The winners and losers in Budget 2014

Winners:

The tourism industry

Not only did the tourism industry get to keep its 9 per cent VAT rate as it had lobbied hard  for in recent weeks, but it also got an added boost when the Government said it would abolish the travel tax. The move has been welcomed by everyone from airlines to (more…)

Budget 2014: Unkindest cuts are kept till last

THE Government waited for the final Budget under the troika to implement some of the unkindest cuts of the entire bailout period.
Pensioners, medical card holders, working mothers, the young unemployed, savers and families with health insurance were all targeted in a series of painful cuts and tax increases totalling €2.5bn. (more…)

Budget 2014 appears to be SME friendly

A number of measures have been announced affecting the SME sector in Budget 2014, including the threshold being increased increased from €500,000 to €3m for SME loan appeals to the Credit Review Office (CRO) and €2 billion in SME supports. (more…)

Budget 2014: Government unveils raft of tax hikes, spending changes

A series of swingeing tax and spending adjustments aimed at reducing the State’s annual outlay by €2.5 billion were unveiled in today’s Budget.

Among the controversial measures announced were a lowering of dole payments to under-25s; a hike in prescription charges; a tightening on the eligibility criteria for medical card holders and the phasing out of the mortgage interest supplement.

Beer, spirits and cigarettes are all to go up by 10 cents from midnight, while wine is to go up by 50 cents, following on from last year’s €1 hike on the price of a bottle.

The Government comfortably won its first vote on the Budget in the Dáil tonight when the vote on the alcohol price increases was passed by 103 votes to 53.

In surprise move, the Government decided to keep the reduced 9 per cent rate of VAT on food and tourism services which has been credited with boosting job creation in the hospitality sector. However, there was no special VAT rate for the beleaguered construction sector which several industry groups had been lobbying for.

Instead Minister for Finance Michael Noonan announced the introduction of a new home renovation incentive scheme which will provide an income tax credit to homeowners who carry out renovation and improvement works on their principal private residences.

To further support the tourism sector, the controversial airport travel tax is to be scrapped in the hope that airlines will open more routes into the country.

“The purpose of this Budget is to continue the progress we have made; to reinforce policies that grow the economy; to establish the conditions which will create jobs; and to prepare for exiting the bailout programme,” Mr Noonan said.

The Minister said there would be no increases in income tax or the Universal Social Charge in 2014. There will be no increases in excise duty on petrol, diesel or on home heating oil and gas either.

As signalled in recent days, free GP care is to be rolled out to all children aged five and under, at cost of €37 million to the exchequer.

Minister for Public Expenditure and Reform Brendan Howlin described the move as the “first step in our programme to provide free GP care for all”.

However, he also announced a €1 hike in prescription charges to €2.50 – with an overall monthly cap of €23.

Mr Howlin said the Government would also carry out a review of all medical cards to remove ineligible and redundant cards.

The income threshold for over-70s for medical cards will also be lowered to €900 per week for a couple and €500 for a single person.

Dole payments for 22-24-year-olds will fall from €144 to €100 a week and 25-year-olds will get €144 instead of €188.

There will be no cuts to child benefit or the weekly fuel allowance, measures which proved controversial in last year’s budget.

On the household benefits package for the elderly, the €9.50 telephone allowance is to be scrapped, although other allowances for pensioners – including free travel, gas and electricity allowances, and the TV licence – are to remain unchanged.

The pupil-teacher ratio in public schools is also to remain the same but college registration fees are to be increased by €250, bringing the annual charge to €2,750.

Minister for Education Ruairí Quinn has already said the charge would increase by €250 until it reached €3,000 in 2015.

The Budget also provides for a hike in Deposit Interest Retention Tax (DIRT) to 41 per cent, which means savers will now have to hand over €41 for every €100 made in interest.

A new bank levy worth €150 million a year to the exchequer was also announced, which will be roughly based on each institution’s market share.

Mr Noonan said the levy — similar to those in other European countries — reflects the significant role played by the banking sector in the economic crisis.

Mr Noonan said the Government’s forecast deficit for 2013 was 7.3 per cent of GDP, for 2014, 4.8 per cent and for 2015, 2.9 per cent.

