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NewsBy Jim Gallagher
Will Michael Noonan deliver a bonanza Budget tomorrow?
Will Michael Noonan deliver a bonanza Budget tomorrow?

It’s make or break time for the government this week as it launches a giveaway Budget to try and guarantee five more years in power.

Fine Gael and Labour have turned round the economy, but have still managed to infuriate huge swathes of the country with their water policies, the housing crisis and the continued decimation of rural Ireland.

They will now be hoping to firm up their support by putting more money in the pockets of families across Ireland.

Minister for Finance Michael Noonan has promised a €1.5billion package of tax cuts and spending increases – despite the opposition of the Irish Fiscal Advisory Council, which wants that figure cut by more than half.

But with votes to be won, the national purse will be loosened. And in a lottery of who is up and who is down, these are the numbers expected to come up on Tuesday...

UNIVERSAL SOCIAL CHARGE

The public hate it and would love to see it abolished, but will have to content themselves with large cuts. 

The main USC rate of seven per cent is almost certainly going to be slashed to an expected 5 or 5.5 per cent.

That means anyone earning between €17,500 and €70,000 – to which the rate applies – could save up to €1,000 a year at the top end of the scale. 

Each one per cent cut in the USC charge will save you €10 a year for every €1,000 you earn over the threshold.

Someone earning €45,000 a year would save €411 from a 1.5 per cent USC cut and nearly €550 from a 2 per cent.

The 8 per cent rate for people earning over €70,000 is not expected to change.

Low earners want the 1.5 per cent owed on earnings up to €12,012 cut or the threshold raised. And the same for the 3.5 per cent USC on the next €5,564. 

Enda Kenny has already promised to increase the number of low-income workers that are exempt from USC to 500,000 in Budget 2016, so the cut-off point is likely to rise to €13,000.

INCOME TAX

Hard-pressed workers are also desperate to see cuts in income tax and Kenny has already promised to bring the overall tax burden to below 50 per cent. 

The Government is expected to cut the top tax rate from 40 to 39 per cent and is likely to raise the level at which people enter the higher bracket, which is currently €33,800 for a single earner, by €1,000. Every taxpayer in this group would gain by €200 a year. 

The standard tax rate could also drop from 20 to 19.5 per cent. Most homes could benefit by between €15 and €20 a week in reduced taxes.

The self-employed claim they are discriminated against because they pay a USC rate of 11 per cent on earnings over €100,000 compared to 8 per cent for PAYE workers. 

They are demanding equality, but may not get it as the Government will not want to be accused of helping the well-off. But PRSI changes could be introduced to help the self-employed.

INHERITANCE TAX

Families are demanding that rates, which rocketed during the recession, are brought back down to earth.

The tax threshold was cut from €521,000 to just €225,000, leaving people with huge bills when left the family home. 

Some sons and daughters have had to sell up because they couldn’t afford the tax bill – particularly in Dublin, where a modest semi can cost €500,000.

The rate of inheritance tax also jumped from 20 per cent in 2008 to 33 per cent today.

Michael Noonan is now expected to introduce a new inheritance tax regime raising the threshold, possibly to €300,000. 

HEALTH

Extra spending on healthcare was the number one priority for the public in a recent poll, as people called for extra doctors and nurses.

The Government will announce a €600million supplementary health budget to tackle overspending this year. The HSE had asked for €2billion, but this was dismissed.

Talks between the departments of health and public expenditure were the most difficult of all Budget negotiations.

EDUCATION

The Irish National Teachers Organisation has called for an immediate reduction in class sizes in Budget 2016.

And it is understood that education minister Jan O’Sullivan will get up to €20million extra to cut pupil-teacher ratios in primary schools from the current 28:1 to 27:1.

CHILD BENEFIT

Parents were given an extra €5 a month per child in the last budget, with a promise it would be repeated this year. It is now expected to rise again by €5 and possibly even €10 as month.

Reduced childcare costs are also expected to be part of the budget. State subsidies could be extended to private childcare providers, allowing up to 25,000 low-income families to benefit from access to affordable childcare.

MINIMUM WAGE

This will rise from €8.65 to €9.15 an hour from January 1 and the new tax bands will mean workers will not be penalised with extra taxes.

PENSIONERS

Age Action is calling for an increase in the state pension – the first rise in six years – and the living alone allowance. It also wants the telephone allowance restored.

It is demanding an additional €26m in home help services and an extra €7m for 550 home care packages.

CIGARETTES, BEER AND PETROL 

An increase of at least 20c on a packet of 20 is expected, but there should be no rise in the price of a pint. Diesel and petrol will also be untouched.

PROPERTY TAX

The Government has pledged to keep the current rates, so there should be no surprises.