How will The Budget Affect You?
Wednesday, 8 April 2009
After yesterdays budget we'll be informing our viewers about the areas of the budget that will most affect them
Liam Croke, Financial Expert:
Liams Findings
This is a savage budget, particularly for lower and middle income earners and what is noticeable from the people who have been calling our recession clinic is that any further drop in their net take home pay will only further deepen their problems, leading to more mortgages going into default, more loans being not repaid on time and more doom and gloom. There just seems to be an absence of any real direction and people do not mind paying their share if they feel it is equitable but listening to Brian Cowan on the news at 6 he is hoping that we will recover in 2011, hoping the US will recover from their recession quickly which might help us, instead he should be giving people confidence and leadership and taking ownership of the problem e.g. getting into to the banks and getting them to lend again, enforcing them to do this!
Four Scenarios:
1. Married couple, one income of €35,000, 2 kids under 5 and a mortgage greater than 7 years old:
€87.50 less per month from monthly net income after income and health levy increases
€75.00 less per month after removal of mortgage interest relief
€83.00 less per month after early child care supplement halved
Total loss of net monthly income = €245.50 per month (€2,946 per year)
2. Married couple, two incomes totalling €60,000pa, 3 kids (2 under 5) mortgage greater than 7 years
€108.33 less per month from monthly net income after income and health levy increases
€75.00 less per month after removal of mortgage interest relief
€83.00 less per month after early child care supplement halved
Total loss of net monthly income = €266.33 per month (€3,195.96 per year)
3. Lone parent, 2 kids under 5 and renting a home.
€83 less per month due to childcare supplement.
€205 less of a Christmas bonus payment
Total loss of net monthly income = €83 per month + €205 = €288
The other measures of course are:
. 25c on a pack of 20 cigarettes
. 05c on a litre of diesel
. Early childcare to be abolished next year altogether - replaced with a free years pre school care - danger here is that the early childcare supplement was being used by people to help with creche fees which for some people are greater than what their mortgage is costing!
. Removal of mortgage interest relief will hit those in arrears very hard and this extra amount was going towards the arrears and many banks were depending on this "extra payment".
. Xmas payment is now gone - only saving €156 million - moneylenders rubbing their hands!
. Is this just the beginning - property tax, carbon tax and tax on children's allowance to come in December.
. Under 20 their social welfare entitlement reduced to €100 per week - those on fas schemes or those who take up further education courses will not have their money halved
. The danger is that by taking money out of the economy you are in danger of adding to a deeper recession but did they have any other choice?
. Capital gains tax has increased to 25%
. Dirt tax is up to 25% from 23% so those with money on deposit are going to see less each month in interest earned
. 1% levy on life assurance premiums on or after the 1st June 2009 - rate of exit tax from life assurance policies and investment funds is now going from 26% to 28%
All Budget Measures:
. Income levy rates doubled to 2%, 4% and 6%.
. Cigarettes up 25 cent and diesel up five cent a litre.
. New asset management agency to take bad loans off the banks' balance sheets.
. Early childcare supplement halved from 1 May, and scrapped altogether next year.
. No increases in social welfare for the next couple of years, rates may be reviewed later.
. The ceiling for employee PRSI will rise from €52,000 to €75,000.
. New scheme to allow civil servants over the age of 50 to retire.
. Income levy thresholds lowered, with the 2% rate at €15,000, 4% at €75,000 and 6% at €175,000.
. DIRT will go up from 23% to 25%. The levy on non-life insurance premiums rises from 2% to 3%.
. Capital Gains Tax and Capital Acquisitions Tax will both rise from 22% to 25%.
. Christmas welfare bonus will not be paid this year, while those under 20 will have their dole payments halved.
. A 10% cut in political expenses, while long-term payments to TDs will be abolished.
. Health Levy rates will double to 4% and 5%. The entry point for the higher rate will be reduced to €1,443 per week which is €75,036 per annum.
. Commission on Taxation will decide on how to raise further money from taxing or means testing child benefit.
. A national infrastructure bond to be looked at to raise money for capital projects.
. Ceiling for employee PRSI to rise from €52,000 to €75,000.
. Enterprise Stabilisation Fund to be set up to help protect jobs in troubled businesses.
. Stamp Duty trading scheme to be introduced.
. A review of top-level public sector pay rates.
. Petrol and alcohol duties will not go up.
. Mortgage interest relief will now only be available for the first seven years on principal private residences.