Tuesday 15th October 2013
The winners and losers of the Irish Budget 2014
Who benefitted most from the Budget and who lost out?
A shopper watching the Minister for Public Expenditure and Reform Brendan Howlin addressing the Dáil, in a Dublin city shop this afternoon.
Not only did the tourism industry get to keep its 9 per cent VAT rate as it had lobbied hard for in recent weeks, but it also got an added boost when the Government said it would abolish the travel tax. The move has been welcomed by everyone from airlines to
Incentives to start your own business featured strongly in the budget, with a two-year exemption from income tax for new businesses started by the long-term unemployed, tax relief for entrepreneurs investing proceeds from one business venture in another new startup and
Families with young children:
If you have children aged five and younger, they will be entitled to free GP care under new budget plans from January.
Pregnant women who previously would have fallen into the lower category for maternity benefit will now get extra money from January as the rates of maternity benefit are standardised at €230 per week.
Although it may not quite have been the package the construction sector had hoped for, the home renovation tax incentive scheme should give a lift to builders – as long as they are tax compliant The scheme, which applies to extensions and renovations to the home, window-fitting, plumbing, tiling and plastering, will provide an income tax credit to homeowners calculated at a rate of 13.5 per cent on all qualifying expenditure over €5,000 up to a maximum of €30,000. The Living City Initiative will also encourage the regeneration of areas in Dublin, Kilkenny, Galway and Cork. There’s also the Government’s €30 million plan for the State’s house building programme, which will deliver 500 houses, including new builds and the upgrade of previously uninhabitable units, adn the €10 million to be allocated for unfinished estates.
Mr Noonan promised 25 pro-business and pro-jobs measure in the budget. From the previously mentioned investment incentives to measures like the increase in cash receipts threshold for VAT, the budget is widely considered to have been beneficial to business. The decision not to touch the corporation tax was no surprise, but it may have eased a few concerns that the Government would be forced to raise it, even a few percentage points.
Losing their telephone allowance is one thing – that’s €9.50 per month – but pensioners appear to be being hit from all sides. Those with an income over €500 per week (€900 for a couple) face losing their medical card in favour of a GP only card, which may be a tough measure to swallow.
The 0.6 per cent levy on pension funds may be due to come to an end by December 2014, but in the meantime, Michael Noonan has decided to replace the charge with a 0.15 per cent levy on funds held in 2014 and 2015. Hat is currently being taken to mean that the levy on pension funds in 2014 will actually be 0.75 per cent.
Drinkers and smokers:
The old reliables were hit once more in the budget, with 10 cent added to measures of beer and spirits, and 10 cent to a packet of 20 cigarettes. Wine drinkers are being hit by 50 cent for the average bottle. Coming so soon after last year’s excise duty hike, it’s made the odd bottle of wine more of a luxury for many.
Up until Budget 2014, if you were under 22 and a new entrant to the jobseekers scheme, you could only claim the reduced rate of €100. That has now been extended to those under 25, and claimants won’t reach the full payout until 26 years of age. The Government was quick to point out that no such restrictions apply to the return to education scheme,
A levy that raises €150 million may swell the Government’s coffers, but it’s likely to hit the banks where it hurts – and could end up ultimately being passed on to hard pressed consumers in the form of higher mortgage interest rates and lower returns on their savings. And while they’re at it, the Government’s decision to increase DIRT to 41 per cent will have an adverse affect on savers too, and discourage them from putting their money away.
Minister brendan Howlin’s bite?
Standardising the rate of maternity benefit at €230 per week for new claimants from January 2014. This will save €30m in 2014.
- The number of waiting days for entitlement to Illness Benefit is being increased from three days to six days. This will save €22m.
- The annual payment to RTÉ for the free TV licence is to be reduced by €5m from €59.17 to €54.17m
- Other health measures include: €25m from a lowering of the income thresholds for the Over 70s Medical Cards to €900 per week for a couple and €500 for a single person
- €30m for private bed charges in public hospitals.
- Health savings measures include €50m on drugs from generic substitution and reference pricing and €113m from a review of all medical cards to remove ineligible and redundant cards.
- Howlin: “In line with the Programme for Government, I am allocating €37m to fund the roll out of Free GP Care for children aged 5 and under as a first step in our programme to provide Free GP Care for all.”
- Extension of the €100 reduced rate of Jobseeker’s Allowance and Supplementary Welfare Allowance to existing recipients who reach 22, and for new entrants aged up to 24 on or after 1 January 2014.
- The reduced rate of €144 will apply to those reaching 25 from January 2014.
