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Families facing ‘dirty dozen’ of tax hikes, price rises and benefits cuts

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FAMILIES are to be hit hard by a “dirty dozen” of tax hikes, price rises and reductions in state benefits that take effect from today.

A large number of changes announced in October’s Budget are set to be implemented as we move into 2014, and energy price hikes will also swing into effect.

More than a million homeowners will have to fork out more money to keep the lights on in 2014.

Electric Ireland, which is the retailer supplier name for the ESB, said it would freeze its prices until January and then impose a 1.7pc rise.

The company is still the biggest electricity supplier in the country, with 1.3 million customers. The rise will mean an extra €18 for an average family over a year.

Electric Ireland also said it would wait until January to implement a rise mandated by the regulator to subsidise wind power and peat-generated electricity.

The so-called public service obligation (PSO), which is imposed by the Government, will cost an extra €35 for an average family over a year.

And Bord Gais is due to hike its electricity prices from February by around 2pc.

The extra costs come as recent research commissioned by credit unions found that most families will take around two months to pay off the borrowings they built up to pay for Christmas.

Most of the higher costs are due to government decisions.

Savers are among those to be hardest hit, with the tax on interest paid for deposits set to shoot up from 33pc to 41pc from January 1.

Deposit interest retention tax (DIRT) will also apply to credit union dividends paid from 2014. And some people with large deposits will have to pay PRSI (pay related social insurance) of 4pc on deposit interest for the first time.

The exit tax on gains made from life assurance policies and investment funds will also jump to 41pc.

Pregnant women will see the maternity benefit “standardised” at €230 a week for 26 weeks from January 6 onwards.

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Most women get a higher rate of €262, so there will be a huge loss for new mums.

Over the full 26 weeks, those due to get the higher rate will lose €832 in payments, with the move set to affect around 8,000 women.

Families with four or more children will feel the impact of a cut in child benefit from the start of January. The rate for all children falls to €130 a month, effectively a cut of €10 for each child for fourth and subsequent children.

And the bereavement grant, a once-off payment to help with funeral costs of €850, is being scrapped.

Anyone saving for a pension will be hit by a rise in levy on private schemes. It jumps from 0.6pc of the fund’s assets to 0.75pc.

And people who hit 65 this year will no longer get a state pension transition payment. Up to 2013, people reaching 65 got what is called the State Pension (Transition) for a year and then the State Pension. But now the State Pension (Transition) will no longer be paid where a person reaches 65.

A state scheme to help those with mortgage arrears is also being scrapped. The mortgage interest supplement will be closed to new entrants from today. It pays around €300 a month for those unable to meet their repayments.

And older people and those on social welfare will no longer get the €9.50 a month telephone allowance as part of what is called the household benefits package. The scheme is being cancelled for new and existing recipients.

Health insurance will be affected by moves by Health Minister James Reilly to charge insurers an extra €130m for using public beds in public hospitals. Dermot Goode of Healthinsurancesavings.ie said this extra cost will be passed on. It comes on top of a reduction in the tax relief for health policies, and price rises already anno-unced by Glo and Aviva. VHI and Laya are set to announce more price hikes, he said.

The full property tax applies from this year, although most of those who are liable will probably have already paid it for 2014.

Last year, half the amount was due, but this year an average of €300 will apply to homes.

Jobseeker’s Allowance will be cut to €100 a week for those between the ages of 18 and 24 who have no children, from January 14. This will apply to new entrants.

Another reduced rate of €144 will apply to jobseekers who reach 25 from January.

The rate for those aged 25 years and over is €188.

Workers who get ill from January 6 will not get illness benefit payments for the first six days of their time off work, under a change brought in by the Department of Social Protection.


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