Ireland’s Budget 2013: Details And Reaction To It by Annette J Dunlea

Published In The Carrigdhoun Newspaper 15th Dec 2012 p.21

Ireland is emerging from its economic crisis, Finance Minister Michael Noonan declared as Budget 13, the sixth austerity budget in a row, got underway.He said that the economy was continuing to grow but still had a long way to go.There are manifest signs that the country is emerging from the worst of the crisis he said.Ireland will continue to fulfil the conditions of the EU/IMF bail-out package so it could return to borrowing money from the international money markets.It’ll be recalled as a reforming budget,” Noonan says. ‘We’re emerging from crisis,’he says.”Budget Day is a good day for taking stock of where we are, so let us take stock. In the second half of this year, the NTMA has raised over €7 billion in the markets, he stated.He lists Ireland’s achievements.The Bank of Ireland, ESB, Bord Gais and AIB have all raised funds for the first time in years.The IDA has announced 84 projects set to create some 8,650 jobs. The economy grew last year and will grow again this year and next year. There are manifest signs that the country is emerging from the worst of the crisis and that the efforts of the Irish people,despite the hardship, are leading to success, he states.He notes that the first measure of success is whether the bail out programme is being fulfilled.Ireland has fulfilled 160 separate conditions of the programme, and has now drawn down over 80 per cent of the low cost money available under the programme. We have also made the fiscal, structural and legislative changes that provide the basis for a renewed economy that will lead to job creation.Secondly,he says Ireland must get back to the markets at sustainable interest rates. The NTMA has secured access for some of our funding this year but we must be certain of market access as needed. If a return to the markets is the measure of success I am confident that we will achieve this objective but as yet it is work in progress”Work is being undertaken by senior officials in a number of Departments to finalise the PlusOne initiative, which is intended to encourage employers to hire individuals that are long-term unemployed. It is envisaged that this new incentive will replace the Revenue Job Assist and the Employer PRSI Incentive schemes.

The cuts are as follows:for politicians there are no cut to ministers’ or TDs’ pay but the era of unvouched expenses for politicians is over.There is a small 10 per cent reduction to parliamentary allowance.He’s also cutting leaders’ allowances to independent TDs.He wants to abolish the payment of severance pay for current and future officeholders.Educational cuts include  that fee-paying schools – staffing schedule increased in 2013 by 2 points.he is reducing allocation to VECs.Higher-level student contributions will be increased by €250 in 2013, 2014 and 2015.PPP Schools Bundle 3 – €50 million secured.€200 million in funding for Exchequer for schools.School clothing allowance cut by €50 to €100.Student contribution in higher education will be increased by €250 in each of the years 2013, 2014, 2015.The sick leave referral arrangement for teachers and SNAs will be made similar to those operating in the Civil Service.Allocation to VECs to be reduced by €13million in 2013

The Health cuts include the prescription charge for medical card holders to be increased from 50c to €1.50.Monthly cap for family being increased from €10 to €19.50.Drug Payment Scheme threshold to be increased from €132 to €144.Professional fees for GPs etc. reduced to save €70 million.Drug Payment Scheme threshold is being increased from €132 to €144 per month, saving €10 million .For Seniors:all pensioners under 66 will have their weekly primary payments fully maintained. Weekly fuel allowances won’t be changed.There are changes to Telephone Allowance scheme and electricity allowance.There is a  reduction in the duration of jobseekers’ benefits by 3 months.”Child benefit to be reduced by €10, as predicted.Respite care grant cut by over €300 in budget.The reduction represents a 19 per cent cut in the payment which is used by carers to pay for home help and respite care.Twenty thousand pensioners are to lose medical card.Respite Care Grant to be reduced by €325, from €1,700 to €1,375 per annum.100 garda stations to close and 28 districts to amalgamate.Within the Justice Sector, reduction in the Garda overtime and various other payroll and efficiency measured will yield over €60 million.It is a good time to be a criminal, this is really false economy.The cost of taxing a car will increase by up to 25 per cent next year, depending on the age and emissions standards of the car.

Child benefit for 600,000 families will be cut by €10 a month for the first two children, €18 for the third child and €20 for all subsequent children.Women are entitled to state maternity benefits  €217 a week which will now be taxed.They cut the Back to Schools Footwear and Clothing Allowance by €50.The average family will be hit by about €1,000 a year. The main targets are once again low and middle income families.

