PAYE workers facing €3,000 tax hit after Budget
PAYE workers will be hit with tax hikes of more than €3,000 in next month's Budget.
A new property tax, a higher universal social charge and the lowering of pensions tax relief will suck thousands of euro out of the average household, projections from consultancy firm Grant Thornton show.
Although income tax rates will remain unchanged, other levies and charges mean that next month's Budget will be one of the worst of the past five.
The firm also predicts property tax will be applied at 0.25pc on the value of a home.
But next year the Government has indicated that the property tax will only apply from the second half of the year.
This would mean a €400,000 house would end up costing €600 next year, made up of €500 in property tax for the half year and €100 for the household charge. Environment Minister Phil Hogan refused to give a pre-Budget leak on the amount householders will pay in property taxes next year, citing his past resignation over similar leaks.
The minister refused to put a cost on the property tax when he appeared before the Oireachtas Environment Committee.
He resigned as Minister of State at the Department of Finance in 1995 when Budget details were sent to to a journalist before it was announced.
Partner with Grant Thornton, Peter Vale, said he also expects Finance Minister Michael Noonan to hike the top rate of the universal social charge (USC) from 7pc to 8pc.
A new 8pc USC rate will cost a couple with a joint income of €80,000 an extra €690 a year.
Grant Thornton says employee PRSI – currently levied at 4pc – will be extended to non-employment income such as dividends and rents from property investments.
A reduction in tax relief on pension contributions from 41pc to 20pc, will cost €2,520 a year for a couple on €80,000.
And Grant Thornton also expects increases to motor tax rates, higher deposit interest retention tax (DIRT), and levies on cigarettes and alcohol.
Mr Vale said: "With at least €3.5bn being sought from expenditure savings and tax increases, we will all be feeling considerably less well off on December 5."
The expected Budgetary hikes will cost a family on €40,000 an extra €3,250. Those on €80,000 will be hit for €5,410, while a family earning €150,000 will be €8,750 out of pocket.
Meanwhile, figures from the Central Bank show average debt for every man, woman and child is now €38,938. But net wealth – made up of the value of houses and financial assets, minus borrowings– stands at over €90,000.