After the spendthrift budgets of the past few years, Budget 2020 was a much more cautious affair with the need for financial prudence high on the Government's agenda due to the very real threat of a no-deal Brexit.
But that didn't mean there wasn't money to be given away. In fact the Government announced a spending package of around €3.1 billion in total, although much of this had been previously committed.
From an increase in the carbon tax to a reduction in prescription charges, there was a lot to take in. Here we take a look at the main announcements and what it all means for your pocket.
With the threat of a no-deal Brexit ever present, a whole host of Brexit support measures for the economy were announced.
In total, a package of more than €1.2 billion, excluding EU funding, will be made available. €200 million will be invested next year no matter what happens regarding Brexit to increase staff and improve customs and technology facilities at ports and airports.
If there is no deal, then €650 million will be made available to support the agriculture, enterprise and tourism sectors and to assist the most affected citizens and regions. Over €365m will also be set aside for unemployment benefits while a further €45m will be made available to assist jobseekers in case unemployment rises in the event of the UK crashing out of the EU.
Supports will also be made available to the food, manufacturing and services sector.
As expected Budget 2020 saw no major changes to taxation, meaning most of us will see no increase in our take home pay.
Although taxes at least didn't rise, with wages increasing at a rate of around 2 to 3% a year, the failure to increase tax credits or tax bands in line with wage inflation means most people will end up paying a higher percentage of their income in tax next year.
|USC bands 2020||Rate|
|€12,012 to €19,874||2%|
|€19,874 to €70,044||4.50%|
|Tax bands 2020||20%||40%|
|Married (one earner)||€44,300||Balance|
|Single parent family||€39,300||Balance|
Housing was unsurprisingly a big focus of the budget again this year. The main announcements were:
It hasn't been a good budget for smokers (is it ever?)
The excise on cigarettes has gone up by 50 cent, bringing the price of a pack of 20 cigarettes up to around €13.50. However excise duty on alcohol and petrol and diesel has remained unchanged once again this year but changes to the carbon tax (more on that below) mean motorists will still be hit.
Also, a new tax based on a vehicle’s nitrogen oxide (NOx) emissions will be applied to new cars and used imports from 1st January, replacing the current 1% diesel surcharge. For the best-selling current new diesel models, the average charge under the new NOx tax will be broadly similar to the cost of the outgoing levy, meaning no real impact on consumers' pockets. However new petrol and hybrid-engined models will see a slight increase in price.
Prescription charges for medical card holders are to be reduced by another 50 cent, bringing them down to €1.00 per item for those over 70 and €1.50 per item for everyone else.
Also, the maximum amount which patients must pay for drugs and medicines themselves before State subsidies apply under the Drugs Payment Scheme is to be reduced by a further €10 to €114 per month.
The medical card income threshold for people over 70 will be increased by €50 for a single person or €150 for a couple per week, allowing around 56,000 additional people to qualify.
Other developments in healthcare at a glance are:
Last year the Government held off at the last minute on increasing the carbon tax but this year there was no reprieve for consumers with the Minister announcing that the tax would increase by €6 to €26 per tonne of CO2. The Minster also reiterated the Government's commitment to increasing the tax to €80 per tonne by 2030.
Petrol and diesel will be hit by the increased charge from midnight while other fuels will be spared until May 2020.
So what exactly does that mean for your pocket?
Below is an approximate outline of what the tax increase will add to various fuels, as well as the total amount now being paid in carbon tax.
|Gas*||€14 a year||€61 a year|
|Petrol & diesel||1.5 cent per litre||6.5 cent per litre|
|Bale of peat / briquettes||14 cent||59 cent|
|Bag of coal||63 cent||€2.73|
|Home heating oil**||€15 per fill||€65 per fill|
*Based on average annual consumption of 11,000 kWh of gas
**Based on 900-litre tank
The Minster has promised to ringfence the money raised from the carbon tax for mainly environmental, green and public transport initiatives. As part of this, €3 million will be allocated for electric vehicle infrastructure which will double the number of local authority on-street charging points.
Unlike previous years there was no across-the-board increase to social welfare payments, with spending far more targeted than in previous years. Having said that, the Christmas Bonus will be paid at a rate of 100% again this year to all social welfare recipients.
There was no increase to the State Pension or Jobseeker's Allowance.
Other developments in social welfare at a glance are:
Often referred to as the death tax, CAT has proven increasingly controversial in recent years as soaring property values mean many people are faced with huge tax bills upon inheriting family assets, in particular the family home.
The Minister announced a €15,00 increase to €335,000 to the lifetime Group A tax-free threshold, which broadly applies to transfers between parents and their children. However, despite the increase, it remains substantially below the €500,000 target mooted by the Government a few years ago.
Fine Gael has long tried to differentiate itself from Fianna Fáil as the party which can be trusted to manage the public finances prudently, and against the backdrop of a no-deal Brexit the Minster kept a relatively tight grip on the public purses.
However increases to the carbon tax in conjunction with no changes to income tax or the much maligned USC is sure to vex middle-class Ireland while there was little in the way of relief for hard-pressed renters. As a result it remains to be seen if Fine Gael will be punished for this at next year's election.
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