Change is here...
Enda Kenny and Eamon Gilmore have finally agreed to join forces and enter government. The new coalition certainly has their work cut out for them but both leaders have confirmed that key issues will be addressed immediately. Both parties backed the programme for government which had been criticised by some as a mere continuation of the policies being pursued by Fianna Fail. However, the new government do not agree with this and the details of the programme for government would also suggest that change is on its way.
Among the issues addressed in this document are the following:
· Current tax rates, bands and credits will be maintained. This is good news for now as many people would have feared that the new government would make changes to increase taxation.
· A minimum tax rate of 30% will apply to high earners. This will be achieved by reducing, capping or abolishing property tax reliefs and shelters. The high earners restriction, introduced by the outgoing government had already resulted in a 30% minimum rate for high earners but this was limited by the reliefs covered in this restriction. We don't, at this point have full details of the changes to be implemented by the new government but will a 30% minimum rate be enough? Many people may feel that high earners should pay even more tax.
· Water charges will be introduced. Details of these charges are not yet available and some work has to be done before they are implemented. However, the idea of such a charge is very frightening for families already struggling.
· A detailed review of the USC will take place. As expected there has been no suggestion that this will be abolished. We all hope that any changes in this legislation will be helpful for those who are at the lower end of the economy i.e. people earning the minimum wage, medical card holders etc.
· The national pension reserve fund will be used to fund certain expenditure. This fund was set up in 2001 in order to take care of social welfare and public service pensions from 2025 onwards. Such provision was required as it is anticipated that the funds needed in the future will dramatically increase due to the ageing of the population. Any suggestion that this money will be invested elsewhere is somewhat worrying for future pensioners.
· Within the first 100 days of the new government a jobs fund will be resourced. This fund will provide 15,000 additional places in training, work experience and educational opportunities for those out of work. This is good news for many young people who have been out of work for a long time or who have not yet had the opportunity to enter the work force.
· The 13.5% VAT rate will be cut to 12%.
· The 8.5% employer PRSI rate for lower paid employees will be halved and there will be no increase in 10.75% employer rate. This is also good news as a reduction in employer costs can only help with job creation.
· The reduction in the minimum wage announced by the outgoing government will be reversed. Again, this is good news for people who have experienced changes in their contracts over the last few weeks reducing their hourly rate.
· Travel tax will be abolished. The intention here being to help airlines to restore lost routes. This is good news for airline operators who are struggling as many people no longer have the disposal income to fund holidays.
· The eligibility criteria for the back to education allowance will be expanded thus resulting in opportunities for some people who had not previously qualified for this support.
· A number of measures to support SMEs are included in the document such as an end to upward only rent reviews for existing leases and the introduction of a single business tax for "micro enterprises" which will make starting a business less daunting.
· The government will undertake a review of the options for the implementation of the site valuation tax. As part of this review they will take into account the number of households in mortgage distress. We hope that this means that there will be potential relief available for individuals in certain circumstances i.e. not purely based upon the value of the property.
· The government has confirmed that welfare fraud will be tackled. The outgoing government had made some progress in this area and the new government has stated that even tougher measures will be implemented. This is a welcome move as the reduction of the number of people receiving benefits to which they are not entitled can only be helpful in freeing up funds for those genuinely in need.
· There is no proposal to cut child benefit. This is obviously welcomed by anyone with children and hopefully the government will be able to maintain the current levels for the foreseeable future.
· The document includes a deferral of the recapitalisation of the banks and an end to the HSE with all functions to return to the department of health. This has been coupled with the introduction of universal health insurance - another charge for people already paying taxes, social security and USC?
Only time will tell how the above plans will pan out but undoubtedly there will be change! For more information please contact us at email@example.com