Tuesday 23 January 2018

Troika farewell will give us back control

Members of the 'Troika' team - European Commission, ECB and IMF - crossing the street from the Merrion Hotel to the Department of Finance in 2012
Members of the 'Troika' team - European Commission, ECB and IMF - crossing the street from the Merrion Hotel to the Department of Finance in 2012

Michael Brennan Deputy Political Editor

FINANCE Minister Michael Noonan promised that the country will get back control of its "purse" by exiting the bailout after the Budget.

He insisted that the decision to cut the Budget adjustment target from €3.1bn to €2.5bn was financially sound, and would not affect the country's chances of bidding farewell to the troika in December.

"There will be no promissory notes, there will be no Anglo Irish Bank and there will be no bank guarantee. We will have exited the programme and Ireland will have been handed back her purse," he said.

Mr Noonan also defended his decision to base his Budget on a forecast of 2pc economic growth next year – when the Fiscal Advisory Council had only predicted 1.8pc growth.

He said it was better because it took account of the Budget measures he was announcing.

The good news

Mr Noonan announced that the special 9pc VAT rate for the tourism and restaurant sector would be retained after the sector had created 15,000 jobs.

"This will support the increased number of jobs in place and accelerate the creation of new jobs," he said.

But the estimated €350m cost will be paid for by a new levy on pension funds of 0.15pc.

In a gesture towards the women who suffered in the Magdalene Laundries, Mr Noonan announced that the compensation lump sums paid to survivors will be tax-free.

The bad news

Mr Noonan announced hikes in the taxes on cigarettes and alcohol, with a packet of 20 cigarettes increasing by 10 cent and duty on a pint of beer or cider being increased by 10 cent.

He announced a further 50 cent tax increase on wine – which Labour once promised to stop Fine Gael from doing.

And he announced a massive hike in DIRT tax on savings from 33pc to 41pc, to make people spend more.

Tax changes

Mr Noonan announced that the Government would be restricting the lone-parents' tax credit to the parent who was looking after the child, to save €25m per year. Previously, the tax credit could be claimed by a mother and a father, even if one of them was not involved in the care of the child.

He confirmed a €150m annual bank levy for the next three years .

However, the banks will benefit from his decision to allow them to get a tax write-off on losses on property loans sold to NAMA.

The construction sector

Mr Noonan said the construction sector had been hit harder than any other since the recession began in 2008 – as he outlined his desire to provide jobs for thousands of unemployed construction workers.

He announced that there would be a new home-renovation scheme which would give people a VAT refund on projects worth between €5,000 and €30,000.

He said that all claims would have to be registered with the Revenue to combat the "shadow economy".

And he said that the tax incentive scheme to restore buildings in our historic cities would be extended beyond Limerick and Waterford to include Cork, Galway, Kilkenny and Dublin.

Irish Independent

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