What to expect from Budget 2016
The plan for government expenditure and tax cuts was expected to come in at around €1.5 billion, however funds carried over from 2015 could actually see an expansion of spending closer to €3 billion.
With an election just around the corner, the fiscal changes for next year could mean an effective doubling of what the government had planned to announce in its ‘giveaway’ budget.
So what can we expect from this budget?
A lot of eyes will be on the Universal Social Charge and whether the government will make any significant changes. First introduced as an emergency measure when the economy hit bottom; it was designed to shore up a tax base that had been destroyed. Now with the economy improving and increased money flowing into the exchequer, there have been calls for the charge to be reduced. The Taoiseach has acknowledged that the charge is widely “hated”, and has said that it will not be cut completely overnight.
The USC was initially introduced by as a temporary charge in December 2010 by the late Brian Lenihan, who was finance minister at the time. It brings in around €4 billion every year for the exchequer. However, come tomorrow, the Budget looks like being all about cutting the charge and making life less expensive for parents of young children.
A 1% reduction to USC is the most likely outcome – the government is looking to target those hit hardest by the marginal rate of 51% – the combination of upper rate tax 41%, 7% USC, and 3% PRSI.
The government are likely to introduce new measures on paternity leave for fathers and an increase in free pre-school care as well. The Tánaiste Joan Burton is also said to be in favour of increasing child benefit.
Some welfare cuts will be reversed – the respite care grant which is paid to 77,000 people is likely to be one of them. There will also be measures to help deal with the housing crisis; incentives for both developers and landlords.
Budget 2016 may look like this:
- Christmas Bonus increase from 25% to 75% for people on long-term social welfare weekly payments
- €2.50 increase on fuel allowance
- Entry level for paying USC to be raised
- Tax credits for self-employed
- 50c on the price of a 20-pack of cigarette
- €120 million for housing fund
- Capital Gains Tax reduction
- Inheritance tax exemption threshold to be raised from €225,000 to €280,000
With the full details just hours away, Independent TD Tommy Broughan hopes the government takes their opportunity to close the inequality gap in Irish society.
“It will be interesting to see what new information is revealed tomorrow, given that many of the measures expected to be introduced in Budget 2016 have been discussed in the media in recent weeks,” he said.
“I welcome the Tánaiste’s announcement that child benefit will be partially restored by €5 per week but it remains to be seen what other steps the government takes to make Ireland fairer and more equal.”