- The total 2014 allocation for activation places in education and training and work experience is €1.6bn.
- This will provide nearly 300,000 places in work, education and training programmes across the Departments of Social Protection and Education and Skills, an increase of 18,000 or 7% since 2012.
- 94,000 will be reserved for the long-term unemployed, an increase of 78% on the 2012 provision.
- “€10m will be provided for an unfinished housing estate resolution initiative.
- “I will also be allocating €30m of the lottery licence proceeds to recommence the State’s house building programme.
- “This will facilitate up to 500 additional housing units between a small number of new builds and the return of previously uninhabitable units to the housing stock.”
- €10m has been allocated to resolve the problems at Priory Hall.
- Howlin said: “I am pleased to be able to announce that a further €200m in capital spending arising from the balance of lottery licence proceeds will be used to support local economic activity and job creation. These projects will, of course, be subject to the Public Spending Code.”
- On the National Lottery sale, Howlin said that €200m of this dividend is ring-fenced to ensure the construction of the National Children’s Hospital.
- The minister said 13,000 direct and many more indirect jobs are expected to be created by this programme.
- Five of the nine PPP (public-private) projects have already issued to market and the flagship Grangegorman DIT project – valued at over €200m – is due to issue by the end of this month.
- Howlin said that in July of last year, he announced a €2.25bn infrastructure stimulus package. These projects are progressing as planned.
- A pilot phase for a new model of financing social interventions in Ireland called Social Impact Investment will be launched. This uses private capital to provide better outcomes for citizens. The pilot phase is seeking private sector investment partners to provide long-term stable homes for homeless families in the Dublin region.
- The cost of the pay bill has fallen by some 17%, and the Haddington Road Agreement with Public Service unions earlier this year will permit that cost to fall further again.
- The Public Service has reduced in size by almost 10%.
- Medical Card holders have risen by 540,000 or over 40% between 2008 and 2012, from 1.35m to 1.89m.
- The number of people of pensionable age has increased by 65,500 or 13.5% since 2008.
- Numbers in Education have risen by 78,000 or 8%, from 961,000 in 2008 to 1,039,000 last year.
- Numbers in receipt of Jobseeker’s payments have risen by almost 200,000 or 130% between 2008 and 2012.
- Ireland has a growing population, which increased by almost 350,000 between 2006 and the last census in 2011.
- Howlin announces that he expenditure measures he is announcing for 2014 amount to €1.6bn out of an overall consolidation of some €2.5bn.
Minister michael Noonan’s bite?
- No increases in excise duty on petrol, diesel or on home heating oil and gas; no increases in the 9%, 13.5% or 23% VAT rates; no increases in the 9%, 13.5% or 23% VAT rates.
- No increases in income tax or the Universal Social Charge in 2014.
- DIRT rises to 41% for top rate taxpayers.
- Noonan said the 0.6% Pension Levy introduced to fund the Jobs Initiative in 2011 will be abolished from the 31st of December 2014.”I will however, introduce an additional levy on pension funds at 0.15%.”
- Excise duty on a pint of beer or cider, and a standard measure of spirits, is being increased by 10 cent, the duty on a 75cl bottle of wine is being increased by 50 cent.
- “With effect from midnight tonight, excise duty on a packet of 20 cigarettes is being increased by 10 cent with a pro-rata increase on the other tobacco products.”
- Contributions to pension schemes will continue to attract income tax relief at the marginal rate of tax.
- Banks are to make an annual contribution of €150m to the Exchequer for the period from 2014 to 2016. Noonan said: “We will introduce the levy on the same basis as the one that yielded over €100m each year from 2003 to 2005.”
- On medical insurance relief, Noonan said he would cap the amount of premium on which tax relief will be available to €1,000 per adult and €500 per child.
- “With effect from midnight tonight, excise duty on a packet of 20 cigarettes is being increased by 10 cent with a pro-rata increase on the other tobacco products.”
- The Dept of Finance is forecasting GDP growth of 0.2% this year, strengthening to 2% next year. Noonan said: is forecasting GDP growth of 0.2% this year, strengthening to 2% next year.
- All Magdalene Laundry lump sum payments to claimants will be tax exempt.
- Subsidised financial training programme for small businesses.
- A new Start Your Own Business scheme to assist individuals who have been unemployed for at least 15 months start their own unincorporated businesses by giving them a two-year exemption from income tax.
