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Sunday, 7 November 2010

10 Need To Know Things About The Budget...

1 If €6bn seems like a huge number, it's because it is. The equivalent of more than €1,300 for every man, woman and child in the country, it works out at an average of €4,000 for each one of our 1.5 million households.

2 The Government says the Budget "adjustments" will be split 3:1 between spending cuts and tax increases, ie €4.5bn of cuts and "only" €1.5bn of tax rises. That still means that each of the 1.8 million people still working will each be paying an average of over €800 more tax in 2011.

3 For lower income earners, December 7 is likely to bring a shock. After the Budget, most if not all workers will be paying income tax. For someone on the minimum wage even a 10pc tax rate could cost them up to €1,800 a year.

4 Middle income earners are also going to find themselves squeezed. The Government is likely to hike all of the tax rates.

5 Homeowners are going to remember December 7 for decades to come as the Government finally imposes a property tax and water charges. Stand by for a flat-rate property tax of up to €1,000 per home. Water charges, at a couple of hundred quid per home, are also on the agenda.

6 Last year Brian Lenihan promised to replace PRSI with a new "social protection contribution". While it might seem like a good idea, the reality is likely to be a new tax that all workers will end up paying. A 5pc charge could cost someone on the minimum wage up to €900 per year.

7 Social welfare recipients, most of whom saw their weekly payments cut by €8 in last year's Budget, are likely to see their payments reduced once again, probably by a similar amount. Pensioners who were spared last year won't be so lucky this time round, with a €9 per week cut being mooted.

8 For many families, public spending cuts will feel like more tax increases. Any family with a child in third-level education will be forced to fork out a further €1,000 per year in the student registration fees. Families will see further cuts in their net (after-tax) incomes as children's allowance is either reduced further and/or taxed.

9 For health service users, cuts are likely to translate into higher fees to use A&E services, increased health insurance premiums and poorer services.

10 Conspicuous by its absence from the Government's announcement of its Budgetary plans was any mention of the Croke Park deal, which ring fences public sector employees from the impact of the cuts by guaranteeing no further pay cuts or compulsory redundancies until 2014.

International investors are coming to see it as the acid-test of Ireland's sincerity when it promises to mend spendthrift ways. It now looks as if the Government can either rescue our national solvency or keep the Croke Park deal, but it can't do both.


Report - Evening Herald

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