Budget 2017: Buzzwords explained
With the budget announced this week, there’s one thing we can guarantee. There will be a lot of jargon, political speak and budget buzzwords.
Here’s a list of the top ten budget buzzwords explained:
- Budget- A budget is a plan for a defined period of time. It may include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows.
- Fiscal Space – The amount of money available for new tax reductions and spending increases.
- The Double Irish - The double Irish arrangement was a tax strategy that some multinational corporations used to lower their corporate tax liability. In 2013, the Government announced that companies which incorporate in Ireland must also be a tax resident there. This counter-measure took effect in January 2015, for newly incorporated companies, and will take effect in 2020 for companies with existing operations in Ireland.
- USC- The Universal Social Charge is a tax on income that replaced both the income levy and the health levy (also known as the health contribution) since January 1 2011. You pay the USC if your gross income is more than €13,000 per year.
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- Ireland's Corporation Tax- Ireland’s is currently 12.5pc. A corporate tax is a tax on the income or capital of corporations or legal entities.
- Capital expenditure- Spending on long-term items such as schools buildings, roads etc.
- Current expenditure- Spending on day to day items such as hospital waiting lists.
- Deficit- The gap between income and spending. Shrinking the deficit means either raising taxes or cutting spending. It is sometimes called the country's overdraft. A concept some think is fatuous as unlike households, governments can keep rolling over the debt for years, and inflation, still a usually occurring phenomenon, erodes it. The next generation does not have to wipe out the previous one's debts, as it does in a family.
- Capital Acquisitions Tax-The threshold on Band A is expected to be raised from €280k to €500k over the next few years (This band includes all gifts and inheritances from parents to their children). This will mean that no inheritance tax will be due on inheritances passed to children that are worth less than €500k. This increase might be phased in over two or three Budgets, probably not all in Budget 2017.