive a boost as ministers reverse a €325 cut to the respite allowance made two years ago.

Some 77,000 carers were hit by the cut, which critics branded counter-productive and “cruel” as stressed carers would have to put relatives in State homes as a result.

The young unemployed are also set to receive a boost if they are involved in education or training.

Social Protection Minister Joan Burton was widely attacked when she slashed dole rates for people under the age of 25. In 2013, she cut unemployment payments for people aged 22 to 24 by €44, to €100 a week, while rates for 25-year-olds were sliced back from €188 per week to €144.

The childcare changes would see age limits for the Early Childhood Care and Education Scheme changed, replacing the current three years, two months — four years, seven months, by making any child eligible from the age of three until they start school proper.

Ms Burton has already signalled that child benefit will be increased by €5 in the Budget.

Smokers will be hit by increased tax on cigarettes, but the Government has rejected calls to impose a “sugar tax” in order to try and combat rising obesity.

A cut in capital gains tax is also expected to feature in the package in order to boost R&D investment.

Government sources suggested that personal tax changes would see someone on the average industrial wage of €38,000, €320 a week better off, and those earning €70,000, some €800 better off annually.

Renua leader Lucinda Creighton and Fianna Fáil finance spokesperson Michael McGrath have both expressed fears that the Coalition has not learned the lessons of the crash and is prepared to put the recovery at risk in order to “buy” the looming general election.

After a week of confusion, Mr Kenny confirmed that he favours a Spring poll over a snap November election.

Agriculture Minister Simon Coveney said the most likely date would be the end of February or start of March, though the Taoiseach does not have to go to the country until April 9.