Ireland’s economic recovery has been remarkably impressive with almost full employment. Minister Donohoe said the Budget would promote fairness and allow for sustained improvements in the standards of people’s lives. Describing the state of the economy as he began his speech, the Minister said that, at 6.1%, unemployment was at its lowest point since 2008.
The Budget, he said, was part of a process that would help minimise the exposure of the Irish economy to outside risk, including events like Brexit and possible changes to US trade policy. He also announced increased spending of €1.2 billion in Budget 2018 to fund developments in the housing and health sectors and pay for tax cuts and social welfare payment rises.
However, while Budget 2018 sees modest improvements for some it fails to get to grips with the scale of the crises needing to be addressed. Many Irish people are facing persistent challenges; over 8,000 people, 3,000 of whom are children, without a home. Furthermore, over 213,000 children are at risk of poverty, while some 414,000 are experiencing deprivation, and 128,000 children are living in consistent poverty.
The Finance Minister stressed that he would only increase spending by what the country could afford, and he kept the growth in public spending and the growth in expenditure at less than the rate of economic growth projected for next year.
Who are the best off from budget 2018?
Minister Donohoe has said his budget will lay the foundations for a more resilient and fairer Ireland which will be better able to deal with challenges that lie ahead. Among those set to benefit from the 2018 Budget are the unemployed, disabled, pensioners and lone parents.
Minister Paschal Donohoe announced on Tuesday a €5 per week increase in all weekly social welfare payments starting March 2018, along with a Christmas bonus payment of 85% to be paid to all social welfare recipients in 2017. Furthermore, a decision has been made to restore the telephone allowance for people in receipt of both the living alone allowance and the fuel allowance.
Those not better off from Budget 2018?
There was bad news for fizzy drink makers as the government confirmed that a sugar tax is on the way. The Minister said there will be a tax of 30c per litre on sweetened drinks with over eight grams of sugar per 100 millilitres.
There will be a reduced rate of 20c per litre on drinks with between five and eight grams of sugar per 100 millilitres. He also said the levels are consistent with rates that are being introduced in the UK and will commence in April 2018 subject to State Aid approval.
What are the implications of the tax cuts?
Changes in income tax thresholds and the USC will benefit the majority of workers and those who have private pensions. The Government has reduced the 2.5% USC rate to 2%. Up until the Budget, this rate applied on income between €12,012 and €18,772. However, Minister Donohoe has now increased the ceiling for the 2.5% rate from €18,772 to €19,372. The 5% USC rate will be reduced to 4.75%. This is the rate that applies on income between €19,372 and €70,044. No changes for the self-employed who will continue to pay an extra 3% USC surcharge on income over €100,000.
Final Note: Budget 2018 talking points
- Cigarettes up by 50c a packet
- Commercial stamp duty up to 6%
- Prescription charge down to €2 per item
- VAT on sunbed salons up to 23%
- Sugar tax of 10c per can
- 800 new Gardaí
- 1,000 new Special Needs Assistants
- €5 increase in State pension (from the end of next March)
- Telephone allowance back at €2.50 per week.
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