BUDGET 2016: Coalition to restore 75% of Christmas bonus to prove widespread recovery

The Coalition will today move to prove the economic recovery is benefiting every section of society by returning 75% of the Christmas bonus to struggling pensioners and social-welfare recipients — up from the 50% that had been flagged.

The last-minute change will be announced by Finance Minister Michael Noonan when he reveals the €1.5bn Budget 2016, made up of tax cuts (€720m) and benefits hikes.

The opposition insists it is a pre-election bribe that puts any economic comeback at risk, while the Government is keen to frame it as proof Ireland has recovered.

While the budget contains something for the poor, the rich, and the squeezed middle, the politically sensitive Christmas bonus — given to pensioners and social welfare recipients — will receive particular attention. After being axed amid uproar in 2009 at the height of the crisis, 25% of the once-a-year bonus was returned last year.

Repeated Coalition leaks in recent weeks strongly suggested this increase would double to 50% in Budget 2016 in a further attempt to underline the perception of an economic recovery for all, while helping Labour in particular to shore up its voter base.

However, senior Government figures last night confirmed the announced rate will be 75%.

In real terms, it means a single pensioner will receive an extra payment of €173 at Christmas and an average pensioner couple will gain €327. A lone parent with one child will be given €163 more, while a carer will receive an additional €175.

Among other initiatives due to be announced as part of the €1.5bn budget package — which stretches to €3bn with this year’s supplementary budgets in education, transport, and health — are: n €720m of tax cuts, including the reduction in the highest rate of tax below 50%; n USC rate changes to take tens of thousands of the lowest paid out of the system altogether and cut the 7%, 3.5%, and 1.5% rates for others to 5.5%, 3%, and 1%, respectively; n A new three-year tax credit scheme for farmers and the self-employed, which means €500 of their money each year cannot be touched by Revenue; n The return of the €1,700-a-year respite grant to carers; n An inheritance tax starting point increase which means €300,000 of gifts to children — previously €225,000 — cannot be taxed; n The phasing out of the private pensions levy; n A minimum wage increase plan worth €1,000 to low-income workers.

Despite the Government plans, Age Action Ireland yesterday warned that older people are worse off now than before the 2011 “democratic revolution”.

St Vincent de Paul said wider calls for help remain “100% higher” than in 2007.