Budget 2011 in brief
With a target of cutting the government defecate by 3.8 billion does the Irish budget for 2012 deliver. After seeing successive budgets take €600 per month from the average household and 20 billion from the economy, the question is can the Irish people afford any more taxes and cuts. While the budget cuts are keeping the IMF and ECB happy what effect is it having on Irish society. Cuts and Taxes alone will not get Ireland back on track to recovery. Taxing yourself out of recession is like fighting for peace. Will budget 2012 deliver on job creation or is it just more slash and burn. Below is a brief summary of budget 2012 and how it will effect you.
Budget 2012 the cuts
- €3.8bn fiscal adjustment needed in 2012 budget
- €2.2bn of adjustment from spending
- €1.4bn in day-to-day spending cuts in budget
- €20m earmarked for new Labour Market Activation Fund
- Public service staff down by 6,000
- Public service pay bill to fall by €400m in 2012
Budget 2012 Social Welfare
- Weekly social-welfare payments unchanged
- Changes to the one-parent family payment will save €20.7m
- Child benefit for first and second child unchanged
- Cut of six weeks in the cold-weather allowance
- Jobseekers’ benefit to be based on five-day week
- Redundancy and insolvency changes will reduce employer rebate from 60% to 15%
- Back-to-School Clothing Allowance abolished for two/three-year-olds
- Payments for new claimants of Disability Allowance cut to €100 a week for people aged 18-21, and to €144 for people aged 22-24.
Budget 2012 Health
- €543m in net savings in the health area
- Extra charges on private treatment in public hospitals
- Drug Payment Scheme monthly threshold up from €120 to €132
- New measures will reduce the price of drugs
- 2% cut in disability, mental health and children’s services, saving €50m
- Staff ceiling of 103,800 employees to apply to HSE in 2012
Budget 2012 Education
- €132.3m savings in education
- 2% cut in Higher Education funding – €7m saving
- Increase of €250 in third-level student contribution
- Changes to fee and maintenance supports for new post-graduate students
- Education expenditure will comprise 17% of all current expenditure next year
- €19.2m in cuts to trainee and apprenticeship schemes
- Primary-school transport charge to be doubled to €100
Budget 2012 Reform
- Savings of €105m in Dept of Agriculture, Marine, Food
- Savings of €45m in Dept of Transport, Tourism, Sport
- Savings of €34m in Environment, Community, Local Govt
- €52.9m cut in Overseas Development Aid
- €79m cut in spending for An Garda Síochána
BUDGET 2012 the Taxes
Income tax: No increase
VAT: Raised by 2% to 23%
Universal Social Charge: Exemption raised to €10,000 – this affects 330,000 people
Carbon Tax:
Increased from €15 per tonne to €20 per tonne
This means:
- 1.4c increase on Petrol
- 1.6c increase on Diesel
- €17.32 increase on Fuel Oil (to rise in May)
- €14.46 increase on Natural Gas (to rise in May)
- No Carbon Tax on solid fuels
Cigarettes
25c increase on pack of 20
Alcohol
No change in excise duty
- Legislation planned on low-cost alcohol
Motor Tax
Changes to apply from 1 January
- Band A up €56 to €160
- Band B up €69 to €225
- Band C up €28 to €330
Mortgage Interest Relief
- 30% for first-time buyers between 2004 and 2008
- 25% for first-time buyers in 2012
- 15% for non-first time buyers
€100 Household Charge
Waived for those on mortgage interest supplement and those in unfinished housing estates
Stamp Duty
- No change to stamp duty on residential property
- Commercial property rate lowered from 6% to 2%
Farming
- Lower commercial stamp duty rate will also apply to farmland
- 50% stock relief on registered farm partnerships
- 100% rate for certain young trained farmers
- Incentives for timely transfer of farms before the current owners reach the age of 66
Capital Gains Tax incentive
Applies to property bought by end 2013 and kept for 7 years
Capital Acquisitions Tax
Up from 25% to 30%
Capital Gains Tax
Up from 25% to 30%
DIRT
Up from 27% to 30%
Corporate Tax Rate
To remain at 12.5%
Corporate tax
Exemption for start-ups extended 3 years
Research & Development
- €100,000 of expenditure can be used as tax credit
- Companies can use R&D credits to reward key employees
GDP: 1.3% growth forecast in 2012
Special Assignee Relief Programme: Initiative to attract key staff
50% Employer PRSI pension relief abolished
Approved Retirement Funds: Tax up 1% to 6% on transfer of funds
Gambling: Legislation planned on internet betting
Does the budget deliver on election promises? Please comment.
