Minister for Finance Brian Cowen has delivered his fourth Budget against what he has described as a challenging economic backdrop.
Mr Cowen said the priorities of his budget were to help the incomes of the vulnerable, help home buyers and boost the economy.
Citing the extraordinary growth that the Irish economy has seen over the past 10 years, he said investment in a sustainable future was the Government's top priority.
Mr Cowen warned that the global economy was beset by uncertainties, saying financial markets were highly volatile and the construction sector domestically was experiencing a slowdown.
He also said that he must place one economic objective ahead of any other, that 'we must do things now that will position our country for sustainable development over the years ahead'.
The Minister said the rate of increase on public current expenditure in 2008 has to be moderate to take account of the resources available.
However he provided almost €53bn, which is a net increase of over €1.7bn. This includes almost €960m for welfare supports.
He said he was planning for a general Government deficit of 0.9% in 2008.
Mr Cowen said the National Development Plan was his top priority and will be rolled out as planned. He said it will transform the country socially and economically.
He insisted the priorities of current spending remain health, education and social welfare, which account for almost 80% of total current spending.
Stamp duty
Stamp duty is reduced - no tax will apply on the first €125,000, while the balance up to €1m will be charged at 7%. Anything over the €1m threshold will attract duty at 9%.
Welfare
Almost one billon of the €3.8 billion Mr Cowen plans to borrow next year will go to extra welfare spending, including an increase of €14 per week in the contributory pension, bringing it to €233, and of €12 per week in the non-contributory pension, which will be worth €212.
VRT
Mr Cowen announced that from July next year, VRT rates will be determined by the the CO2 emission rating of the car and will no longer be related to engine size
He said the changes were the most fundamental reform of VRT since its inception in 1993.
He said there will be seven VRT rates ranging from 14% to 36% depending on the car's CO2 emission level.
Education
A total of €9.3 billion will be spent on education next year, €828 million of which will be capital expenditure.
The budget contains an additional €95 million for capital expenditure on primary school buildings, because the expected large number of new pupils at primary level over the coming years presents a major challenge.
Cigarettes
The price of a packet of 20 cigarettes will increase by 30c from midnight.
He said there would be pro rata excise rate increases on other tobacco products.
Housing
Mr Cowen said he is making available a total housing package of €1.7bn in Exchequer resources, which together with non-Exchequer financing, will bring the overall housing package to €2.5bn.
This will support the delivery of commitments in Towards 2016 with 9,000 new social housing units to commence or be acquired in 2008 and the provision of 5,500 new affordable homes.
Rental housing
The minister said he recognised the importance of the rental sector and the cost pressures on those renting.
He is increasing the income tax relief on rent payments by 11%. He is also proposing to increase the threshold for the rent-a-room scheme from €7,620 to €10,000 to ensure the continued supply of this type of rental accommodation.
Farming
The economic prospects for farming have improved with increasing producer prices and increased food exports.
Mr Cowen said the Farm Waste Management Scheme was put in place to help farmers adjust to the new environmental conditions and standards required by the EU Nitrates Directives and to support the competitiveness of Irish agriculture.
In response to the strong take-up of the scheme, Mr Cowen announced a further increase of €35m in 2008, to bring the total grant aid next year to almost €150m.
He also announced the allocation of €370m to the Rural Environmental Protection Scheme - REPS 4 - to cover grants for approximately 60,000 farmers.
Tax
Personal tax credits are to increase by €70 for a single person and €140 for a married couple.
The PAYE tax credit also goes up by €70 while the home carer credit is up by €130 to €1,830 per year.
The standard rate tax bands are being widened. It will mean that those on the minimum wage will continue to pay no income tax and the average wage will stay out of the top rate.
Arts
Almost €245m is to be invested in the arts, an increase of 5.25% on 2007. The Film Board has seen an increase of 18% in its funding - Section 481, the tax relief incentive scheme for film and television productions in Ireland is to be extended to 2012.
Funding for the Arts Council is to increase by 6.4%, with a total funding package of €85m, an increase of €5m, which includes €3million for touring.
The Arts Council had sought an increase of €20m to bring its total funding to €100m