“We have beaten our deficit target during each year of our programme, and a deficit at 4.8 per cent will beat the target again next year.”

On the issues of mortgage arrears, Mr Noonan said: “Within the next 12 months I expect that the vast majority of customers who are currently in (mortgage) arrears will have been offered and accepted a sustainable solution.”

Ireland says may exit bailout without EU backstop

(Reuters) – Ireland will become the first euro zone country to exit an international bailout in mid-December and may do so without a financing backstop from its European partners, the ruling party announced at a triumphant rally on Saturday.

Prime Minister Enda Kenny told a gathering of his Fine Gael party that “the economic emergency will be over” when the country exits its 85 billion euro bailout on December 15, confirming the official date of the exit for the first time.

“There’s still a long way to go. But at last, the era of the bailout will be no more,” Kenny said to loud applause.

Earlier, Finance Minister Michael Noonan gave the clearest signal yet the country may exit without the insurance policy of a precautionary credit line and said he expected to comfortably beat EU deficit targets next year.

Refusing to take a precautionary credit line would block Ireland from accessing the European Central Bank’s as-yet-unused Outright Monetary Transactions (OMT) program of government bond purchases.

But it would also reduce the conditions and close monitoring from European officials and bolster the government’s claim to have restored the country’s economic sovereignty lost by the previous government.

“Two years ago, I addressed the Irish people and said that I wanted to be the taoiseach who would retrieve our economic sovereignty and independence,” said Kenny, using the Irish term for prime minister.

“This goal is now within our grasp,” he said.

Left-leaning opposition party Sinn Fein criticized Kenny as celebrating prematurely and said he was out of touch by suggesting that the austerity of the past three years was working for Ireland.

“Try telling families at risk of losing their homes that austerity is working,” Sinn Fein leader Gerry Adams said in a statement. “Try telling the 415,000 people on the live (unemployment) register or the 300,000 that have emigrated in the last four years.”

The coalition government of Fine Gael and the left-leaning Labour Party is due to release a budget next week that will cut the budget deficit by a third and contain a 2.5 billion euro package of spending cuts and tax hikes, less than the 3.1 billion euro package originally planned.

The budget deficit will fall to 4.8 percent next year from 7.3 percent in 2013, well within targets agreed with the EU, Noonan said. The economy will grow 0.2 percent this year before bouncing back to growth of 1.8 percent in 2014, his department said this week.

The finance minister’s suggestion that Ireland may pass on a precautionary credit line came a day after EU Economic and Monetary Affairs Commissioner Olli Rehn said Ireland had a “very good chance” of exiting its bailout without one.

The government had said last month it would seek a 10 billion euro ($14 billion) precautionary credit line from the euro zone to insulate it against market shocks.

“IMF countries that exited bailout programs in the past had a kind of precautionary program attached … but we have a very significant backstop because the NTMA (national debt agency) is carrying cash buffers of about 25 billion euros,” Noonan said in a speech to the conference.

“The cash buffers have given us the kind of backstop that we need,” he said.

The National Treasury Management Agency said last week it would not tap bond markets in the final quarter of the year, a move that may slow Ireland’s return to the “regular market access” it would need to access the OMT. ($1 = 0.7373 euros)

(Reporting by Conor Humphries; Editing by Ron Askew and Peter Cooney)

More axe than tax in today’s Budget

Today’s Budget will see a raft of new measures designed to adjust the public finances by E2.5bn with a greater emphasis on cuts.

It is expected that there will be E900 million in additional revenues in 2014 and more than E1.6 billion in cuts. (more…)

Noonan to announce range of harsh cuts in budget

Pensioners to lose phone allowance and prescription charges to see big increase. A raft of harsh measures such as ending the monthly telephone allowance for pensioners, a hefty rise in prescription charges, an 8-point rise to 41 per cent increase in Dirt tax and scrapping the mortgage interest supplement payments will be included in the €2.5 billion budget to be announced today. (more…)

Budget 2014 to be unveiled today

The Cabinet is to meet later today to discuss the Budget for a final time before details are made public.

Finance Minister Michael Noonan will deliver the taxation measures in the Dáil at 2.30pm, followed by the Minister for Public Expenditure and Reform, Brendan Howlin, who will outline the spending cuts. (more…)