Budget to hit highest and lowest earners
Published: Monday, December 06, 2010
5 December 2010 By Susan Lynch in the Sunday Business Post
The abolition of certain tax reliefs and cuts in social welfare and the minimum wage will draw the ire of both ends of the earning spectrum
While it is almost inconceivable to imagine a household in the country that will not be hit hard by Budget 2011, it seems likely that those at either end of the earnings spectrum will bear the brunt of the bad news. The four-year plan published on November 24 gave a sneak preview of many of the measures to be announced in Minister for Finance Brian Lenihan's budget on Tuesday.
At the higher end of the scale, the proposed abolition of tax reliefs and a reduction in the rate of tax relief for pension contributions will have a significant effect for high earners.
The pension change alone could cost a high earner €1,500 a month by 2014, at which stage the relief will be available at 20 per cent, rather than the current marginal rate of relief of 41 per cent, in addition to relief for PRSI and health levy in some cases.
The announcement in the four-year plan that numerous tax reliefs, including the patent exemption and artists' exemption, were to be either abolished or curtailed was not surprising, given ongoing speculation that their abolition was imminent.
These reliefs had, since 2007, been subject to the high earners' restriction which ensured that a minimum effective tax rate was paid in any year by a taxpayer. However, notwithstanding this restriction on the use of these reliefs, their continued application has been the source of much political pressure on Lenihan.
What was perhaps surprising in the four-year plan was a proposal that 'legacy' property incentive reliefs are to be phased out. These are reliefs, which have now been abolished, but because tax relief was available to taxpayers over a number of years, they continue to cost the exchequer an estimated €400 million per annum...........
..........Women
Further cuts in child benefit without the increased availability of subsided childcare would cause considerable hardship to women and their families, according to the National Women's Council of Ireland (NWCI). It has also called on the government to recognise atypical work patterns by calculating unemployment on the basis of hours, rather than days, per week.
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