Budget blows to your pocket could cost you up to €3,500
It's now 38 days until Budget Day -- when the Government tries to squeeze more money out of our destitute pockets. This, the sixth austerity Budget to hit the country, could cost you €3,500 this year, according to a round-up of possible Budget blows by the Sunday Independent.
MOTOR TAX €225
The motor tax hikes which kicked in at the start of this year forced some drivers to pay about 50 per cent more than they did in 2010. Owners of electric cars were the hardest hit.
As the Government has already signalled that it is overhauling our motor tax system, it looks like drivers will be hit with more hikes this December.
Electric cars and other cars with low carbon emissions could be in the firing line again, warned Brian Keegan, director of taxation with Chartered Accountants Ireland. "The gap in motor tax between low emission cars and ordinary cars is too great," said Keegan.
Paul Dillon, tax partner with the chartered accountants, Duignan Carthy O'Neill, believes that drivers can expect motor tax increases of between 5 and 10 per cent at the very least. "It's likely that the Finance Minister, Michael Noonan, will increase motor tax rates across the board," said Dillon. A 10 per cent price hike could push up your motor tax bill by as much as €225, depending on the type of car you drive.
Vehicle Registration Tax, which can add as much as 36 per cent to the price of a new car, could also be targeted.
Social Protection Minister Joan Burton plans to hit all landlords with a PRSI (Pay Related Social Insurance) bill for any profit earned on rental income.
If this is the case, ordinary workers who are renting out their homes could have to pay 4 per cent PRSI -- on top of the 48 per cent tax they already pay -- on the profit earned on rental income. (If you're self-employed or living off investment income, you could already be paying 4 per cent PRSI on the profit earned from rental income).
As the average asking rent in the country is €809 a month, Burton's plans to hit all landlords with a PRSI bill could easily cost a landlord €388 a year.
However, if you're renting out a home in Dublin or another major city, your PRSI bill could be a lot more. For example, you could get €1,865 a month for a four-bedroom home in south Dublin, according to the latest rental report by property website Daft. A 4 per cent PRSI bill on the profit earned from rental income on that home could be almost €900 a year.
SNEAKY TAXES €360
Sneaky taxes are taxes which the Government introduces without increasing the main income tax rates. They include PRSI and the universal social charge.
In its deliberations for last year's budget, the Tax Strategy Group -- a committee chaired by the Department of Finance which advises the Government on tax issues ahead of each Budget -- made recommendations for increases in PRSI for middle-to high-income earners. While the recommendations were not taken up by Noonan in Budget 2012, they show the lines along which the Government is thinking and particularly at risk are the self-employed, according to Dermot Kelleher, partner with KHR Chartered Accountants.
So yet again, the middle-class could be in the firing line this December.
If PRSI rates for self-employed individuals are increased by 1 per cent, a self-employed individual would pay 5 per cent, rather than 4 per cent PRSI.
As PRSI is paid on most of your income, a 1 per cent increase in the PRSI rate would cost a self-employed person on the average wage about €360 a year. A self-employed individual earning €80,000 would pay almost €800 a year more.
If the Government also decides to hit employees with a 0.5 per cent increase in PRSI, an employee on the average wage would pay an extra €180 in PRSI a year. "There's only so much more tax adjustments which can be sustained beyond which the Government will start to lose tax," said Keegan.
CAR PARKING AT WORK €200
Plans to introduce a €200 annual levy in 2010 for employees who parked their car at their workplace were shelved.
"The levy could come back on the table in December's Budget," said Oonagh Casey, senior tax manager with Ernst & Young.
Child benefit could be slashed by €40 a month per child after an expert group in the Department of Social Protection recommended such a reduction.
If the €40 cut goes ahead, parents with one child would see their monthly child benefit down to €100 from €140, meaning the child loses out on €480 a year. Parents with two or more children would lose at least €960 a year.
Burton has indicated that she's considering giving higher child benefit payments to those on low incomes or relying on social welfare payments -- so it looks like the middle-class will take the brunt of these expected child benefit cuts.
Last week, Joan Burton said she is considering limiting the amount of pension contributions on which you can claim the higher 41 per cent rate of tax relief.
If Burton went the whole way, and cut the higher rate of tax relief on all pension contributions to 20 per cent, the average worker would lose out on €830 a year in take-home pay, according to research by the actuarial consultants Milliman.
If you're a higher-rate tax-payer, it currently costs you €59 to put €100 into your pension -- thanks to pensions tax relief. If the Government chopped tax relief on certain pension contributions to 20 per cent, it would cost you €80 -- an extra €21 on the current cost -- to put €100 of those contributions into your pension.
CARBON TAX €220
It is only six months since a hike in carbon tax pushed up our gas bills -- and it looks like another carbon tax increase is on the cards this December.
The latest €5 increase in carbon tax means that a householder with an average gas bill is already coughing up about €58 a year for the carbon tax. If the Government increases the carbon tax by €5 again this year, that householder will pay €72.44 a year in carbon tax, according to Bord Gais.
"There's wide social implications to increasing the carbon tax, particularly given the huge energy price increase of this year," warned Dillon.
As well as gas bills, carbon tax also pushes up the cost of heating oil, petrol and diesel. If you drive a typical car, you're already paying €100 a year extra in petrol to cover the cost of the carbon tax, according to Conor Faughnan, director of consumer affairs for AA Ireland.
If you've an average diesel car, the carbon tax currently sets you back €117 a year.
If the Government increases the carbon tax by another €5 this December, the carbon tax will cost the driver of a typical petrol car €125 a year -- or €146 a year for diesel cars.
"There's so much tax on fuel, it's affecting usage," said Faughnan. "Total fuel sales are down."
PROPERTY TAX €300
Details of the much-feared property tax, set to replace the €100 household charge introduced earlier this year, should be unveiled in this December's Budget.
The property tax is expected to be set at around €300 for an average, three-bedroom, semi-detached house. It's likely that owners of more expensive properties will pay more.
Sunday Indo Business