With a €3.8 billion fiscal adjustment needed in 2012 it’s no wonder the budget had to be rolled out over a two day period this year. With Day 1 concentrating on Social Welfare, Health and Education and Day 2 concentrating on taxes, there is quite a lot to take in.
We are delighted to provide you with our compliments, full details of all the budget in our attached Budget Highlight’s PDF which you can download for your information and reference.
Day 1 of the budget included the news that while the weekly social-welfare payments would remain unchanged, lone-parent family payment, child benefit for third and subsequent children, fuel allowance and job seekers benefit will all face cuts. For employers, redundancy and insolvency changes will reduce employer rebate from 60% to 15%
The health sector sees extra charges on private treatment in public hospitals, an increase in the threshold amount for the Drug Payment Scheme and a 2% cut in disability, mental health and children’s services. Meanwhile in education we saw a 2% cut in Higher Education funding an increase of €250 in third-level student registration fees, a doubling of the primary-school transport charge and cuts to trainee and apprenticeship schemes.
Day 2 didn’t come as much of a surprise given the amount of leaks in the past few weeks. As was previously confirmed, VAT will increase from 21% to 23% from 1st January 2012 and there were no changes to the income tax rates of 20% and 41%, the tax credits and tax bands. The universal service charge exemption was increased to €10,000.
Our transport costs are going to increase with a 1.4 cent increase in petrol and 1.6 cent increase in diesel with effect from midnight 6th December 2011, with further increases in fuel oil and gas coming into effect in May 2012. Motor Tax changes to apply from 1st January will see increases ranging from €28 to €69 in the three bands.
Some relief for first time buyers will at least be welcome with mortgage interest relief of 30% to apply to first time buyers (between 2004-2008), decreasing to 25% for first-time buyers in 2012. Relief of 15% will apply for non-first time buyers. The sting is we are now all faced with the €100 household charge next year.
Stamp Duty on commercial property has been lowered from 6% to 2%. Capital Acquisitions Tax and Capital Gains Tax is increasing from 25% to 30% and DIRT is increasing from 27% to 30%. Corporation tax is to remain at 12.5% and the corporation tax exemption for new start ups is being extended – small offerings in an otherwise bleak budget.