11 moves made in today's budget
There's a €5 social welfare boost, around €500m for health - and plans for a sugar tax
A social welfare boost
Pensioners, carers, people with disabilities, blind people and widowers will get a €5 increase in their social welfare payments from March 2017, as will those 25 and over on jobseeker’s allowance. Those under 25 will only get a €2.70 increase. There will also be an 85 per cent Christmas bonus for social welfare recipients.
Nearly €500 million more for health
The government expects to spend around €497 million extra on health in 2017. Medical card coverage will be extended to children in receipt of domiciliary care, while over-70s will benefit from a €5 drop in the maximum prescription charge. There’ll also be a return of optical and dental benefits under PRSI, and an additional €15 million for a fund aimed at reducing waiting lists.
A new scheme will aim to increase demand for new homes
First-time buyers will benefit from a rebate of income tax paid over the previous four years, up to 5 per cent of the price paid on a new home, all the way up to the value of €400,000. The move has been met with skepticism, however, with many thinking it’ll just increase demand, rather than supply. This moves comes alongside the €1.2 billion allocation to the Housing Action Plan, which has the goal of delivering around 47,000 social housing units by 2021.
Education, education, education
Around 2,400 teachers will be hired next year as part of a €458 million increase in education spending. The third-level sector, badly affected by cuts and still waiting on a decision on a funding model, will get a €36.5 million increase, far off the €100 million that Fianna Fáil had requested.
Early years funding gets a 35 per cent increase
Jumping from around €345 million to €465 million, the early years budget will support the provision of both universal and targeted provisions for young people. Depending on parental income, some children aged between six months and 15 years will be eligible for a subsidy, while children of the same age who are cared for by registered childminders or care centres will be eligible for a new universal subsidy.
The universal social charge falls across the board
The universal social charge, which replaced the income levy and the health levy in 2011, will fall by 0.5 per cent across all bands. Those who currently pay 1 per cent will pay 0.5 per cent, while those who pay 3 per cent will now pay 2.5 per cent. Those in the 5.5 per cent band will pay 5 per cent. Many said the move was tokenistic, but Noonan said the changes would have a “material impact” on the disposable income of lower and middle-income earners.
Justice package means Ireland’s going to get 800 more gardaí
A €2.5 billion justice package – an increase of €68 million – will see an additional €28 million for An Garda Síochana. There’ll be 800 new gardaí hired and trained in 2017, as well as around 500 additional civilian staff for the force. The building of a new forensic science laboratory will be accelerated, while the courts service will also get an extra €30 million for new courthouses and additional staff.
Farmers are big beneficiaries
Noonan announced a new €150 million fund to make reduced-interest cash-flow finance available to farmers. In a tough year, farmers who pay income-averaged tax will have the option to only pay taxes from that year – essentially postponing the payment of a proportion of their tax bill for a year. And the previously agreed €25 million animal welfare scheme for sheep will commence next year.
Changes to both capital acquisitions and capital gains taxes
Children will now only be taxed on gifts from their parents when the gift is worth more than €310,000, while taxes on gifts from both relatives and non-relatives will now apply at an 8 per cent higher rate. Similarly, the rate at which capital gains tax is applied has been reduced from 20 per cent to 10 per cent (up to a limit of €1 million), a move that has been welcomed by investors and companies who will pay less tax when a company, or a shareholding, is sold.
A sugar tax is coming in 2018
April 2018 will see the introduction of a tax on sugar-sweetened drinks, commonly known as a “sugar tax”, Noonan said. The Irish Beverage Council has said that it is a “delusion” to think that “additional taxes on soft drinks will have any positive impact on obesity”. Britain plans to introduce a similar tax in 2018, while France has had one since 2012.
Ireland’s going to get a rainy day fund, with €1 billion to be contributed each year
Once Ireland achieves a budget surplus after 2018, finance minister Michael Noonan said that €1 billion will be contributed annually to a contingency fund. It can then be used by the government of the day in a counter-cyclical manner, he said, meaning that the use of the fund would increase when the rest of the economy is slowing down.