Friday 21 October 2016

Pensions up €3 in 'family Budget' that chases old and young voters

Workers will benefit by €1,000 from tax cuts

Kevin Doyle and Niall O'Connor

Published 13/10/2015 | 02:30

‘Sensible steps’: Finance Minister Michael Noonan
‘Sensible steps’: Finance Minister Michael Noonan

The old age pension is to be raised by €3 a week as part of a Budget Day package for the elderly, the Irish Independent has learned.

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An increase to the fuel allowance and a larger than expected Christmas bonus payment will make up the Government's pitch for the grey vote ahead of the impending election.

A single pensioner will be better off to the tune of more than €300 a year as a result, while a couple over 66 years old will gain almost €640.

The Budget will put around €1,000 a year back in the pocket of every worker along with promises of more to come in future years if the Fine Gael-Labour Coalition is re-elected.

Ministers Michael Noonan and Brendan Howlin will target their speeches at four sections of society: low and middle-income earners, retired people, vulnerable groups and families.

They will pledge to recruit more nurses, doctors, gardaí, teachers, and build an affordable childcare system.

The centre-piece of the speech will be a 1.5pc cut to the 7pc rate of the Universal Social Charge (USC).

The Budget will also include:

A €550 per year tax credit for the self-employed.

A 50 cent increase in the price of cigarettes.

An increase to the inheritance tax threshold from €225,000 to €280,000.

An entrepreneurial package aimed at attracting emigrants home, and tax breaks for microbreweries.

A review of mortgage lending rules.

Two weeks of parental leave for fathers.

Increases in child benefit and the introduction of free pre-school for children aged between three and five years.

The delivery of 20,000 homes by 2020 through Nama, the details of which can be seen here in this infographic.

The €2.50 prescription charge for medical cards and the €100 A&E fee will be frozen.

The full restoration of the respite grant for carers.

Social Protection Minister Joan Burton will take credit for winning an increase to the State pension after it appeared to have been ruled out in recent days. The Irish Independent has learned that it will rise from €219 a week to €222. This will amount to an extra €156 a year.

The one-off Christmas bonus - which was ended during the recession - is to be restored to 75pc for all long-term social welfare recipients.

This means a single person will benefit from a payment of €173, while a couple will get €330.

There will be a €2.50 increase to the €20 fuel allowance which runs for 26 weeks of the year.

Some €600m of the €750m available to Mr Noonan will be used to slash the deeply unpopular USC.

Read More: We are a nation with expectations on this Budget day - it could end badly

As part of a suite of measures, the point at which workers begin paying USC - which is currently set at €12,012 per annum - will be increased by €1,000. This will take thousands of low-income earners out of the USC net.

There will also be cuts to the rates applied to workers' incomes. The top rate of 7pc, applied to earnings of between €17,500-€70,000, will be cut to 5.5pc. The lower rates of 3.5pc will be reduced to 3pc and the 1.5pc rate will be slashed to 1pc.

The marginal rate of tax - which takes into account income tax, USC and PRSI - will be brought down below 50pc.

"That will have a major psychological impact," a Government source said.

Read More: Kenny must 'rebuild his credibility' after election confusion


The changes to the tax system will see middle-income earners take home an extra €1,000. Cuts in the USC combined with a rise in the minimum wage will see workers in that category benefit by €700 a year. Taoiseach Enda Kenny has already signalled that the USC will be axed altogether by the end of 2020, if the Coalition is re-elected.

The Department of Health will get the largest spending increase of around €270m on top of the €600m supplementary budget for this year.

However, Leo Varadkar will not be extending the free GP visits scheme.

"We might have extended GP care from six to 11 but we are trying to rebuild relationships with the GPs and IMO and if we announced that they might take umbrage," a senior Government source said.

Transport Minister Paschal Donohoe is to reduce the registration fees for hauliers to help them compete with companies in Northern Ireland.

As revealed by the Irish Independent last week, sweeteners will be announced for landlords who agree to take tenants off the social housing list.

Sources confirmed that property owners who enter into the RAS/HAP schemes will be offered 100pc interest relief in a bid to tackle the housing crisis.

But plans to offer refunds to property developers who agree to sell properties at below market rate remained in doubt last night. Instead, developers who enter into such a scheme will be told that levels will be reduced or even scrapped.

However, one minister said Environment Minister Alan Kelly, who is behind the proposal, is refusing to accept defeat.

And talks between Mr Kelly and Mr Noonan aimed at securing a "rent certainty" agreement broke down last night. In a blow to Mr Kelly, he failed in his bid to link rent to inflation over a four-year period. One source told the Irish independent that tensions between the two ministers are "at the extreme".

Elsewhere, Justice Minister Frances Fitzgerald has secured funding for at least 600 additional gardaí, with the positions advertised in the coming weeks.

A multimillion euro package for garda overtime, as well as funding for additional staff in the courts service and the charity's regulator, has also been agreed. Her budget also includes monies for a new operation to tackle the epidemic of rural crime which will be announced in the coming days. The details of the plan are still being finalised.

Irish Independent

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