Cigs set to rise in Budget as lower rates of USC see small cut

The price of cigarettes is set to rise again in the Budget
The price of cigarettes is set to rise again in the Budget

The Budget Day tax package will spread €330m so thin that most workers are unlikely to feel any real impact in their wallets.

Finance Minister Michael Noonan has compiled a plan which attempts to please businesses, farmers and landlords - but will see the so-called squeezed middle income earners gain as little as €2 a week.

The Irish Independent understands that he plans to reduce the two lower rates of Universal Social Charge by 0.5pc, to 2.5pc and 0.5pc respectively.

Mr Noonan is signalling he won't reduce the 5.5pc rate which hits incomes between €18,000-€70,000.

Sources said he would tweak the thresholds but ultimately the benefit to middle-income earners would be little more than €100 a year.

Mr Noonan's tax package will also include:

  • Tax breaks for landlords.
  • A reduction in capital gains tax for start-up companies to 10pc on earnings up to €10m.
  • A special deal for farmers that will allow more flexibility in their tax payments.
  • Inheritance tax exemption to be raised by €40,000, to €320,000.
  • Incentives to encourage the regeneration of historic dwellings.
  • Doubling the €550 income tax credit for the self-employed.
  • A hike to cigarette prices.

There is a suggestion that the price of diesel will also rise when the Minister announces the Budget 13 days from now.