Coalition to target high earners in effort to raise €500m
Published 05/12/2012 | 05:00
Higher earners are to be targeted with:
• A 3pc hike in the USC on pensions over €60,000.
• Capping the tax relief on pension contributions at €60,000.
• PRSI on public hospital consultants' private patient income.
• PRSI on landlords and share earnings.
• Increases in capital taxes.
• The higher property tax on houses worth over €1m.
All told, the package of measures specifically hitting the wealthy is expected to add up to €500m.
The increase in the Universal Social Charge on high pensions will impact upon retired bankers, former government ministers and retired senior civil servants.
The move comes as new figures reveal seven judges who retired in the past five years are on astonishing pensions of more than €100,000.
After obtaining the figures, Fine Gael TD Derek Keating called for a "special tax rate" to apply to the earnings.
The Government has faced a backlash for the past six weeks over the lavish pensions paid to retired bosses from banks bailed out by the taxpayer.
But it remains to be seen if the higher USC rates will convince the public the issue has been adequately tackled.
Meanwhile, hospital consultants are going to lose a perk they got in a deal done back in the 1980s, whereby their income from private patients is not subject to PRSI.
And on the social welfare front, it has now emerged:
• Older people will have to shop around as their telephone allowance gets cut.
• The PRSI threshold on anybody earning about €18,000, who is currently exempt from the tax, will be be either abolished or substantially reduced.
• Child benefit will be cut by €10.
• Allowances for after-school childcare for people who want to go back to work, school or college will get increased funding.
• More places will be provided in Community Employment, Jobbridge and TUS schemes.
• There will be no cuts to the rent or fuel allowance.
• No statutory sick pay scheme will come in for the private sector.
• There will be changes to the public sector sick pay scheme.
• No cuts to core payments, such as the domiciliary care allowance or the carers allowance.
Ministers tried to reassure coalition backbenchers on the Budget measures, with Public Spending Minister Brendan Howlin briefing Labour TDs while Social Protection Minister Joan Burton spoke to Fine Gael TDs.
TDs and senators are expected to take a hit in their €11.7m annual expenses bill in the Budget. A source said there would be a cut of "less than 15pc".
And TDs will also have to provide more receipts for their expenses. Under the current system, some of them are claiming up to €15,000 without receipts to pay for constituency office rental, leaflet drops and PR advice.
But they will now be forced to provide receipts to claim these expenses – subject to the existing receipted limit of €25,700.
However, there will be no change to the system for travel and accommodation expenses, which allows TDs to claim up to €38,000 per year without providing receipts.
The number of garda stations also to be shut as part of the latest phase of nationwide closures is expected to be revealed today.
In a first phase of closures, announced last December, 39 stations were closed – but today's announcement will involve a much higher figure.
The Budget comes hours after the latest tax figures from the Department of Finance showed a continued slowdown in sectors of the economy.
The Exchequer took in €300m less than expected from income tax in just one month.
On the spending side, the overspend in social protection has now hit €610m and health is at €321.
With most of the tax collected for 2012, the Department of Finance admitted to collecting €171m less than forecast in the first 11 months of the year following a sharp fall in income tax receipts last month.