Budget 2016 Summary

Below is a summary for Budget 2016 as announced on 13/10/2015

 

The last few budgets have been hard, but they made it possible for Ireland to exit the bailout, reduce our debts, and move into a real recovery.

The top priority of this year’s budget is to keep that recovery going, while providing relief and better services for the Irish people. It includes steps like a cut in the USC, more nurses and doctors for the health service, more affordable and quality childcare, and ending the unfair treatment of the self-employed. These are sensible, affordable steps that will keep the recovery going and bring its benefits to more households

 

A Middle Income Tax Cut to create Jobs and Secure our Recovery
  • A cut in the USC for low to middle earners from 7% to 5.5%.  This reduces the marginal tax rate on low and middle income earners to below 50% for the first time since 2009.  The benefit is capped at €70,000.
  • Increased entry point into USC to €13,000, bringing to over 700,000 the number of low earners exempted from the USC. And cuts in the lower USC rates and bands to help low earners and make work pay.
Income tax cuts are fair and spread the benefits of the recovery.  For a working family of 2 middle income earners, on around €50,000 each, these changes mean an extra €1,300 p.a.
Income tax cuts will create 15,000 more jobs over projections (when delivered over 3 budgets), by encouraging increased workforce participation and entrepreneurship, growing domestic spending and consumer confidence, and encouraging foreign investment.
Tax cuts will encourage home our emigrants and is key for attracting foreign investment. 
Over 5 budgets this Government has restored our public finances without taxing jobs, a key election promise, helping create 125,000 jobs since the Action Plan for Jobs in Feb 2012.

 

A Jobs Budget to Secure the Recovery
CGT Entrepreneur Relief: a decrease in capital gains tax for entrepreneurs from 33% to 20%.
Knowledge Development Box: a lower 6.25% rate of corporation tax on profits from patents and copyrighted software, incentivising R&D to take place in Ireland.
Making work pay to increase jobs, through cuts in the lower USC rates and bands, and a 50c increase in the minimum wage.
Making childcare more affordable and removing barriers to work: free pre-school for children from 3 until primary school (up to an additional 50 weeks), 8,000 extra Community Childcare Scheme places, 2 weeks paid paternity leave, and a €5 increase in child benefit.
A new €27bn multi-year Capital Plan to address emerging infrastructural bottlenecks in the economy and create 45,000 jobs in the construction sector.

 

A Fair Budget — Everyone Benefits from Tax Cuts and Extra Funding for Key Services
Extra funding for housing — an extra €69m for social housing, an extra €17m for homelessness, and NAMA will build 20,000 houses over the next 5 years.
Extra funding for health — free GP care for under 12s, a €900m increase in health funding.
2,260 extra teachers and a reduction in the pupil-teacher ratio from 28:1 to 27:1 (primary).
600 extra Garda recruits
Fair for low earners — they gain the most, through USC cut and 50c minimum wage increase
Lower earners gain more under Govt’s tax cuts than under FF.  A €20,000 earner only gains €255 under FF, but gains €493 under the Govt (through USC and PRSI cuts).
FG’s USC cuts are worth more to an ordinary family (€717 for a family on €45,000) than SF’s populist property tax (€405 for house under €250,000) and water charges cuts (€160).
Fair for the self-employed — a new tax credit worth €550, which moves them towards equal tax treatment with PAYE workers.
Fair for families — decrease in inheritance tax by increasing the threshold, freezing of local property tax until 2019.

 

A Sensible and Affordable Budget — We will Never Repeat the Mistakes of the Past
A sensible budget sustaining our recovery and reducing our deficit to 2.1% of GDP in 2015, then 1.2% in 2016, and then we will eliminate the deficit by 2018.
Tax revenues will increase by 15% but spending by only 4%, over the two years 2015-2016.
National debt will drop below 100% of GDP this year, ahead of required EU reduction.
The Independent Fiscal Advisory Council has approved the overall budget assumptions.

 

The Elderly are included in the Recovery
A €3 increase in the weekly pension, recognising the contributions of the elderly.
Christmas bonus restored to 75% of weekly payment, €173 to a pensioner, from Dec 2015.
The fuel allowance will increase by €2.50 per week.