Budget 2017 review
The Coffee Cup Budget (and muffin?)
There was no major surprises in the Budget as it had been well leaked in advance. The attempts to ease the burden on middle-income tax payers are modest, but at least moving in the right direction, we can however have a coffee and muffin on the Minster for Finance.
The Coffee (+ Muffin) effect
Most should be around €5 per week better off, which would be the price of a coffee and muffin (around here at least). If you earn €36,920 you will be €4.76 per week better off, earn €50,000 and you will be €5 better off etc… (yes a miserable tip is all that would be left). Those on the state pension or social welfare will also be €5 per week better off.
I will skip all the headline bits as I have them below and give you the bits you can throw out in conversation over a coffee or drink.
Amount coming in €67.4 billion, amount going out €70.1 billion. Yes a €2.76 billion shortfall.
Cigs went up 50c and there will be a sugar tax. Booze was left alone but the excise revenue which includes these brings in €5.8 billion. Yes by drinking more you are helping the economy (only joking).
The interest on our national debt is €6.1 billion (in main thanks Anglo, Nationwide, bond holders etc..). Health spending €15.3 billion and increasing, plus Education at €10 billion to name a few of the big spenders.
New car sales declined by just over 10% in the first 9 months of the year. Sterling weakness and high motor-related taxes are leading to a surge in imports of second hand cars from the UK.
The unemployment rate stood at 6.1% of the labour force in September, down from 15.2% in 2012.
Surprisingly given the weakness of sterling, exports to the UK increased by 12.6%. It is probably the case that Irish exporters to the UK are using price to maintain competitiveness, which may not be a sustainable situation for exporters in the longer-run;
Key Challenges in Budget 2018
While the Irish economy continues to enjoy strong and broad-based growth, it is clear that there are significant challenges ahead.
- The personal tax burden is way to high;
- The quality of public services is seriously deficient, with the health sector under particular pressure;
- There is a significant shortage of owner-occupied housing, social housing and rental property. Leading to price rises for renters and buyers.
On the taxation side, the key measures in Budget 2018 include:
- The threshold at which workers end up paying the top rate of tax was lifted by €750 to €34,550 for a single worker and to €43,550 for married one-earner couple.
- The Home Carer Tax Credit was lifted by €100 to €1,200;
- The Earned Income Tax Credit for self-employed has been increased from €950 to just €1,150. For employees, it stands at €1,650, so self-employed tax payers are still being discriminated against.
- The 5% USC rate was cut by 0.25% and the 2.5% rate was cut by 0.5%. The 2.5% rate was paid on incomes between €12,200 and €18,772 and this ceiling is being lifted to €19,372. The cut in this rate will benefit lower income earners more.
- The stamp duty rate on non-residential property transactions was increased from 2% to 6%.
Small steps in the right direction but to be fair he had little to play with. Lets hope the price of a coffee and muffin does not rise in the New Year, just when we were looking forward to the extra few euro and treating ourselves.
I hope this short review helps you get a handle the budget and of course if you have any questions just ask and I will do what I can to get you the answers you need.