Most savage Budget yet takes €1,000 from families
Published 06/12/2012 | 05:00
THE most savage Budget of the economic downturn has hit ordinary families for €1,000 a year.
Property tax, cuts to child benefit and changes to social insurance have put extraordinary new pressure on squeezed family incomes.
Pensioners will lose out with cuts to the household package that helps for electricity, gas and telephone bills.
And in a move that is set to prove highly controversial, mothers on maternity leave will now have to pay tax on State maternity payments - despite paying for this already through PRSI.
No section of society was left unscathed by the draconian Budget.
In the wake of the delivery of a package of cuts and taxes worth €3.5bn, there were scuffles between gardai and protesters outside Leinster House.
The Government was also under fire for announcing the closure of 100 garda stations, as part of the biggest overhaul in the history of the State, under cover of the Budget.
Families will be pounded by a string of new taxes and charges:
* Maternity benefit will be treated as taxable income -- costing mothers an average of €800.
* A new property tax will cost €180 for every €100,000 the property is worth. This means a €200,000 house will generate a property tax of €360.
* Changes to pay related social insurance (PRSI) will mean that all those earning above the minimum wage will pay an extra €264 a year.
* Self-employed PRSI contributions were doubled, and will be applied to unearned income such as dividends, rents and deposit interest.
* A €10 cut to child benefit. A family with two children will be down €240 over a year.
* Another €250 on the student registration charge.
* Changes to the drugs payment scheme which will see families paying out €144 a month before the State will cover the cost.
* Changes to motor tax, with some pre-2008 cars to be levied an extra €126 a year.
* Savers are to be hit with a rise in DIRT of at least 33pc.
* The price of a pint rose by 10c last night, with duty on wine up by €1.
* Cigarettes went up by 10c.
There will also be rises in capital gains and capital acquisitions tax, according to the new measures.
New criteria will also be introduced for those aged over 70 in order to qualify for a medical card, with those on higher incomes eligible for a GP card only.
The duration of jobseeker's benefit will also be reduced by three months.
The full details of the property tax were provided.
Taoiseach Enda Kenny said the decision to introduce a property tax was "progressive and fair".
Last night, the Government began passing the Budget measures with votes on the hikes in alcohol and cigarettes.
No coalition TDs defected and the Government passed the vote 108 to 49.
But Labour Party chairman Colm Keaveney has still not committed to voting with the Government on social welfare cuts next week. Former Labour minister Roisin Shortall said the Budget was "regressive and anti-family".
She also attacked Tanaiste Eamon Gilmore on the size of his pension.
Finance Minister Michael Noonan used his Budget speech to outline his plans for growth in the small business sector – but there are major tax hits for workers and homeowners.
The minister last night denied his Budget will cost the average family €1,000 per year in taxes and lost benefits.
"I don't accept that figure. You might get an example that fits that but it's not typical," he said.
Mr Noonan offered a robust defence of his second Budget, saying it "would be recalled as a reforming Budget" that had finally broadened the tax base by introducing a property tax after years of discussion while also reforming the public and private pension system.
"We have the most progressive income tax system in the EU," he said.
Public Spending Minister Brendan Howlin admitted it was "not easy" to keep providing public services while imposing over €2bn in spending cuts.
He announced a range of cutbacks, including a €10 reduction in child benefit and reductions in the telephone and electricity allowances for elderly people.
Mr Howlin said the country would come through the "tough" crisis which was almost without precedent in the developed world. "In time, future generations will be proud that we, as a people, tackled this crisis head on," he said.