Budget 2012 – Day 2
It was 90 years ago today that Michael Collins’ delegation signed the Anglo-Irish Agreement on our path to freedom. It was said that it was not ultimate freedom; rather the freedom to achieve ultimate freedom. Those who agreed with the Treaty would go on to form Fine Gael.
This Fine Gael Government is now coming full circle; leading what little is left of our economic freedom (after being initiated by Fianna Fáil) back into a different kind of rule, governed by Germany. It is hard to take but essential for our recovery.
Today marks Day 2 of the Budget which focuses on tax increases after yesterday’s spending cuts as laid out by Minister Brendan Howlin.
As promised there will be NO increase in income tax, rates and no narrowing of bands and tax credits. There will be an increase in the Universal Social Charge so that the lowest paid, some 330,000 taxpayers, will not continue to suffer unfairly. However, there will be an increase in indirect taxes.
There will be anIncrease in the current rate of Capital Acquisitions Tax from 25% to 30% after today. Mr. Noonan is also Increasing Capital Gains Tax from 25% to 30% after today.
The country already knew that VAT will go up 2 points to 23% and will come into effect on January 1st and not in staged increments as Fianna Fáil originally intended. This was confirmed today. Finance Minister, Michael Noonan, also reinforced the Government’s commitment to maintain Ireland’s 12.5% corporation tax rate.
There is to be no increase in the VAT rate at the 0%, 9% and 13.5% rates that cover basic medical, children, tourism, service sectors and home heating oil.
Minister Noonan is going to create a Special Assignee Relief Programme as well as a Foreign Earnings Deduction. This will allow multinational and indigenous companies to attract key people to Ireland so as to create more jobs and to facilitate the development and expansion of businesses in Ireland.
Mr. Noonan addressed the problem of upward-only rent reviews saying that, while they are looking to get viable legislation to the table, they do not want to have to pay landlords compensation.
“NAMA has policy guidance where it can approve rent reductions when they are shown to be in excess of current market levels and viability is threatened,” he said.
However, despite eliminating several quangos, a NAMA Advisory board is to be set up to advise on strategy, proving that the new boss still resembles the old boss in some ways.
The old reliables of alcohol (VAT increase but not Excise) and cigarettes (25c per packet) were also hit, as is annual tradition.
This may have been a very tough Budget on almost but Ireland must reconcile itself with the fact that it could been much worse, just like it could have been 90 years ago if Collins did not sign.
No increase in income tax
VAT increased by 2% to 23%
First-time buyers get mortgage interest relief at 25%
Measures to help those who bought houses between 2004-2008
Stamp duty on commercial property to be reduced
Foreign Earnings Deduction to support firms in emerging markets