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Budget day promises tax cuts for squeezed middle

Story by Linda O'Reilly

Monday, 9th October, 2017 7:12pm

Budget day promises tax cuts for squeezed middle

One of the biggest talking points ahead of this year's Budget has been promised tax cuts for the so-called 'squeezed middle'. The Taoiseach Leo Varadkar has pledged on numerous occasions that the threshold at which people pay the higher rate of income tax will rise. That priority is one echoed by Fine Gael grassroot members in the Cavan and Monaghan constituency.
Ahead of Budget 2018, each constituency was asked to distribute a survey of Budget priorities among its members. The results were to be collated and returned to party HQ for consideration. The Cavan Monaghan submission or 'wish list', as seen by The Anglo-Celt, clearly sets out a widening of the income tax bands as its top priority for tax relief.
It calls for: "Widening the basic income tax band so that a person can earn an additional €1,000 (or more if possible) and be taxed at the basic rate of 20% rather than the higher rate of 40%."
A €1,000 increase in the band would see the average earner save less than €200 a year. The second priority in the taxation category was to increase the earned tax credit for the self employed.
Currently workers begin paying the higher 40 per cent rate at €33,800. But Fine Gael must balance any changes in this area with Fianna Fáil's demand to abolish the Universal Social Charge (USC) as they are relying on their Confidence and Supply partners to pass the Budget. Sources on both sides say they expect the budget to contain a mixed income tax package that combines a small cut in the USC and a raising of the threshold at which people hit the higher rate of income tax. It should be noted that the USC brought in an additional €3.7Bn for the exchequer last year so a gradual merger of the USC and PRSI charges are more likely. 
In other areas, the one-page submission from the Cavan Monaghan Fine Gael constituency calls for an increase in the weekly social welfare payments for people with disabilities and carers. The second priority in this area was to restore the Telephone Allowance for the elderly, followed by an increase in the Living Alone Allowance.
In the area of public expenditure, members in Cavan and Monaghan want the greatest spend in Transport, Tourism & Sport; followed by agriculture.
They were also asked to name capital infrastructure projects that they would like to see undertaken over the next 10 years. They cited the delivery of the East West link from Dundalk to Sligo, the upgrade of the Castleblayney to Virginia Road and the extension of the M3 motorway to Cavan Town.

What's also tipped for Budget 2018

- Increases in excise on tobacco (the Tax Strategy Group has suggested a €1 increase on a pack of 20, Around €8.62 of an €11 pack is currently collected as tax generating €1.1BN in 2016)
- New taxes on e-cigarettes to be introduced
- New sugar tax from March/April 2018
- Little change in alcohol prices as excise rose by €1 last year on a bottle of wine (The Public Alcohol Bill will be enacted before the end of the year, which will target below cost selling in supermarkets).
- Price of diesel to remain unchanged despite earlier speculation that it could be equalised with petrol
- Initiatives to encourage a greater uptake of electric vehicles.
- Special nine per cent VAT rate for the hospitality sector to be left untouched
- Retention of mortgage interest relief beyond the current end date of December 2017 (as insisted on by FF)
- Extension of existing dental, optical, paternity leave benefits and maternity benefit for mothers who deliver prematurely
- State pension to rise by €5 a week (another FF priority)
- Changes to the Fair Deal Scheme for farm families (a three-year cap on annual contributions his set to be extended to farmland and businesses)
- Additional resources for social housing (one in five units built next year predicted to be for social housing)
- 500 new school teachers to reduce class sizes
- a €20 increase in the universal childcare subsidy scheme to €100 per month
- No additional funding is to be provided for any overspend by the HSE in delivering commitments set out in its National Service Plan (the current overspend is estimated at €100M)

What the politicians want to see

Budget must prepare for Brexit and reward workers  

Fine Gael Senator Joe O'Reilly is eager that Budget 2018 will not squander our hard-earned recovery process, prepare for Brexit, reward workers and protect those who need support.
“To prepare for Brexit our self employed should be helped more with improved relief to acquire or keep private pensions and a tax system, which has flexibility particularly with VAT. Our farmers must get a further increase in ANC payments, suckler cow support and continued tax reform,” contended Senator O'Reilly.
“I support the widening of the lower rate tax band to delay entry to higher rate on grounds that it rewards work by putting money in workers pockets making overtime and promotion attractive and repaying big sacrifices over latter years,” he continued.
“Social protection payments such as Old Age Pensions Disability Payments and Carers should see last years improvements built on. In the Capital Plan that will accompany the Budget I want to see a commitment to Extending the M3 to Cavan Town, the East West Link, and a new College Campus for Cavan,” outlined the Senator of his own personal priorities.

