Michael Noonan, finance minister, in his Budget 2016 speech set out the Government's tax and spending measures for 2016:

The Dept of Finance is forecasting growth of 4.3% in 2016 and 3% in the years thereafter;

130,000 more people are now in work than at the low point in 2012 and the Government is on track to recover all of the jobs lost in the recession by 2020;

In 2016, employment will increase by 48,000 and there will be over 2m people at work in Ireland ;

 

Between the end of 2014 and the end of 2016, the official forecast is that the economy will grow by 18% in nominal terms with revenue from taxation and PRSI increasing by just under €7.2bn or 14.7% while gross voted expenditure will increase by €2.25bn or 4.2%;

Noonan says: "The public finances continue to improve, with a broad and growing tax base providing stable funding for vital public services ... My Department forecasts that we will balance the books." The Department forecasts that the books will be balanced in headline terms in 2018 with balance in structural terms following in 2019;

The minister said the Government's fiscal stance means it complies with US fiscal rules, and the headline deficit to 2.1% of GDP in 2015 and 1.2% in 2016; and reduce the debt to just under 93% of GDP. The forecast deficit is well ahead of the original target of 2.7% and below the EU excessive deficit requirement of less than 3% of GDP;

The minister said the Budget package includes €750m in revenue relieving measures in 2016. He said the cost is partially offset by a single revenue raising measure — the price of cigarettes is going up by 50 cents. It comes into effect at midnight;

Changes to USC (universal social charge): Entry threshold to USC raised from €12,012 to €13,000. 1.5% rate is cut to 1%. This applies on the first €12,012 of income;

3.5% rate cut to 3%. This applies on income in excess of €12,012 up to an increased threshold of €18,668. 7% rate to 5.5%. This applies on income in excess of €18,668 up to €70,044;

The entry threshold goes up from €12,012 to €13,000, removing approximately 42,500 workers from the scope of the charge entirely. Noonan said it is estimated that over 700,000 income earners will not be liable to USC at all from next year.

Noonan says these USC changes will reduce the marginal rate of tax to 49.5% for all earners under €70,044.

A €190 increase in the Home Carer Tax Credit to bring it up to €1,000 per year. Noonan said his will help single income married couples with children or those who care for an elderly or incapacitated relative.

An earned income tax credit of €550 for the self-employed will be introduced, which could go up in subsequent budgets;

Capital Gains Tax relief of 20% for selling a business or part of a business with a value of up to €1m will be introduced in January, replacing the current rate of 33%;

Capital acquisitions tax: Noonan announces an increase in the group A tax free threshold, going up from €225,000 to €280,000;

The revaluation date for the Local Property Tax is moved from 2016 to 2019;

The remaining pension levy of 0.15% will end this year and not apply to 2016;

Noonan announced a new tapered PRSI credit with a maximum level of €12 per week or €624 in annualised terms to alleviate the step effect across a range of incomes. He said the change will ensure that low income earners will see a significant improvement in net incomes;

The Knowledge Development Box (KDB)/ Patent Box regime will be introduced in the upcoming Finance Bill. He said it will be the first OECD-compliant KDB. A low corporation tax rate of 6.25% will apply.

The Financial Institutions Levy will be extended to 2021 and this will bring in an additional €750m over the period;

In the agri-food sector, general stock relief, the stock relief for young trained farmers, the stock relief for registered farm partnerships and the stamp duty exemption for young trained farmers are being extended for a further three years to the end of 2018. Noonan also announced plans for making it easier to transfer farm ownership.

The minister said the excise relief for micro-breweries will now be available upfront;

Noonan said the excessive fees faced by retailers for accepting card payments required to be addressed. A new EU regulation is halving the so-called interchange fees faced by retailers to 30 basis points for credit cards. "I am today halving the corresponding fee for debit cards to 10 basis points. These changes significantly reduce the costs of accepting card payments and combined, these reductions will save retailers an estimated €36 million in fees per year."

The changes come into effect on 9 December;

The minister said road tax for large goods vehicles in Ireland is too high by comparison with Northern Ireland and the rest of the UK. Commercial motor tax rates are to be simplified, with the 20 existing rates to be replaced by five new rates, ranging from €92 to €900. The maximum rate had been €5,195;

The cap on the eligible expenditure for film making has been raised to €70m;

Noonan announced that NAMA is to provide social housing. He says it will aim to deliver 20,000 residential units before the end of 2020. 90% will be in the greater Dublin area. About 75% will be houses, mainly starter homes;

He said "NAMA will deliver these units by working with developers. Achieving this new target by the end of 2020 means delivering on average 80 new housing units every week across some 100 active sites." It will require funding of €4.5bn will not compromise NAMA's debt repayment commitments.  

Brendan Howlin, spending minister, outlined welfare and spending increases:

Howlin said the Government has begun an orderly unwinding of the financial emergency legislation, which allowed the Government to freeze public service pay is the prudent and correct thing to do;

The pupil teacher ratio at primary level will fall from 28 to 1 to 27 to 1;

The minimum wage will increase, from January to €9.15 an hour from €8.65;

Over 2,260 new additional teaching posts, including 600 new resource teachers are being funded. This is in addition to the extra 610 special needs assistants and 190 resource teachers already announced this year;

Free GP care for the under 6s and over 70s will be extended to all children under 12. "Subject to successful negotiations with teh medical professions."

Pensions will rise by €3 a week with the respite care grant restored to €1,700 and fuel allowances up €2.50 a week;

The threshold for the Family Income Supplement is being raised by €5 per week for families with one child;

The Department of Jobs, Enterprise and Innovation will be allocated €792m in 2016, with €500m going to enterprise agencies.

The Department of Agriculture, Food and the Marine has been allocated €1.3bn. It will be used for a new agri-environmental scheme and capital investment schemes under the Rural Development Programme. €10m available from the proceeds of the sale of Bord Gáis for an affordable housing scheme; a €50m allocation for the 1916 centenary celebrations; €2.2bn is for funding the Department of Justice, including for 600 gardaí; €25m will be provided to help deal with the European refugee crisis. €2m has been made available for an emergency aeromedical service.

Over €640m for Official Development Assistance. €486m will be managed by the Department of Foreign Affairs, with the remainder being administered through other Government Departments and the EU Development Co-operation Budget.

Department of Finance Budget websitethis site has been updated following the ministerial statements with for example how tax changes affect various earning groups.

PwC Ireland Budget analysis

EY (Ernst and Young) Budget website

Live from Dáil Éireann from 2:00pm

 

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Noonan, Howlin, Budget 2016, Dublin

Ministers, Brendan Howlin and Michael Noonan, at Government Buildings today 13 Oct 2015