McEvoy and Associates The budget and the four year plan
The budget and the four year plan
Background
The new budget has had an effect on all of us and it is the harsh reality that things will only get tougher. It was a shock to the ordinary taxpayer as the tax bands and credits decreased and the bad news is there is only more to come. Spending has to be reduced right across the board and more cuts are also anticipated for the taxpayers.
So what have we actually done so far?
Well the four year plan has already been implemented and accomplished in the 2011 budget.
- Income tax was changed. Tax band were changed from the standard rate band of €36,400 to €32,500. This is expected to change to €30,400 by 2014. The personal tax credit which was €1830 is now €1650. This is expected to fall to €1530.
- Another change was to reduce or abolish reliefs and exemptions. Some examples of this are rent, BIK, employer share schemes, patent royalties, age credits etc. Many changes have already taken effect.
- University Social Charge has been introduced in order to replace the PRSI/Health levy.
- Tax relief on pension contributions was flagged. However this could be likely to change and revisited as it caused controversy.
- Stamp duty has been changed and most reliefs were abolished.
- There is no tax relief on the first €2000 of full time third level fees (€1000 part-time)
However there is still more to do, so what is next?
This is a four year plan so the next three years like 2011 will be tough; we might even say it will get a whole lot worse next year. Here are some of the changes we should expect:
- Income tax will have further reductions on tax bands and credits.
- USC is to incorporate PRSI.
- Property reliefs will be removed and there will be a site tax of €100 in 2012 and a full property based tax in 2013.
- For VAT there will be a new standard rate of 22% in 2013 and 23% in 2014
- It is expected that a water charge may come into play in 2014 but there is no guarantee as of yet.
Period |
Tax Increases |
Current Spending |
Spending reductions |
Total changes |
2011 |
2020 |
2280 |
1700 |
6000 |
2012-2014 |
2980 |
4720 |
1300 |
9000 |
Total Savings |
5000 |
7000 |
3000 |
15000 |
To read a more indepth article on this topic, it can be found on the CPA website. It is written by David FitzGerald.