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THE GOVERNMENT HAS issued a firm commitment to announce a tax cut in next week’s Budget, but the debate about how exactly that is done and how much taxpayers’ stand to benefit is ongoing.
The famous Budget leaks have not flowed as freely as they have in previous years as the coalition keeps a firm lid what will be announced. We’ve had a few hints but nothing specific.
Last month, Health Minister Leo Varadkar’s suggestion that the tax cuts could amount to an “extra fiver or tenner” in your weekly pay packet prompted the Taoiseach Enda Kenny to deliver a ‘slapping down’ of his outspoken minister.
But given Varadkar’s comments many will now be expecting to benefit to tune of between €5 and €10 when Michael Noonan makes his Budget 2015 announcement in the Dáil next week.
The government’s intention has become clear in recent days. It wants to cut the 52 per cent top marginal rate of tax. This rate is made up of three components – 41 per cent income tax, 7 per cent Universal Social Charge (USC) and 4 per cent PRSI.
The Taoiseach outlined the issue facing ministers in their deliberations at a press conference earlier this week, saying: “The question is how best do you give relief to whom you want to give it by looking at either one element of it or all three elements?
“It is in there that the Minister for Finance is going to have to make his proposals to government for consideration. It is not as simple as it might seem to reduce the 52 per cent tax burden. But if you want help for middle-income earners, you have to do it in a particular way.”
That ‘particular way’ is likely to involve looking at all three elements of the 52 per cent rate and making changes to them. Not all of these changes will be made immediately.
The government is expected to lay out its tax plans for the next three years and the focus in this Budget 2015 announcement will be on changes to income tax and USC.
There is a drive in both in Fine Gael and Labour to cut the unpopular USC. Tánaiste Joan Burton mentioned the levy, first introduced in 2011, a number of times in an interview with Today FM earlier this week as she talked about easing the tax burden and one Labour cabinet source was adamant yesterday: “We’ll have to do something on USC.
But given the tax raises €4 billion in a full year, officials in the Department of Finance are understandably reluctant to reduce the rates and thus the income from one of their biggest revenue raisers.
The table below, courtesy of Revenue, shows that if the 7 per cent top rate of USC was cut to 6 per cent it would cost €358 million next year and over €500 million in the full year.
By contrast, cutting the top income tax rate of 41 per cent to 40 per cent would cost €164 million in 2015 and €234 million in the full year. But the drawback is that it would not be as beneficial to as many taxpayers as changing the top rate of USC would.
Source: Revenue Ready Reckoner
Adjusting the USC and income tax bands is also an option for the government and would, in some instances, cost less than reducing the rates.
For example, increasing the income threshold at which the 7 per cent USC rate is applied from €16,016 to €17,516 would cost €77.2 million in the full year:
On income tax bands, the government has consistently spoken of the unfairness on workers who see 52 per cent of their income over €32,800 go straight to the taxman.
Jobs Minister Richard Bruton said last month: "I am on record as saying the point at which Irish workers hit the 52pc rate is far too low. That sets us out on a limb. It means the tax wedge for investors and employers is too large at low levels of income. That is something that we need to change."
That kind of talk indicates that many in the coalition are in favour of changing the bands as opposed to reducing the rates.
The government could increase the income tax band by €1,000 so that workers, for example, begin to pay the 52 per cent rate on income over €33,800 and not €32,800 as they currently do.
This would cost €75 million in a full year. While increasing the band by €1,500 to €34,300 would cost €112 million in the full year.
These are some of the options on the table as Budget discussions continue.
It's believed the tax package is being discussed by the Economic Management Council - which is made up of the Taoiseach, the Tánaiste, and the Ministers for Finance and Public Expenditure - today and is expected to go before Cabinet tomorrow where deliberations over its content will begin.
Don't be surprised if there's another Cabinet meeting on Sunday and then a final meeting on Tuesday morning before Michael Noonan takes to his feet in the Dáil at 2.30pm.
Before that we're sure, through the inevitable leaks, to get a better idea of just how much you stand to benefit in Budget 2015.
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They should take the Pope down for a look when he’s over.
He could give the nuns absolution and all would be ready to start over again with a clean slate.
@Gerry Ryan deG: he should certainly be taken there to visit, but nobody gets a clean slate on this. When he visits he should personally hand over compensation to the countless victims of religious abuses that are still awaiting payments.
The hope for the church when it comes to compensation is to drag it out long enough until all the victims are dead, the only thing the church cares about is itself and its pockets.
@Barry Somers: Bernard law to get a cardinals send off in St Peters with the PR pope attending.. That’s what Rome thinks of its victims http://boston.cbslocal.com/2017/12/20/cardinal-bernard-law-funeral-pope-francis-statement/
Dunno who is worse. The government or the Catholic Church.
@Trevor W: governments can be good or bad, &they can cause hurt or pain as well as do good things.. .we all know that but people expected much more of the catholic church because it was supposed to be holy, godly &Christian. People believed it was caring, truthful, loving Christ -like &compassionate & instead found it to be anything but. in short the catholic church was much worse because it showed itself up as lacking in basic morals, deceitful, uncaring, unloving &concerned only with protecting its image & grabbing money every chance it could get
@Trevor W: Sinn Fein arevtge worst. Then the church then the government
@Trevor W: There was a time that they were one in the same.