PRSI will be put on rental income, investment income, dividends, savings.There was a broadening the base for all PRSI contributions.We saw an increasing the main level of annual contribution from self-employed from €253 to €500 and abolishing the weekly allowance for employees.Modified income from trades will be subject to PRSI now.Capital tax- thresholds on acquisition tax to increase by 10 per cent. DIRT to increase to 33 per cent.Tax relief will only be allowed to pensions designed to deliver an income of up to €60,000 from 1 Jan 2014.The Pensions Levy under the Jobs Initiative will not be renewed after 2014.The reduced rate for USC for those with pensions over €60,000 will be discontinued from Jan 1 2013. The Top Slicing relief for ex-gratia lump sums of over €200,000 or more will also be discontinued.People with AVCs will be able to withdraw up to 30 per cent of their value – any withdrawals will be subject to marginal rate relief for three years.Employees to pay more PRSI – increase to the minimum level of annual contribution from the self-employed from €253 to €500.Weekly allowance for employees of €127 abolished, this will cost €264 a year.Noonan said  that nobody below €18,000 will pay PRSI.SMES:€100 million to €400 million funds to be made available to help restructuring and other help for SMEs.Local enterprise supports to be bolstered.10-Point Tax Reform Plan which includes:reform of 3-year corporation tax relief for start-ups.Increase cash receipts threshold from €1 million to €1,35 million.R&D credit to go from €100,000 to €200,000.

Top salaries have been reduced by up to 30 per cent and capped at €200,000.There are to be two reductions to general salaries totalling around 14 per cent he says.Pensions reduced to over €100 million savings annually.He outlines other streamlining measures such as shared back-office services, one for the Civil Service to reduce headcount by 17 per cent.Online services have been improved, and is hoping for productivity and cost savings because of annual leave and sick leave changes.Further plans to reduce public service staff numbers to 282,500 by end 2014.

Further changes in Budget 2013 include: a three-year exemption of Property Tax for first-time buyers, and people buying new or previously unoccupied homes.Property tax payable on 0.18% market value of the property up to €1 million. 0.25% on balance of property value over €1 million.It will cost us between €300 and €500 a year for the average house.Carbon tax increases by €10 per tonne from 1 May 2013 and €20 per tonne from 2014.Beer/ cider sees a 10c increase; spirits also gets a  10c extra per litre and a €1 increase on 75cl bottle of wine.10 cents to be added to 20 cigarette packs.50 cents increase on 25 grams packs of loose tobacco.Any unpaid Household Charge for 2012 will be collected through the Property Tax.Household charge will cease from 1 Jan 2013.DIRT will increase from 30% to 33%.Capital Acquisitions Tax and Capital Gains Tax to increase from 30% to 33% from midnight. The threshold at which CAT applies will be reduced by 10%.A dual registration to be introduced – registration tag will be 131 for first half of next year and 132 for second half of the year.€11 million in 2013 and €26 million in a full year given to increase number of placements available in ‘labour market activation schemes’.A new €175 million ten-year Capital Venture Fund is created.He is restructuring of local entreprise boards with an  allocation of €26 million in 2013.Plans to reduce public expenditure to €51.1 billion next year and capital expenditure to €3.4 billion in 2014.Ireland has agreed a new Inter-Governmental Agreement with the US in relation to the US Foreign Account Tax Compliance Act.Donations to charities and other approved bodies made from 2013 tax year will be subject to a new, simplified tax relief regime. New rate to be a blended rate of 31%.From 1 July 2013, Maternity Benefit will be treated as taxable income, but will continue to be exempt from the USC.Where modified PRSI rate payers have income from a trade or profession, such income and any unearned income they have will be made subject to PRSI from 1 Jan 2013.Central Bank overseeing the rollout of a range of options to deal with unsustainable personal and commercial debt VAT rate of 9% to be continued in 2013.Film Tax Relief Scheme extended to 2020, moved to tax credit model and to be enhanced.Mortgage Interest Relief to end on 31 December.Some people will be able to defer payment of the Property Tax, subject to 4% interest. Three-year exemption of Property Tax for first-time buyers, and people buying new or previously unoccupied homes.They are referring to measures such as an increased Universal Social Charge for over 70s on high incomes; increases in DIRT, Capital Acquisition taxes, and Capital Gains Taxes all of which will bring in €200 million.This is tiny in comparsion to the changes in PRSI which alone which will net €289 million.

