Thursday 18 January 2018

Explained: What Budget 2018 means for workers and stay-at-home parents

Photo: Stock image
Photo: Stock image
Cormac McQuinn

Cormac McQuinn

FAMILIES with a stay-at-home parent will benefit from an extra €100-a-year in the form of an increase in the home carer credit to €1,200 a year.

The move is among tax measures in Budget 2018 which also sees the threshold for the higher rate of income tax to applied raised by €750 and cuts to lower rates of USC.

Finance Minister Paschal Donohoe announced the €100 increase to the home carer credit saying it assists more than 80,000 families where one spouse works primarily in the home to care for children or other dependents.

In a section of his speech entitled "rewarding work" Mr Donohoe said he wanted to ensure the tax system is fair.

"A system where those earning an average wage are charged the higher rate of tax is unfair," he said.

The entry point for the higher rate of income tax for single earners is being increased by €750 from €33,800 to €34,550.

Ray MacSharry, Minister for Finance, holds aloft the Budget Bag.
Ray MacSharry, Minister for Finance, holds aloft the Budget Bag. "Mac the Knife" delivered a tough budget. Fiscal rectitude was the phrase of the day. The budget targeted the public service, imposing a pay freeze and an embargo on recruitment. It put an end to a number of housing grants, and travellers who left the country for less than 48 hours were no longer entitled to duty-free goods. A £10 charge for hospital outpatients was also introduced. April 1987
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Minister for Finance Charlie McCreevy pictured today his office holding up his budget speech contained on a disc inside a transparent briefcase
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Charlie McCreevy, then Minister for Finance in 2001
Charlie McCreevy, then Minister for Finance in 2001 Photo: Tom Burke
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Mr Donohoe also announced that the 2.5pc USC rate is being reduced to 2pc and the 5pc USC rate is being dropped to 4.75pc.

He said the ceiling for the new 2pc rate is being raised from €18,772 to €19,372 to ensure that full-time workers on the new increased national minimum wage of €9.55-an-hour won't pay the upper rates of USC.

Mr Dohonoe said that he is establishing a working group to plan over the next year for the process of amalgamating USC and PRSI over the medium term.

He said a key objective of the group will be that this process doesn't narrow the tax base and "ensures that our personal taxation system is both competitive and resilient in the future".

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