Budget 2017: Minority report
Budget 2017 marked a historic occasion as Minister Michael Noonan and Minister Pascal Donoghue presented the first ever budget to Dáil Eireann from a minority government. Brexit was on the mind of Minister Noonan from the off as he announced that the 9% tourism rate of VAT would remain for another year.
Farmers feeling the effects from a tough year saw an increase in the flat rate of VAT from 5.2% to 5.4% and the introduction of the ability to step out of income averaging in a particularly tough year.
The housing market has been in turmoil of late and the Minister stepped in with a number of incentives to help give it a kickstart. Assistance is to be offered to first time buyers in the form of a Help to Buy Scheme. A rebate of tax paid over the previous four years can be sought up to a maximum of 5% of the value of the house purchased capped at €20,000 in tax relief.
In an effort to get more students out of rental accommodation and into the spare rooms of family homes, an increase in the amount of tax free rent allowable was increased from €10,000 to €14,000 where two students are housed.
A commitment to reverse the restriction of mortgage interest relief on residential properties was announced with the first move seeing the allowable portion of interest increased from 75% to 80%.
The workforce as a whole saw some relief in the reduction of the amount of USC charged on the three lower rates reduced by 0.5% seeing the rates for 2017 set at 0.5%, 2.5% and 5%. One income families saw an increase of €100 in the home carer’s tax credit.
The earned income tax credit was increased from €550 to €950 for the self employed. However, they are still worse off when compared to their PAYE counterparts who are entitled to a PAYE credit of €1,650.
For investors and those with a little wealth, DIRT was decreased by 2% with a view to decreasing it over a number of years down to 33%. All the CAT thresholds were increased with Category A gifts from a parent to a child increased from €280,000 to €310,000.
Before committing his portion of the budget to the house, Minister Noonan committed to retaining the 12.5% corporation tax rate, put up a pack of cigarettes by 50c to €11, announced 50 new jobs for Revenue and made it known that the government intends to follow the UK and implement a sugar tax.
The Minister for public expenditure and reforms major announcement was the introduction of a new means tested Children’s support payment to those with children between 6 months and 15 years of age. Details on this can be found by reading Minister Zappone defends new early childcare scheme
47,000 new social homes were announced to be completed by 2021 with an increase of €105m in the housing assistance budget and an increase in the amount available to help house the homeless of €28m to €100m.
Those on social welfare are to receive an increase in their rate of pay across the board of €5 from March 17. The minister made sure to specifically mention that this included those in receipt of the state pension. In a giving mood, an increase in the Christmas bonus to 85% was announced along with a reduction in the prescription charges for the over 70’s from €25 to €20.
In trying times both at home and abroad, it remains to be seen how this budget will pan out. Brexit and the US presidential election are looming large on the horizon but for now, we seem to be on an even keel.
For the full budget document, see Budget Summary