Budget 2016: Families the big winners in 'giveaway' last budget before election
Published 13/10/2015 | 16:14
FAMILIES are the big winners in Budget 2016, with a €5 increase in monthly child benefit, allied to free GP care for the under 12s and extra free pre-school childcare, all coming together to make a significant impact on a family's monthly outgoings.
Meanwhile, well-flagged cuts to the USC will make a significant impact on the take-home pay of most people.
Here are the ten things you need to know from today's announcements from Finance Minister Michael Noonan and Public Expenditure Minister Brendan Howlin:
1. USC cuts
There will be cuts to all three levels of the hated Universal Social Charge (USC) - the top rate will drop from 7pc to 5.5pc for income earned in excess of €18,668 and up to €70,044. The 3.5pc rate will be reduced to 3pc for income earned between €12,012 to €18,688. And the bottom rate of 1.5pc will drop to 1pc for the first €12,012 of income earned. The USC cuts will mean the marginal rate of tax will be 49.5pc for all people earning under €70,444.
Read more: Budget 2016 Blog: Your questions answered
Meanwhile, the entry point for USC will increase from €12,012 to €13,000 which will result in 42,500 being removed from USC entirely.
2. Home Carer Tax credit/PRSI/Property Tax
Finance Minister Michael Noonan has increased the Home Carer Tax Credit of €190 to bring it up to €1,000 a year, in a bid to support single-income families. The income threshold up to which the carer can earn has also been increased by €2,120.
After this Budget, the top 1pc of income earners will pay 22pc of all taxes collected while the bottom 75pc of workers will pay 19pc of the country's tax revenues. Mr Noonan also has introduced a tapered PRSI credit with a maximum level of €12 per week or €624 a year in a bid to help low income earners.
In relation to Employer PRSI, Mr Noonan has increased the entry point to the top rate of 10.75pc by €20 per week to €376 a week.
Mr Noonan confirmed he has increased the tax free threshold for Capital Acquisition Tax from €225,000 to €280,000 to allow greater transfers between parents and children.
Mr Noonan has also confirmed he is freezing the current Local Property Tax rates until 2019, as recommended by the Don Thornhill report.
3. Small business owners and VAT in tourism
Michael Noonan has confirmed the introduction of a €550 tax credit for small business owners in his Budget speech.
The Earned Income Tax Credit will be available to all small business owners including farmers, retailers, publicans and tradesmen.
4. New homes
To address the crisis, he told the Dail in his Budget speech that Nama is aiming to deliver 20,000 additional residential units before the end of 2020. He said 90 pc of these units will be in the greater Dublin area. About 75 pc of these will be houses, mainly starter homes.
5. ATM charges
Mr Noonan is abolishing the €5 stamp duty for a owning a debit card and replacing it with a 12c fee for every time you withdraw cash from an ATM.
However, it is understood at the moment that this fee will be capped at €5 annually and there will be no charges for debit card transactions in shops or elsewhere.
6. Price of a packet of cigarettes jumps
The cost of a pack of 20 cigarettes will be increased by 50c and now cost €10.50.
7. Tax cuts for commercial drivers and film industry
Michael Noonan also announced a reduction in commercial motor tax to €900 down from €5,195. Mr Noonan is also increasing the film tax credit cap up to €70m to encourage more investment in the sector.
8. Thumbs up from the children
Children will now be eligible for the Early Childhood Care and Education Scheme (which offers free education for pre-schoolers) from the age of three to five and half or until they begin primary school.
As expected, Child Benefit will be increased by €5 and families will received €140 a month from next year. Minister Howlin confirmed that next year Free GP care will be made available to all children under 12.
Two weeks of paternity leave will also come in to law from next September.
9. Increase in the minimum wage to €9.15 per hour
Public Expenditure Minister Brendan Howlin has confirmed that there will be an increase to the minimum wage from €8.65 to €9.15 per hour.
10. Pension payments to increase by €3 per week
Mr Howlin also announced that pension payments will increase to €3 per week from next year. The Respite Care Grant will also be restored to €1,700 and the fuel allowance increased by €2.50 a week to €22.50.