Remember Those Green Shoots of Recovery?
It is clear that 2015 has injected new optimism back into the Irish economy. We almost believe that openly speaking of any kind of recovery could advertently bring about its early demise. What a superstitious lot we are! Those green shoots of recovery that we once feared to talk about have apparently rooted themselves in a new economic soil. It’s composition of education, innovation and entrepreneurial spirit have galvanised this newly laid foundation. Over the past few years we baulked at the slightest muttering of two simple but powerful words – “the Budget”. The Irish Workforce has suffered the brunt of every Budget since 2008. Seven full-scale budgetary collisions have left workers scarred for life with many still uncertain of their futures in the workplace.
Today’s budget has offered us hope if anything. Long gone are the days when the Irish Workforce bought into empty political promises. We are now more informed and pragmatic than ever, we trust our own judgement rather than placing all faith in the hands of others. With the general election on the near horizon, what sweeteners are on offer in return for ballot votes? What does Budget 2016 mean to the ordinary Irish Worker? How will it impact our already stretched monthly household budgets?
Today Michael Noonan announced that Ireland was the fastest growing economy in Europe for the second year running. He also said that we are well on track to replace all jobs that were lost during the economic crisis. Noonan also noted that he expects growth to continue in 2016 at an estimated rate of 4.3%. Noonan forecasts over 48,000 net new jobs in 2016 which will bring the workforce to over the 2 million mark for the first time.
Key Take-Aways from Today’s Budget.
Universal Social Charge
The USC was originally introduced by the late Brian Lenihan in December 2010. It’s main purpose although ‘temporary’ was to increase tax revenue and shore up a failing economy that was running low on operating funds. It presently brings in approximately €4 billion per annum.
It was announced today that all 3 levels of the USC will be cut.
Top Level: 7% down to 5.5%
Mid Level: 3.5% down to 3%
Lower Level: 1.5% down to 1%
In addition to these cuts a new entry level has been set at €13,000 (up from €12,012 ). This change will remove over 40,000 workers from USC altogether. Minister Noonan also added that USC is to be progressively abolished over the next few years but no definite date was announced.
Indirect Tax
It was confirmed that the reduced VAT rate of 9% will remain unchanged for the Tourism and Hospitality sectors. The 13.5% or the standard VAT rate of 23% will also remain unchanged in 2016.
Some of the usual suspects, for example a packet of 20 cigarettes will have duty increased by 50 cent (including VAT). This duty will be applied from midnight tonight. Alcohol which is usually an easy target remains unchanged.
Minimum Wage
It was announced that Brendan Howlin, Minister for Public Expenditure has increased the minimum wage from €8.65 to €9.15 per hour.
Child Benefit
For the first time in some years there will be an increase to Child Benefit. An increase of €5 per month will raise benefit to €140 per month.
In addition to Child Benefit an extension has been made to the early childhood care and education scheme. Children between the ages of three and five- and-a-half will be entitled to a free school place taking them up to primary school entry. On another note the free GP scheme will be extended to include Children under 12 years of age
The Outcome
All in all this was a Budget that favoured everyone but to differing degrees. It is the first budget in 8 years that gives back to the Irish Workforce after a long period of austerity. Many commentators are already accusing Minister Noonan of delivering a Budget with one eye on the election. It could also be said that the opposition parties will find it hard to throw a punch at the government after delivering this ‘positive’ budget. It is safe to say that the coming days ahead will offer some interesting debates from both sides of the fence and of course from those already firmly perched on the fench.