- CGT entrepreneurial relief: A new CGT incentive is being introduced to encourage entrepreneurs (in particular “serial” entrepreneurs) to invest and re-invest in assets used in new productive trading activities. The measure will apply where an individual , who has paid capital gains tax on the disposal of assets, makes investments in a new business in the period 1 January 2014 to 31 December 2018 and subsequently disposes of this investment no earlier than three years after the date of investment. The CGT payable on the disposal of this new investment will be reduced by the lower of (i) the CGT paid by the individual on a previous disposal of assets in the period from 1 January 2010 and (ii) 50% of the CGT due on the disposal of the new investment. Commencement of this measure is subject to receipt of EU State Aid approval.
- Property purchase incentive: The inventive relief from CGT (in respect of the first 7 years of ownership) for properties purchased between 7 December 2011 and 31 December 2013 introduced in Budget and Finance Act 2012 is being extended by one year to include properties bought to the end of 2014. Where property purchased in this period is held for seven years the gains accrued in that period will not attract CGT.
- The start date of the new Film Relief scheme will be moved to 2015 from 2016. It will be extended to include non-EU talent in order to help attract additional major film productions to these shores. It will be extended to include non-EU talent in order to help attract additional major film productions to these shores.
- The minister said: “Ireland’s corporate tax strategy has three key elements: rate, reputation and regime. The tax rate is settled policy. We are 100% committed to the 12.5% corporation tax rate. This will not change.” The tax rate is settled policy. We are 100% committed to the 12.5% corporation tax rate. This will not change. However, cooperation with global efforts on curbing tax avoidance is important and a document is being published on the Irish position. Legislation will be introduced to end so-called ‘stateless’ companies.
- The investment will include the construction of 4,500 new houses and apartments in Dublin, in addition to much-needed office accommodation in the city centre and investment in commercially viable retail projects.
- NAMA expects to have approved €2bn in funding for Irish projects between 2011 and 2015.
- The incentive is payable over the two years following the year in which the work is carried out. The credit will be calculated at a rate of 13.5% on all qualifying expenditure over €5,000 up to a maximum of €30,000.
- A new Home Renovation Incentive will provide an income tax credit to homeowners who carry out renovation and improvement works on their principal private residences in 2014 and 2015.
- The farmers’ flat rate addition is being increased to 5% from 4.8% with effect from the 1st of January 2014.
- The air travel tax will be cut to zero with effect from the 1st of April 2014.
- Noonan says 9% VAT rate for tourism and hospitality sector will be retained.
- The rate of VAT for the tourism and hospitality sector and the other sectors to which it applies had been due to revert to 13.5% at the end of this year.
- Michael Noonan, finance minister says: “We will bring in a deficit of 4.8% in 2014, we will bring in a small primary surplus, demonstrating that our national debt, which has been rising for so many years, is under control.”
Reilly unable to give details on who will lose their medical cards
The health James Reilly minister has said he is unable to give specific details and is in the dark on numbers of how many will lose their medical cards after review, this will save €113m.
But Dr Reilly added the medical card issue will be subject of a “cross Cabinet review” that will also involve the Department of an Taoiseach.
The measure will involve increasing the scrutiny and probity of medical cards
Up to 35,000 people over the age of 70 are set to lose their full medical cards as a result.
Instead, these people will revert back to a free GP card in a move that will save the Exchequer €25 million.
Speaking at his post Cabinet briefing at Government Buildings, Dr Reilly also defended the move to grant free GP care to under 5s, dismissing suggestions that it was driven by political rather than healthcare motives.
It has emerged that it is likely to take several months before the legislation necessary to give effect to the measure will even come before Cabinet.
Defending the move, Dr Reilly said: “Parents find fees for GPs quite the barrier and children become quite unwell as a result and end up in hospital.
“It is a step toward getting rid of the two tier health system,” he added.
“This is going to be the most challenging year the Health service has yet faced,” the minister added.
Health Service Executive (HSE) Chief Executive Tony O’Brien said that “unavoidable pressures critical service priorities and programme for Government commitment will make this a very challenging period.
“We are entering the most challenging period in the health service plan delivery,” he said.
Dr Reilly came under sustained questioning throughout the briefing about the proposed saving of €113 million as a result of the medical card cull.
The minister said this would be achieved by increased “scrutiny” of card holders and “probity”.
Dr Reilly admitted it was a “challenging figure”, but could not indicate how many medical cards are likely to be affected.
“It is difficult to give an estimate of how many cards are involved,” he told reporters.
He described it as the “toughest Budget” this Government has had to make, but claimed it would be the “last of the really tough Budgets”.
Dr Reilly also said legislation to abolish the HSE will come in next year.
