Budget 2018 - what does it mean for you?
There are a few interesting changes on the way.
This afternoon, Minister for Finance Paschal Donohoe announced the detail of Budget 2018 in Leinster House. Here are the main points…
- Income tax: The standard rate tax band is being increased from €33,800 to €34,550. There is also an increase to the self-employed tax credit.
- Universal Social Charge: The lower rate for the USC is being cut from 2.5% to 2%, while the 5% rate is being reduced to 4.75%, and the ceiling for the lower rate is being raised to €19,372.
- Social protection payments: The State pension and several other Social Protection payments are going up by €5 per week and the Christmas bonus payment of 85% will again be paid to all social welfare recipients in 2017.
- Sugar tax: A sugar tax is being introduced in April 2018 - it will be 30 cent per litre of tax on drinks with over 8g of sugar per 100ml. And 20 cent per litre on drinks with between 5g and 8g of sugar per 100ml.
- Schools: There’s funding for 1,300 extra teaching posts next year to reduce the primary pupil teacher ratio to 26:1, and there will be €1.7 billion invested in special education, with more than 1,000 new Special Needs Assistants positions.
- Housing: Funding for homeless services will increase by €18m, and there’ll be an extra 4,000 social housing units to be delivered next year. A new body, called Home Building Finance Ireland, will get up to €750M for commercial investment in housing finance.
- Health: There’s an increase of €685m in allocation to the Department of Health, which includes an additional 1,800 staff in frontline services. Prescription charges for medical card holders under 70 is reducing from €2.50 to €2 per item - the monthly cap drops from €25 to €20, with the threshold for the Drugs Payment Scheme dropping from €144 to €134.
- Climate action: There’s €17 million allocated to the Renewable Heat Initiative, and to encourage an increase in electric vehicles. A 0% Benefit-in-Kind rate for electric vehicles is also being introduced, and the Minister confirmed that there’ll be a review of carbon tax carried out by the ESRI, which could have an impact on gas bills.
- Sunbeds and cigarettes: VAT on sunbeds is going up to 23%, while cigarettes will be going up by 50 cent per pack - both of these measures have been welcomed by the Irish Cancer Society.
What impact will the budget changes have for the average consumer?
The impact of the budget changes on your pocket will totally depend on your own circumstances.
However, to give you an idea of how the changes will impact people, according to The Journal’s Budget Calculator:
- A single PAYE worker with no dependents who doesn’t own their own home and earns €35,000 will take home €240 more per year in their pay as a result of the tax changes.
- A married couple with who are jointly assessed for tax, earn €35,000 and €50,000 and have two children will be €338 better off per year, due to the tax changes and the increase to child benefit payments.
- A single public servant on €40,000 will have an extra €253 in their pocket per year after the budget changes come into effect.
- A married couple where one person is self-employed and earns €45000 and the other person doesn’t work will come out with €315 more per year due to the increase in the self-employed tax credit.
While the budget may not have been very exciting, no doubt consumers will be happy to see more money coming their way in 2018.
Why not give the calculator a try yourself and see how much you’ll save?