Increases in social welfare, tax cuts in Ireland's "fiver" budget

Ireland announced its 2017 budget on Tuesday with a 5-euro weekly increase in state pensions and social welfare payments and tax cuts worth 5 euros to most workers, prompting commentators to call it a "fiver" budget.

Despite the increased spending, Finance Minister Michael Noonan warned that the country must maintain a "prudent fiscal policy in order to mitigate against the risk posed by Britain's withdrawal of the European Union." 

Measures were announced to help protect the Irish economy against the effects of Brexit, including increased funding for the prime minister's office. 

A reduced VAT rate for the tourism and hospitality industry would provide a "buffer" against the weakness in sterling, while a business start-up scheme would be extended for two years. 

A number of measures will also be introduced for the agri-foods sector, including tax breaks for struggling farmers, Noonan said.

He said Britain's vote for Brexit had prompted his department to reduce its forecast for the annual growth of Ireland's gross domestic product (GDP) to 3.5 per for 2017, but it was not possible to predict the exact impact on the Irish economy until a final Brexit settlement was agreed.

As well as increases in weekly social welfare payments by 5 euros, there would be an 85-per-cent restoration of a Christmas bonus for social welfare recipients, he said. 

The finance minister also gave away 500 million euros (554 million dollars) in tax cuts, chiefly by reducing the universal social charge by 0.5 per cent. 

This tax was introduced in an austerity budget in 2010 after Ireland's economic crisis led to the country receiving an IMF-EU bailout. 

The budget statement followed a deal between governing Fine Gael and opposition Fianna Fail late Monday.

The minority Fine Gael government is relying on the support of Fianna Fail to pass the budget, and the pension increases are being seen as the opposition party's bid to woo the grey vote.

There were increases in tax relief for landlords and the self-employed along with a scheme to give tax breaks to first-time buyers of new builds.

One of the few tax increases was a 5-cent increase on a pack of cigarettes. 

A sugar tax was also announced, but it won't be introduced until 2018.

Public Expenditure Minister Paschal Donohoe announced 800 million in extra public spending, including 497 million for the health service. 

There was also an extension of social protection benefits to the self-employed, and a childcare package to assist parents in returning to work.

Last update: Tue, 11/10/2016 - 18:12


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