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Low-income families

Families on low incomes are going to be hit hard by the Government's planned tax increases and spending cuts -- whether they are working or receiving social welfare.

The Government is proposing a 5pc cut in social welfare spending in the Four Year Plan.

As it is refusing to touch the old-age pension, this means that other welfare recipients -- the unemployed, lone parents, the sick -- will have to bear the full brunt of the cuts. Expect a 5pc cut, €10 per week, in next month's Budget.

For those working on low incomes, the cut in the minimum wage by €1 to €7.65 per hour will hit hard. This will reduce the income of someone working 40 hours per week by €40 per week.

Workers just above the minimum wage will also be hit, as the annual income tax threshold falls by €3,000 from €18,300 to €15,300 by 2014.

The rise in VAT rates will hit those on low incomes disproportionately hard.

Someone on social welfare spending two-thirds of their income on VAT-rated items will be at least €2.50 per week worse off due to the higher rates while someone on the minimum wage €4 per week worse off.


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