When he says “We are all now complicit”, I sincerely hope he is referring to elected representatives who are paid to look after these matters and have the platform to do so, and not the majority of us who spend most of our time working to keep the country running and pay their wages
@JimmyMc: we are all complicit though. We are not forcing the issue with the representatives who are meant to work to achieve what we want.
It’s an absolute disgrace so many places are sold off and bulldozed and the horrors that happened within all but forgotten. It’s not just magdelene laundries but all the mental institutions. People were locked away for all their lives and forgotten by the world. Their treatment was horrendous too. Now no one speaks about those poor people and the institutions are sold off and turned into things like luxury hotel. We have whole sections of society we locked up and treated badly and neglected. We should remember them all properly.
@Catherine Sims: The industrial schools, the Magdalene laundries are all a thing of the past. They were horrendous places, but they belong to history now, those injustices against men, women and children do not happen today.
@Catherine Sims: yes, curious there was enough will and money to develop them into exclusive/elitist/yuppie housing complexes/gated communities acceptable and desirable for the few who could afford them but not for the unfortunate inmates dealing with barrack like vast nightingale wards… Look up Friern Barnet hospital, north London and see how it evolved from an institution to an, eh, institution…
@Tom&Gerry: there should never be forgotten. Burying heading in sand will not make this go away.
Perhaps you should receive compensation from the tax payer for having to grow up near a Magdelan Laundry. Speak to a solicitor. You are a victim too after all!
@Don Shavago: Dumped Christian White already?
Everyone reading this should be aware that this memorial will cause more pain and horror to the men and women who were in orphanages and are still living today, the grown women who made and had choices are thought of more than the kids imprisoned for 14years by courts, we are the children of these women
@David Dineen: what??
@David Dineen: Catholic Church is a corrupt institution and always will be, Why,!! Because it puts its Trust in Wealth, making Money from every conceivable angle, from the day your born to the day you Die. The only way to break that cycle is, break out of it don’t let yourself be ‘Used’ ‘Abused’ by this profiteering religion. And now to Insult us all, our Government is going to pay out €20 millions on the visit of the leader of this Rich money making Machine. !!!
@Mairtín: so how do the church make money out of people? €2 in a collection plate on a Sunday?
Think about it.
You’re talking absolutely bollixxx
@David Dineen: what choices did these women have?
@Mairtín: No The church is paying for the visit
@Steph Duffy:
These women had no choices but the men who made them pregnant definitely got away with not facing up to their responsibilities.
@marg fitzgerald: and where does the church get their money?
@Tom Burke: two plates passed around per service, paying money (€50) to have someone remembered in a mass, more again to have a mass said for them. Christening, Education, Communion, Confirmation, Wedding, Funeral. At every step there’s the church with the hand extended for a bit of wheel grease. Indulgences haven’t entirely gone away either
@Dave O Keeffe:
None of which are compulsory .
@Mairtín: The problem for you is that Ireland is a Catholic country. For me and my family and millions of Catholics in this country, it would be an honor to have the pope visit.
@Dave O Keeffe: And why not, are you saying that priests should not be paid for their time. . Priests have living expenses the same as everyone else. You are not forced take part or participate in any way with anything to do with the church, you are obviously anti catholic. So i suggest you stop bothering yourself with the affairs of a church you have no time for. Just walk away, nobody will stop you.
@Mairtín: I would imagine that all churches survive on donations from their congregations. How else would they survive?
@Tom&Gerry: so your saying a priests wages comes solely from the voluntary offerings of the parish in which he serves? That’s absolute bull. I’m not anti-catholic at all, Catholicism does a world of good for a lot of people but there is no denying the organisations obvious wealth and the corrupt nature of the business side of it. The fact that anyone not donating would have to do so in view of the whole congregation brings another element to it.
@Dave O Keeffe: bullxxxx Dave.
You get a mass said and it’s typically €10 but you decide what you give.
Yes you make a contribution for a wedding or a christening but it’s nominal and if you can’t afford it it’s no problem.
For the wedding the couple and guests will arrive at a clean heated church which is provided.
Go to your local village tomorrow and walk into any premises shop, pub, restaurant, solicitor etc. Very soon you will be approached and the goal is to get your money.
Walk into your church. No charge.
You can go into that church every day of your life and never pay 1c, and you will be as welcome the next day.
You are not being truthful and you know it.
someone please ask micheal woods doctor of tomatoes what sort of crack cocaine he was smoking when he did a lousy deal to help the church out with its compensation deal to the victims of anal rape rape of women and imprisonment of it s flock .
ask michael martin why he voted for its approval maybe.
I wonder about places like this being preserved, “lest we forget.” If you visit “Auschwitz,” apart from the “Work Will Set You Free” over the entrance gates and a huge warning sign shortly after that, the amount of people laughing, joking and taking selfies, you have to wonder if you haven’t stepped into another (albeit morbid,) section of Disneyworld. The visitor’s centre full of memorabilia, dvds, cards and keepsakes also serve to dilute the horror of the place. There has to be a better way of putting a stop on man’s inhumanity to man…
How much would it be to get a few clothes washed? I need a dog bed cleaned too.
Ip
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