At the same press conference, HSE chief Tony O’Brien said only €110 million out of €150 million of Haddington Road savings will be achieved this year, leaving a shortfall of €40 million.
In a further indication of the hostile relationship between the HSE and Brendan Howlin’s Department of Public Expenditure and Reform, Mr O’Brien said the numbers working in the health service will not be in line with DPER.
Home renovation tax break to boost Ireland’s construction jobs industry
Home Renovation Initiative will incentivise domestic renovations and increase demand for small construction jobs
A ‘Start Your Own Business Scheme’ for people who have been unemployed for 15 months or more and a tax break for home renovations are included in a range of Budget measures announced today.
A two-year tax break for unemployed people who start their own business has been welcomed as the boost that might reignite the almost stagnant construction industry.
The ‘Start Your Own Business Scheme’ announced in today’s Budget will provide a two-year exemption on income tax for people who have been unemployed for 15 months or more and start-up a new unincorporated business.
The scheme is expected to be fuelled by a Home Renovation Initiative (HRI) also announced today, which will incentivise domestic renovations and increase demand for small construction jobs. HRI will provide an income tax credit of 13.5 per cent for homeowners on home improvement expenditure of between €5,000 and €35,000.
The scheme will only apply to registered builders with a tax clearance certificates, in a move to address ongoing Government concerns about black economy operators.
Welcoming the measures, Construction Industry Federation director general Tom Parlon said: “The foundations for the recovery of our industry has been set in this Budget and this will help bring extra confidence, extra activity and most importantly, more construction jobs to our sector.”
Despite a strong lobbying campaign for the introduction of a special VAT rate for new housing, it didn’t happen, losing out instead to the hospitality sector which held on to its 9 per cent VAT rate introduced last year. Marian Finnegan, chief economist at Sherry FitzGerald Group said the decision not to reduce VAT on the purchase of new homes was a missed opportunity. “Such an initiative would have been beneficial in a market suffering a dearth of supply and rising house prices.”
Minister for Public Expenditure Brendan Howlinannounced a public sector stimulus of €10 million in funding for unfinished housing estates, and €30 million for the State’s house-building programme.
Micheál O’Connor, president of the Society of Chartered Surveyors Ireland said: “It’s not a huge investment, though it’s to be welcomed. The public capital spending programme would be more of a concern, the Minister mentioned it’s on track, but we’d like the Government to ensure it hits its spending targets as this hasn’t been achieved in recent years.”
Half of the proceeds from the sale of the State lotterylicense have been earmarked for capital spending projects. The construction sector at local level will directly benefit from a €200 million allocationthat includes funding for road maintenance and repair works, a new national indoor training arena, a better energy programme and housing adaptation grants.
The extension of the seven year Capital Gains Tax waiver for buyers of investment properties to the end of 2014 was greeted with widespread relief. Last year’s announcement boosted investor confidence and was directly linked to increased property sales. The move may also tackle spiralling residential rental inflation – currently a serious problem in the capital. John McCartney, head of research at Savills, anticipates that the CGT extension coupled with the increased Dirt tax rate announced elsewhere will drive cash-rich investors back into the property market.
The decision to extend the Living Cities scheme to Cork, Dublin, Galway and Kilkenny – pending EU approval – will provide incentives for the purchase and renovation of inner city buildings constructed pre-1915 in an effort to regenerate urban areas. Under the plan, home buyers and commercial property owners can apply for tax relief on the refurbishment of historic buildings.
Foreign inward investment in property was incentivised through the addition of Real Estate Investment Trusts (REITs) to the range of qualifying investment options under the Immigrant Investor Programme. The programme is designed to attract and encourage successful business people and entrepreneurs to invest in and ultimately relocate to these shores. The retention of the 12.5 per cent corporate tax rate and the R&D tax credit increase to 15 per cent bolster Ireland’s relative attractiveness for foreign direct investment.
The announcement of Nama’s approval of €2 billion worth of investment in the Republic between 2011 and 2015 to include the building of 4,500 new houses and apartments in Dublin, though a welcome initiative, had been announced prior to the Budget.
Cancer costing European Union countries ‘billions’ a year
Cancer costs countries in the European Union 126bn euro (£107bn) a year, according to the first EU-wide analysis of the economic impact of the disease.
The charity Cancer Research UK said it was a “huge burden”.
The figures, published in the Lancet Oncology, included the cost of drugs and health care as well as earnings lost through sickness or families providing care.
Lung cancer was the most costly form of the disease.
The team from the University of Oxford and King’s College London analysed data from each of the 27 nations in the EU in 2009.
