BUDGET 2016: Package of ‘sensible, affordable steps’

Budget 2016 was drawn up to keep the economic recovery going, Finance Minister Michael Noonan has claimed.

Cuts to the deeply unpopular universal social charge (USC); more nurses, teachers, and gardaí; more affordable and quality childcare; and an end to the unfair tax treatment of the self-employed were among the reforms announced.

“The priority of this budget is to keep the recovery going, while providing relief and better services for the Irish people,” Mr Noonan said.

He told the Dáil the package of tax cuts and increased spending, worth about €1.5bn, amounted to “sensible, affordable steps that will keep the recovery going and bring its benefits to every family”.

He forecast that the economy would be the fastest-growing in Europe this year at 6.2%, and grow by a further 4.3% next year. Employment is forecast to hit close to 1.97m people by the end of this year and the Department of Finance estimates that 48,000 jobs will be created next year, bringing unemployment down to below 8%.

Mr Noonan said Budget 2016 would bring Ireland’s debt levels to just under 93% of GDP, the eurozone average.

The only tax rise in the Budget was a 50c hike in the price of a packet of 20 cigarettes, bringing them to around €10.50 per packet.

“This measure will raise €61.4m in a full year and the additional revenue will enable the funding of new initiatives in the health sector to support young families with children,” said Mr Noonan.

“This Government has consigned to the history books the days of boom and bust, and the attitude of ‘if I have it, I’ll spend it’,” Mr Noonan said.

Changes to the USC mean that, from January, the threshold for when workers start paying the levy rises from €12,012 to €13,000, taking about 42,500 workers out of the net. The Government estimates that more than 700,000 workers will not be suffering under the USC next year.

Mr Noonan said anyone earning less than €70,000 will pay a marginal rate of tax less than 50% for the first time since the 2009 budget.

He also signalled that rising property values in recent years would not mean rising property taxes. Revaluations of homes for the local property tax (LPT) is to be postponed from 2016 to 2019.

“Legislation to implement the postponement will be brought forward in due course,” said Mr Noonan.

The tourism and hospitality sector will benefit from the retention of the reduced 9% Vat rate.

To encourage consumers to go cash free, the limit for contactless payment cards is being raised from €15 to €30 at the end of the month.

The €5 stamp duty on debit and ATM cards is being replaced with a 12c charge on every ATM transaction

However, Mr Noonan said “no consumer will be lose out... as the stamp duty will be capped at the existing levels of €2.50 or €5, depending on card type”.

There will be no charge for debit card transactions.

Hauliers and commercial vehicle users also got some respite with a significant cut to motor tax to bring it closer to the rate in the North and Britain. Five new tax rates for commercial motors will be put in place from January, ranging from €92 to €900, benefiting more than 28,500 companies and drivers.

However, the National Youth Council of Ireland (NYCI), which represents groups working with over 380,000 young people, was disappointed at the failure to reverse the cuts to jobseeker’s allowance for those under 26.

Ian Power, NYCI president, said: “We welcome the decline in youth unemployment in recent years. However, that drop has stalled in recent months and we still have 40,000 young people on the live register.”