'Pension has to be increased'  

Cavan Fianna Fáil TD, Brendan Smith, has said that increasing the rate of the Pension is among the party's top priorities for Budget 2018. He feels that many older people are still not feeling the benefits of the recovery.
“Fianna Fáil insisted that the pension was increased last year as we recognised that many older people were struggling to make ends meet. It was called the Willie O’Dea fiver and, whilst it was modest, it was a positive step. This Budget is the second in the Confidence and Supply Arrangement and Fianna Fáil will be requesting that the pension be increased further. It is the least that older people deserve,” Deputy Smith.
He pointed out that older people have contributed much to society but have been hit by measures introduced by the previous Government - for example axing benefits such as the Bereavement Grant and the Telephone Allowance.
Deputy Smith also referenced the latest statistics from the Survey on Income and Living Conditions, which found that 10.7% of those aged 65 and older are at risk of poverty whilst 15.4% of older people are experiencing deprivation. “This is totally unacceptable and must be corrected. We all have to play our part to do more to shield older people from the impact of poverty and feeling isolated,” he said.
Approximately 387,000 people are in receipt of the Pension and another 95,000 people are in receipt of the Non-Contributory Pension, many of whom have no other source of income in retirement.
“As this year’s Budget preparations get underway, we will once again strongly make the case for an increase in the State Pension. In addition, Fianna Fáil is committed to maintaining and protecting secondary benefits such as the Fuel Allowance, the Household Benefits Package and the Free Travel Scheme. These are vital benefits and must be safeguarded,” said Deputy Smith.
“Fianna Fáil influenced last year’s Budget as much as possible and it was the first progressive budget in over five years. We will continue to try to introduce fairer policies so that Ireland becomes a fairer place to live in for both the young and old,” he added.

Putting people with disabilities first  

Sinn Féin is seeking to put people with disabilities front and centre in their proposals for Budget 2018. Last Thursday, Sinn Féin spokesperson on Disability Rights, Caoimhghín Ó Caoláin TD, published his party’s Budget 2018 proposals to increase investment in disability rights and equality.
He feels that it is important that the upcoming Budget invests in services to further the rights of some of the most vulnerable and neglected people in society.
“It is clear from the sham fight between Fine Gael and Fianna Fáil over tax cuts that will put a measly few euro in the pockets of the vast majority of workers that there will be little or no room for investment in services that are so badly needed by some of the most vulnerable and neglected people in our society,” he said.
According to the latest Census figures, there are some 643,131 people with a disability in the State.
The Sinn Féin package proposes a range of measures to improve the income supports, health, education, employment, transport and housing for those with disabilities. These include:
- Increase Disability Allowance, Blind Pension and Invalidity Pension by an additional €6pw
- Increase Carer’s Allowance and Carer’s Benefit by an additional €5
- Employ 600 additional frontline staff including speech and language therapists, occupational therapists, physios, and psychologists
- 500,000 additional personal assistance hours
- Investment of €3.41 million in our neuro rehab teams and transitional services 
- Increase respite care services by 20% 
- 450 additional resource teachers and 500 additional SNAs 
- Increase Funding for Educational Psychologists 
- 500 places on the Momentum Scheme for people with disabilities
- Increase Funding for the Scheme for Students with Disabilities by 20%, which would allow more students with disabilities to engage in third level education.
- Employment Supports for People with Disabilities including an additional €1.1 million for the Walk Peer programme and a further €2.65 million for the EmployAbility Service to support an additional 1,000 people with disabilities to attain employment.
- Apprenticeship Expansion and Reform Strategy – Cost €45.87 million 
- Transport Accessibility - Sinn Féin are proposing a 10 year programme to make all public transport services fully wheelchair accessible across the State. 
- Refund VRT/VAT to taxi drivers who purchase wheelchair-accessible vehicles
- Increase funding to Housing Adaptation Grants by 50%

“In this Budget, Sinn Féin has chosen a side and it is the side of ordinary people who have yet to see the economic recovery in their quality of life” concluded Deputy Ó Caoláin.

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