The showed the total cost was 126bn euro and of that 51bn (£43bn) euro was down to healthcare costs including doctors’ time and drug costs.
Lost productivity, because of work missed through sickness or dying young, cost 52bn (£44bn) euro while the cost to families of providing care was put at 23bn (£19.5bn) euro.
Overall, richer countries, such as Germany and Luxembourg, spent more on cancer treatment per person than eastern European countries such as Bulgaria and Lithuania.
Lung cancer accounted for more than a tenth of all cancer costs in Europe. The deadly cancer tends to affect people at an earlier age than other cancers so the lost productivity through early deaths is a major factor.
However, the overall economic burden is behind the costs of dementia and cardiovascular disease.
An EU-wide study, by the same research group, showed cardiovascular diseases, including high blood pressure and stroke, cost 169bn euro (£144bn) a year while dementia cost 189bn euro (£169bn) in just 15 countries in Western Europe.
Dementia has very high costs associated with long-term care while cardiovascular diseases include such a wide range of conditions it affects many more people than cancer.
One of the researchers, Dr Ramon Luengo-Fernandez, from the Health Economics Research Centre at the University of Oxford, said: “By estimating the economic burden of several diseases it will be possible to help allocate public research funding towards the diseases with the highest burden and highest expected returns for that investment.”
Prof Richard Sullivan, from King’s College London, said: “It is vital that decision-makers across Europe use this information to identify and prioritise key areas.
“More effective targeting of investment may prevent health care systems from reaching breaking point – a real danger given the increasing burden of cancer – and in some countries better allocation of funding could even improve survival rates.”
Sara Osborne, head of policy at Cancer Research UK, said: “The financial impact that cancer has on the economy across Europe due to people dying prematurely from the disease and time off work remains a huge burden.
“This study reinforces why research is vital to improve our understanding of the causes of cancer – so that we lessen the impact of the disease and develop better ways to prevent and treat the illness.
“We also need to understand why the UK’s cancer mortality rates remain higher than many EU countries despite a similar spend on cancer care.”
Wiltshire dig reveals frogs’ legs eaten by British 8,000 years before French
Blick Mead, near Stonehenge, where a charred toad’s leg was found.
Dig at Blick Mead, a mile from Stonehenge, turns up bones of toad’s leg dating to between 7596BC and 6250BC
If you’re French, asseyez-vous, s’il vous plait. Archaeologists digging about a mile away from Stonehenge have made a discovery that appears to overturn centuries of received wisdom: frogs’ legs were an English delicacy around eight millennia before becoming a French one.
The shock revelation was made public on Tuesday by a team which has been digging at a site known as Blick Mead, near Amesbury in Wiltshire. Team leader David Jacques said: “We were completely taken aback.”
In April they discovered charred bones of a small animal, and, following assessment by the Natural History Museum, it has been confirmed that there is evidence the toad bones were cooked and eaten. “They would have definitely eaten the leg because it would have been quite big and juicy,” said Jacques.
The bones, from a Mesolithic site that Jacques is confident will prove to be the oldest continuous settlement in the UK, have been dated to between 7596BC and 6250BC.
And it’s not just toads’ legs. Mesolithic Wiltshire man and woman were enjoying an attractive diet. “There’s basically a Heston Blumenthal menu coming out of the site,” said Jacques. “We can see people eating huge pieces of aurochs, cows which are three times the size of a normal cow, and we’ve got wild boar, red deer and hazelnuts.
“There were really rich food resources for people and they were eatingeverything that moved but we weren’t expecting frogs’ legs as a starter.”
The discovery is entertaining, but has a wider importance, said Jacques, as it adds to evidence that there was a near-3,000-year use of the site. “People are utilising all these resources to keep going and it is clearly a special place for the amount of different types of food resources to keep them going all year round. Frogs’ legs are full of protein and very quick to cook: the Mesolithic equivalent of fast food.”
Jacques is senior research fellow in archaeology at the University of Buckingham which is funding a new dig on the site. He said it was looking increasingly likely that the site was the “cradle to Stonehenge” which was built around 5,000 years later.
Andy Rhind-Tutt, chairman of Amesbury museum and heritage trust, said: “No one would have built Stonehenge without there being something unique and really special about the area. There must have been something significant here beforehand, and Blick Mead, with its constant temperature spring sitting alongside the River Avon, may well be it.
“I believe that as we uncover more about the site over the coming days and weeks we will discover it to be the greatest, oldest and most significant Mesolithic home base ever found in Britain.”