Paschal Donohoe, Minister for Finance and Michael McGrath, Minister for Public Expenditure & Reform delivered the Cost of Living Budget speech at 1pm on Tuesday 27th September 2022.
With the war in Ukraine raging, inflation soaring with interest rates the only tool western governments have to reduce same, all eyes in Ireland were on the coalition government to see what respite and supports would emanate from the brought forward Budget 2023, an € 11.1billion bonanza of which € 4.1billion went to once off cost of living supports including tax band changes, electricity credits and social welfare increases.
Initial indications are that Budget 2023 has made a comprehensive range of interventions that should leave more money in the hands of consumers and businesses and offset at least some of the inflationary cost of living increases.
John Lowe of Money Doctors.ie reports….
Highlights at a glance…
- € 11.1billion was the Budget package – the ‘cost of living Budget’
- Tax credits and bands have been increased
- Social welfare payments up € 12 per week including State Pension and Fuel Allowance ( the latter effective immediately ) This includes maternity and paternity leave increased by 2 weeks to 7 weeks’ leave in total from next August supported by the State.
- 3 domestic universal € 200 electricity credits(totalling € 600) over the next three billing cycles (November, January and March)
- Businesses to receive up to € 10,000 a month (or 40% maximum of the increased energy costs ) to assist with energy bills
- Free school books for all national (primary) school-going children
- Christmas double bonus for all State pension recipients
- 100% double bonus will be paid 6th December 2022 to those qualified.
- Other one off payments include double Child Benefit in November and all social welfare recipients a double week in October..
- The national minimum wage will increase by €0.80 to €11.30 per hour (January 2023).
INCOME & OTHER TAXES
- Standard rate of tax extended from € 36,800 to € 40,000 – an increase of € 3,200…
- Personal Tax Credit, Employee Credit and Earned Income Credit all set to increase by €75, from € 1,700 to € 1,775
- The Home Carer Tax Credit will increase by € 100 to € 1,700
Universal Social Charge
- One change in the 2nd band ( up € 1,625 )
|First €12,012||0.5%||First €12,012||0.5%|
|Next € 9,283||2.0%||Next €10.908||2.0%|
|Next €49,560||4.5%||Next €49,560||4.5%|
- Remains unchanged at 12.5% for companies with a turnover less than € 750million.
- 15% is still the Corporation Tax rate for those companies with a turnover exceeding € 750million to take effect in April 2023.
Capital Gains Tax
- Remains at 33%
Capital Acquisition Tax ( inheritance tax )
- Remains the same
The threshold for Group A category ( parent to child ) € 335,000
- Categories B € 32,500 & C € 16,250
- Rate remains at 33% over the thresholds
EXIT investment rates
- No change in the Budget speech in the exit tax rate of 41% on investments.
THE MOTOR INDUSTRY
- Public transport reduction fare remains until end of 2023 while the 50% price reduction on the Young Adult Leap Card remains until the end of 2023
- Motor Tax rates will remain unchanged for all cars in the engine sized regime and all but the most pollutant cars in the post-2008 regime.
- Extension of BIK exemption for EVs
- The BIK exemption for battery electric vehicles still extended out to 2025 with a tapering effect on the vehicle value. This measure will take effect from 2023.
- For BIK purposes, the original market value of an electric vehicle will be reduced to €35,000 for 2023; €20,000 for 2024; and €10,000 for 2025.
- Petrol / diesel
- An extension to the current temporary reduction in the excise duty on fuel; 21 cents on petrol and 16 cents on diesel.. this reduction will now remain in place until 28 February 2023
SOCIAL WELFARE BENEFITS
- ALL Social Welfare benefits increased by € 12 per week…
Once off payments….
- A 2 week Christmas Bonus will be paid to pensioners on 6th December
- A € 400 lump sum payment for Fuel Allowance recipients to be paid before Christmas
- Child Benefit – double payment, € 280, will be paid in November..
- € 200 for those on Living Alone Allowance before Christmas
- € 500 will be paid in November to people who get:
- The Carer’s Support Grant
- Disability Allowance
- Invalidity Pension
- Blind Pension
- Payments to families
The weekly rate for a qualified child will increase by €2 from €40 to €42 for children under 12 years of age. It will increase by €2 from €48 to €50 for children aged 12 years and over (from January 2023).
The Working Family Payment thresholds will increase by €40 across all family sizes.
- The Universal Childcare Subsidy will be increased from €0.50 per hour to €1.40 per hour from January 2023.
- Free GP care to extended to 420,000 people under a widening of the free GP care eligibility scheme from next April 2023. Income limits for this means-tested scheme will be increased allowing more people to be covered.
- Free contraception for women aged 16-30 from next August 2023
- In-patient hospital fees will be removed for all patients.
- IVF treatment will be available through the public health system for the first time.
HOUSING, THE HOMELESS AND OTHER SOCIAL HOUSING BENEFITS
- Help to Buy scheme retained for first-time buyers of new homes by way of a 10% income tax refund. Maximum payment is € 30,000 and only eligible up to a purchase price of € 500,000. The rebate will be of income tax paid over the previous four years and only purchases of new homes will qualify. The applicants must also take out a mortgage of 70% of the purchase price to qualify. This scheme is retained to 31st December 2024.
- Rental tax relief to tenants in their principal private residence of € 500 per annum will benefit over 400,000 tenants…
- Vacant Homes Tax to be charged at three times a property’s base Local Property Tax rate – this self-assessed measure will be introduced in 2023 and administered by Revenue. It will be applied to residential properties occupied for less than 30 days on a 12 month period. There will be exemptions for properties that were recently sold or are listed for rent; properties that are vacant due to the owner’s illness or them being in long-term care; and properties that are vacant as a result of “significant refurbishment work”.
- The amount a landlord can claim for pre-letting expenses will double to €10,000 and the amount of time the property must be vacant for has reduced from 12 months to 6 months.
- Defective Concrete Products Levy… a 10% levy will apply to concrete products.
SMALL & MEDIUM SIZED BUSINESSES
- VAT (Valued Added Tax)
- 9% rate (hospitality and tourism sectors) is increased to 13.5%
- The 9% VAT rate for gas and electricity is extended to 28 February 2023.
- Zero VAT rates will apply to:
- Period products
- Hormone replacement products
- Nicotine replacement products
INDIRECT TAXES, EXCISE AND OTHER DUTIES
- Tobacco – Excise duty on a 20-pack of cigarettes to increase by 50c, with pro rata increases for other tobacco products. The price of a pack of 20 cigarettes is now € 15.50.
- Alcohol – no increases on beer spirits or wines
- A double monthly payment of SUSI maintenance grants (once off )
- The Student Contribution is reduced from €3000 to €2000. This applies from the 2022/23 academic year. It will be reduced by a further €500 next year.
- The income threshold for a 50% reduction in the Student Contribution will increase from €55,000 per year, to €62,000 per year from next year.
- A double Student Grant payment will be paid in December. The Student Grant will increase by between 10% and 14% from September 2023.
- Carbon tax will increase by €7.50 per tonne to €48.50 from October 12th. This will increase petrol and diesel costs by 2c per litre. This will however be offset by a reduction in the NORA levy of 2c per litre – basically cancelling out any impact at the pump
FOR FARMERS, FARMING AND THE AGRI-FOOD SECTOR
- 5 agricultural tax reliefs will continue
- Young Trained Farmer Stamp Duty Relief
- Farm Consolidation Stamp Duty Relief
- Farm Restructuring Capital Gains Tax Relief
- Young Trained Farmer Stock Relief
- Registered Farm Partnership Stock Relief