Ireland’s Guide To Money And Living

How will Budget 2017 affect consumers?

Budget 2017

Budget 2017 is much like previous budgets, welcomed by some and derided by others, particularly when a pay increase for TDs was unveiled. Alongside PAYE workers and parents, consumers will also be impacted by a number of measures announced by Minister for Finance Michael Noonan.

Motorists

Despite no increase in tax on petrol or diesel, there’s precious little in Budget 2017 for motorists with fossil fuel cars. Those looking to purchase an electric vehicle will be pleased to hear that VRT relief will be extended for the next five years for electric cars (€5,000) and the next two years for hybrids (€1,500) and plug-in hybrids (€2,500). Taxation of natural gas when used as a vehicle fuel will remain at the minimum EU rate for the next eight years.

First time buyers

Budget 2017 has introduced the Help-to-Buy scheme, an income tax rebate to the tune of 5% when purchasing a newly built house, with the aim of boosting the property market and growing the country’s supply of housing. The scheme will be backdated to July 19th 2016 and will run until 2019.

It’s not without its critics, however – among them Sinn Féin’s housing spokesperson Eoin Ó Broin, who said that the measure would raise house prices. “Michael Noonan’s first-time buyers scheme, available on homes up to the value of €600,000 will simply drive prices even higher and lock greater numbers of people out of home ownership,” he argued. According to TheJournal.ie, one developer increased the asking price for house in a development in Wicklow by between €17,500 and €45,000 the day after the Budget was announced.

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The Home Renovation Incentive Scheme has been extended until 2018, providing tax relief via an income tax credit of 13.5% on “qualifying expenditure on repair, renovation or improvement works carried out on a main home or rental property by qualifying contractors.”

Smokers

Ireland’s smokers have been hit again this year, with Budget 2017 imposing a 50c increase on the price of a packet of cigarettes. “The Irish Cancer Society is pleased that price continues to rise at such a significant rate. It sends a strong signal to the tobacco industry that the Government is serious about reaching its target of a tobacco free Ireland by 2025. The price hike, which will mean the most popular priced cigarettes will cost over €11 a packet, will encourage people to stop smoking and ultimately save lives,” said Donal Buggy, Head of Services and Advocacy with the Irish Cancer Society.

However, there is a fear in some quarters that such price hikes will encourage the black market. “By 2014 it had risen again to 23% so nearly a quarter of all tobacco products in the state in 2014 were bought on the black market. I think the year on year tax increases is a significant factor on that,” said Anti-Austerity Alliance TD Mick Barry.

Prescription cap

Five seems to be the magic number when it comes to Budget 2017 – alongside a €5 increase in social welfare payments and the State pension, the cap on prescription charges for those over the age of 70 has been reduced by €5 to €20, beginning next March.

Sugar tax

Among the announcements in Budget 2017 was that a sugar tax will be introduced in 2018. The public will be consulted on the measure, which will see a tax on drinks sweetened with sugar.

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The Irish Beverage Council (IBC) is very much against the introduction of a sugar tax. “We are extremely disappointed that the Minister for Finance continues to labour under the delusion that additional taxes on soft drinks will have any positive impact on obesity. Internationally, this thesis has been tested and has a 100% failure rate. A sugar tax will hit consumers, industry and the economy for no public health benefit,” said Kevin McPartlan, Director of the IBC.

Childcare

The introduction of the Single Affordable Childcare Scheme, which will come into effect from September 2017, has received a broad welcome. Replacing all existing schemes with a single programme, the scheme will provide means-tested subsidies to parents with children aged between six months and 15 years, and universal subsidies of a maximum of €80 per month or €900 per year for children between the ages of six months and three years.

“The proposed package is a breakthrough for the provision of childcare in this country. After almost two decades of campaigning by NWCI and other advocacy groups, the Government is finally acknowledging its responsibility to tackle the enormous affordability crisis in childcare,” said Orla O’Connor, Director of the National Women’s Council of Ireland (NWCI) “The childcare package is the first step to developing a publicly subsidised universal childcare model, similar to the models available in many other European countries.”

Wondering how Budget 2017 will affect you? Check out TheJournal.ie’s budget calculator.

 

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When not writing about all things personal finance, You & Your Money’s editor Conor Forrest enjoys reading, football and getting lost in an ocean of Wikipedia articles.

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