IBEC Director General Danny McCoy said: “Broadening the tax base and focusing on cutting expenditure means that the direct impact on jobs has been minimised.”The Irish Exporters Association gave a “strong” welcome to the Budget measures to support the export industry.EA CEO John Whelan said: “The decision by the Government not to increase income tax will help in terms of labour cost competitiveness and is greatly welcomed by the exporting sector.”Alcohol Action Ireland welcomed the Government’s decision to restore excise duties to 2009 levels.The St Vincent de Paul said that the increases in prescription charges, the drug payment scheme, the cost of solid fuel and the reduction in child benefit along with the abolition of the PRSI credit would have a severe effect on social welfare recipients and those on low pay.Noting the cut in the duration of jobseekers benefit by three months, Padraig Malone of the Limerick Centre for the Unemployed added: “We have a situation where people are going to be under pressure to prove they are running around looking for non-existent jobs. It is not a good budget”

The people’s Verdict is negative poor, old, low and middle classes are hurting.Mattie McGrath: “It’s a horrible Budget”.He talks about the blow to self-employed people, the cut to respite care allowance, cuts to education –  and “we want people to go back to education” he says.Richard Boyd Barrett is standing now and is taking about a “cruel” Budget. Families, children, people with disabilities, older people – all targeted, he says.A Budget without hope, Doherty claims; Ó Caoláin calls it ‘a day of shame’ for Labour.IBEC director claims Govt. should be congratulated; SVP say ‘elements can be welcomed’.McGrath accuses Labour of capitulating under FG demands.IFA claim PRSI change will put farmers out of business, VFI condemns alochol price rise.Tax hikes ‘will spur illegal tobacco trade’, they say.SIPTU General President Jack O’Connor criticised the abolition of the PRSI allowance, saying it was “a regressive measure which will disproportionately affect lower income families.”The Civil Public & Services Union described today’s budget as a missed opportunity to fundamentally redistribute the impact of the economic crisis in greater measure onto higher earners and those with wealth.The Irish National Teachers’ Organisation welcomed the fact that there would be no increase in class sizes in larger schools, but said that further cuts to teacher numbers in small schools was flawed and misguided.ASTI General Secretary Pat King said: “It is important to state that some cuts announced in last year’s Budget – such as a reduction in the number of English language support teachers – will be implemented in 2013.”The Drinks Industry Group of Ireland expressed extreme disappointment at the decision to increase alcohol excise.Macra na Féirme National President Alan Jagoe said he was absolutely dismayed that the stamp duty relief on land transfers for young trained farmers was not renewed.IMO President Dr Paul McKeown said the threefold increase in prescription charges and the withdrawal of full medical cards from many elderly people were damaging.

Mr Varadkar said Government members would have to accept the measures as they were not choosing from “an a la carte menu. The Budget is a package”.Mr Varadkar joined Tánaiste Eamon Gilmore in defending the sixth austerity Budget in five years, saying he believed the measures set out yesterday were fair as everyone would now have to contribute more and those who had the most were giving the most.This is a budget that affects people all over the country. We have always said that this was going to be a tough budget, the toughest that this government will be doing, said Eamon Gilmore.Mr Gilmore said the budget targeted wealth.There are no cuts in basic rates of social welfare, and, that we would ensure that those who have the most contribute the most.This Budget will produce over €500 million in additional taxes on wealth.It’s the largest package of tax measures on wealth in this country that I have seen in my 23 years in the Dáil, he said.Almost every adult in the State will be hit by a range of budget measures including a property tax, reduced child benefit, extended PRSI and cuts in the entitlements for the elderly.Fr Seán Healy of Social Justice Ireland said that It is unjust that corporations maintain and receive tax relief in Budget 2013 while families continue to suffer the brunt of budgetary adjustments.UNITE Regional Secretary Jimmy Kelly said: “Taking more money out of empty pockets is wrong and is only accelerating the vicious cycle of austerity.”Barnardos criticised what it called the “regressive, unfair and unsustainable” measures outlined in the Budget.

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