Redundancy cash exempt from higher income levies
Redundancy payments will be exempt from the higher income levy rates, Finance Minister Brian Lenihan confirmed yesterday.
Mr Lenihan also defended his emergency Budget and denied the forthcoming elections will be a referendum on the Government's performance.
Mr Lenihan published the Finance Bill yesterday to bring into effect many of the measures in last month's emergency Budget.
Easing the worries of people who lost their jobs in the opening four months of the year, he said anybody who received their redundancy payment earlier in the year and before the Budget, will not pay the higher income levies.
The Government was concerned that high earners would pay themselves lump sums to avoid the higher levies, so it introduced an aggregate rate for self-employed over the course of the year -- combining the two income levy rates. But this rate will not be applied to redundancy payments.
The Finance Bill confirms the measures from the emergency Budget day, such as: l A doubling of the income levy rates to 2pc, 4pc and 6pc. l A limiting of mortgage interest relief to the first seven years of a qualifying home loan. l The termination of the property-related capital allowance schemes for private hospitals, registered nursing homes, convalescent homes and mental health centres.
- The abolition of the special 20pc tax rate applicable to trading profits from dealing in or developing residential land. l An increase in the rate of capital acquisitions tax, capital gains tax and deposit interest retention tax to 25pc l Increases of 2pc in the rates of exit taxes on special savings accounts, personal portfolio life policies and personal portfolio investment undertakings.
Fine Gael's finance spokesman Richard Bruton said Fianna Fail was stubbornly persisting with its narrow agenda by piling taxes on ordinary families and refusing to undertake any initiatives to protect or create jobs.
"The Finance Bill gives legal effect to the introduction of a 51pc tax rate on single persons earning €36,400 and married, one-income, persons earning €45,400.
"This is the result of a Budget designed to make taxpayers carry the can for Government failures," he said.
Families
Labour's finance spokeswoman Joan Burton said the publication of the Bill confirms that marginal income tax rates are set to soar to levels not seen since the 1990s.
"Families on incomes of between €40,000 and €90,000 will take the hardest hit.
"Families with very young children also face the loss of the early childcare subsidy.
"In future, families with children are threatened by the Minister for Finance with the taxation or means-testing of child benefit together with the re-introduction of college fees for older children," she said.
Meanwhile, Mr Lenihan indicated he will not jump into any deal with pension funds to pay for infrastructure projects.
Irish pension funds are offering to invest up to €6bn over the next three years in a range of projects to create building jobs.
But Mr Lenihan said the rate of interest was high and the State had to be careful at this current time.
- Fionnan Sheahan Political Editor
