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Budget roundup: The main talking points from minimum wage to child benefit

NewsBy Shuki Byrne
"Turnaround": The minister presenting the 2016 budget
"Turnaround": The minister presenting the 2016 budget

Ireland's budget is to keep the country's economic recovery going, Finance Minister Michael Noonan claimed in his address.

Cuts to the deeply unpopular income tax levy known as the Universal Social Charge (USC), more nurses and doctors, more affordable and quality childcare and an end to the unfair tax treatment of the self-employed are among the reforms being announced, the minister said.

"The priority of this budget is to keep the recovery going while providing relief and better services for the Irish people," Mr Noonan said.

Mr Noonan told the Dail that the package of tax cuts and increased spending - worth about €1.5 billion - are "sensible, affordable steps that will keep the recovery going and bring its benefits to every family".

The minister forecast that Ireland's economy would be the fastest growing in Europe this year at 6.2%, and grow by a further 4.3% next year.

Public Spending Minister Brendan Howlin declared "a remarkable turnaround" in Ireland's fortunes, which he said was a tribute to the resilience of the Irish people.

Here are the main talking points:

Tax Increase

The only tax rise in the Budget is a 50 cent hike in the price of a packet of 20 cigarettes - up to around 10.50 euro for a packet.

"This measure will raise 61.4 million euro in a full year and the additional revenue will enable the funding of new initiatives in the health sector to support young families with children," said Mr Noonan.

"This is the only tax increase in the Budget."

Universal Social Charge

The USC rates change, as expected, from 1.5% to 1% on the first €12,012; from 3.5% to 3% for the next bracket from €12,012 to an increased level of €18,668 and from 7% to 5.5% for higher earners on income in excess of €18,668 up to €70,044.

Property Tax

The Finance Minister also signalled rising property values in recent years would not mean rising property taxes.

Revaluations of homes for the Local Property Tax (LPT) is to be postponed from 2016 to 2019.

Commercial Motor Tax

Commercial motor tax rates are to be simplified, with the 20 existing rates to be replaced by five new rates, ranging from €92 to €900. The maximum rate had been €5,195.

Card Transactions

Mr Noonan said he was halving fees for the use of debit cards in Ireland to save retailers €36 million a year.

The move will come into effect on December 9 and should also save consumers money.

"It is important that this saving is passed on to the consumer in terms of lower prices, and this new fee regime will be monitored closely to ensure this happens," he said.

In an attempt to encourage more cashless transactions, Mr Noonan is bringing a new 12 cent charge on ATM transactions from the new year to replace a €5 stamp duty on cards.

To encourage consumers to go cash free, the limit for contactless payment cards is being raised from €15 to €30 at the end of the month.

Ireland's Central Bank believes a major shift towards payments by debit cards, smartphones and online transfers could save the economy one billion euro a year.

Minimum Wage

The minimum wage will be increased from €8.65 to €9.15 from January 1. 

"Since we've been in power the minimum wage has been increased by 20 per cent," Minister Noonan said. 

Child Benefit

Child benefit has been partially restored and is now up to €140 per month, an increase of €5. 

A further 8,000 new childcare places have been created through the Community Childcare Subvention (CCS) programme.

Mr Howlin confirmed new measures will include free childcare for children from three years of age until they are five and a half, or until they start primary school.

An extra €15 million has been earmarked for the scheme specifically for children with disabilities.

Increase supply of Residential Housing

NAMA aim to deliver a target of 20,000 residential units before the end of 2020. 

Paternity Leave

There will be an introduction of statutory paternity leave of two weeks, to take effect in September 2016.

Social Welfare Christmas Bonus

The Christmas bonus for people on social welfare will be increased to 75% of the payments.

Health

Mr Howlin said free GP care - currently only available to under 6s and over 70s - would be extended to all children under 12 years.

But the proposal will be "subject to successful negotiation with doctors representatives", he added.

The plan will be funded by a €13.2 billion allocation for health services next year.

Security

Plans were announced to train a further 600 gardai in the coming year, Mr Howlin said. 

Just under €1 billion has been allocated to the Department of Defence.