Wednesday 23 October 2019

Budget 2019: Donohoe lays out 'benefits to families' budget - and Government backtracks on carbon tax

  • Alliance in last-minute demands as Budget talks go into night

  • Workers to get €5 a week back in income tax and USC package

  • Cigarettes up by 50c, but fuel price hikes put off by lobbying

  • Pension hike, granny-flat grant and inheritance tax threshold rise

Finance Minister Paschal Donohoe arrives to work on Budget Day 2019(Photo: Gerry Mooney)
Finance Minister Paschal Donohoe arrives to work on Budget Day 2019(Photo: Gerry Mooney)

Kevin Doyle, Laura Larkin and Cormac McQuinn

Families are to benefit from 100,000 extra GP-only medical cards, increased childcare subsidies and an income tax cut in today’s Budget.

Income thresholds to qualify for a free doctor and the Affordable Childcare Scheme are to be substantially hiked.

Workers will get €5 a week back through changes to the income tax bands and USC, while all social welfare recipients, including pensioners, will also get a €5 boost. These  will be primarily paid for by a VAT rise to 13.5pc in the hospitality sector.

Finance Minister Paschal Donohoe has backtracked on long-planned increases to petrol and diesel through carbon tax. Other measures include:

  • Back to School Allowance up €25;
  • Fuel Allowance extended by a week;
  • 25c increase to the minimum wage;
  • Home Carers’ Tax Credit up €300;
  • Inheritance Tax threshold to rise by €10,000 to €320,000;
  •  ‘Granny-flat’ grant.

The talks on the Budget went down to the wire last night after the Independent Alliance members of Government arrived in Paschal Donohoe's office with fresh demands.

It is understood they secured a €10,000 rise in the existing threshold for inheritance tax for children who are left property by their parents - something Taoiseach Leo Varadkar ruled out just last month.

They also got a commitment that Housing Minister Eoghan Murphy will establish a 'Home Conversion Grant Scheme' to help 'empty nesters' convert their houses into two units.

Tourism Minister Shane Ross lost the battle to stop the special 9pc VAT for the hospitality sector being hiked to 13.5pc. However, he is understood to have got in the region of €40m for tourism initiatives as compensation.

Additional funding: Children’s Minister Katherine Zappone. Photo: Frank McGrath
Additional funding: Children’s Minister Katherine Zappone. Photo: Frank McGrath

In a video message last night, Mr Donohoe said the Budget would "benefit families by looking to make childcare more affordable, looking to ensure that the cost of really important medical services get a little bit cheaper than it is at the moment".

The Irish Independent understands that Health Minister Simon Harris's budget is to stretch beyond €16bn next year. This will allow for 100,000 new GP-only medical cards, a 50pc per item reduction in prescription costs for older people and a lowering by €10 of the maximum a family can pay for medicine in a single month.

There will also be a dedicated allocation for Sláintecare, an additional €55m for mental health services and funding for 100 new therapists to improve assessments of children with special needs.

In the area of childcare, parents with incomes of up to €60,000 after tax will be able to avail of an extra subsidy, provided they are also in receipt of a social welfare payment.

Around 16,000 children up to the age of 15 are to be brought into the Affordable Childcare Scheme for the first time.

Children's Minister Katherine Zappone plans to use a large chunk of the additional €90m she secured in negotiations with the Finance Minister to significantly expand her flagship scheme.

At present, families with a net income of €47,500 who have a medical card, or get other assistance from social protection can qualify for childcare subsidies ranging from €50 to €145 a week depending on circumstances.

The Irish Independent understands the qualifying threshold will rise to €60,000 per couple (around €85,000 gross).

Many families of the 45,000 children who already avail of the targeted subsidies since they were introduced 12 months ago will also see their payments increase.

There will be a significant increase to the capitation levels paid to schools - but they will not be restored to pre- recession rates. A pilot scheme for the new Special Needs Assistants will get €5m.

Social Protection Minister Regina Doherty's package also includes an extra two weeks' parental leave for workers with newborns - but it won't come into effect until late 2019.

The Back To School Allowance is to rise by €25 next year.

It is also understood there will be "more generous" assessment levels for families getting the Working Family Payment and the One Parent Family payment next year.

Lone parents will be able to earn around €1,000 more per year under new thresholds.

Older people can look forward to a €5 pension rise, while the winter fuel allowance will be now paid for 28 weeks instead of 27.

Opinions on carbon tax remained divided in Government last night, but well-placed sources said planned hikes had been dropped.

Mr Donohoe has faced lobbying from his own TDs who feared a backlash in rural Ireland. It is understood he will target diesel cars through registration tax instead.

The 0pc benefit-in-kind tax rate for electric vehicles is being maintained, while local authorities are to get funding for more charging points.

On housing, Mr Donohoe has agreed a package with Fianna Fáil including €300m for an affordable housing scheme.

Separately, sources say he will use his speech to promise that any changes to the Local Property Tax in 2020 will not affect the most vulnerable.

Cigarettes will go up 50 cents but excise on alcohol will not change.

Irish Independent

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