BUDGET 2015 IS THE FIRST BUDGET THAT TAKES IRELAND FIRMLY FROM CRASH TO RECOVERY - KENNY

Posted on November 5, 2014 5:52 PM   |   Permanent Link   

Speaking on the Finance Bill 2015

I would like to make some brief comments on the Finance Bill, which is the legislation that underpins the first budget that takes Ireland firmly from crash back to recovery. GDP growth of 4.7% is forecast in 2014 and 3.9% in 2015.

1.92 million People will be at work at end of 2014 which is up by 80,000 since the low point in 2012. An additional 48,000 is forecast by end of 2015.

There are a number of positive aspects of the Budget that I want to emphasise in particular.

In Budget 2015, all the levers of the tax system including tax thresholds, bands and rates have been utilised to target reliefs squarely at low and middle income workers and households. In terms of single PAYE workers, for example, somebody earning €25,000 will see a 4.6% reduction in their total tax bill, including income tax, USC and PRSI; a person earning €45,000 will see a 3.9% reduction and a person on €70,000 will see their total tax bill reduced by 2.9%. Similarly, a married, one-income PAYE earner on €25,000 will see a reduction of 8.4% in their total tax paid including income tax, USC, and PRSI; a similar person on €45,000 will see a 5.0% reduction and a person on €70,000 will receive a 3.1% reduction in their total tax bill. This is clearly a progressive package of tax measures. More tax is being paid by the highest income earners than the lower end and the bottom line is that reliefs have been targeted at low and middle income workers.

This highlights the government's commitment to making sure that low and middle income earners and families are prioritised when it comes to feeling the benefit of the emerging recovery in their pockets.

In Budget 2015, a relief from Deposit Interest Retention Tax, better known as DIRT tax, for first time house buyers was announced. This applies to savings used by first time house buyers towards the deposit on a house. This is to apply to houses bought between 14th Oct 2014 and 31st December 2017. The refund of DIRT will be for up to 4 years prior to the purchase date - and will apply to the amount of DIRT charged on deposits up to the value of 20% of the purchase price. By way of an example - if a house costs 200,000 Euro - a first time buyer will be able to claim a refund of DIRT paid on the first €40,000 that they had on deposit up to the date of purchase. The refund will be for up to 4 years of DIRT. So if there was €40,000 in an account that was going to be used to pay for a deposit on a house, and that account paid 3% interest, that would mean DIRT of about €1600 over 4 years. Under this refund scheme - that €1600 would be refunded by Revenue to the first time house buyer. I warmly welcome this initiative which is a real benefit for first time house purchasers

A total of €808.3 million is allocated for housing programmes, which is a huge investment and the first step over next number of years in very serious and significant investments in social housing. I welcome this aspect of the budget in particular, it is of great importance given the housing crises that is so evident and which I am approached about almost daily.

Local authorities are to provide 946 housing units through direct building and acquisition and 440 housing units will be provided through voluntary housing bodies and co-operatives. Up to150 new homes will be provided in the community for people with disabilities who are leaving institutional care and 400 new housing units will be provided for people with specific needs. €40.4 million will be provided for approximately 7,600 housing adaptation grants for older people and people with a disability.

1,000 vacant housing units will be refurbished and brought back into use in 2015. An extra €3 million will be provided for regeneration/remedial works in disadvantaged communities. It is expected that 8,000 households will transfer from Rent Supplement to the new Housing Assistance Payment. Up to 2,000 new transfers are expected under the Rental Accommodation Scheme.

I welcome the extension of the Home Renovation Incentive to include rental properties which will result in better accommodation living standards in the private rented sector.
There has been a lot of attention paid to the soon-to-be-abolished 'Double Irish' tax scheme. I must say I am glad to see that this scheme is changed. I believe it did reputational damage to Ireland. It angered overseas governments because it allowed multinationals to channel untaxed revenues to an Irish subsidiary company, which then paid the money to another company registered in Ireland that is tax resident elsewhere, usually in a tax haven such as Bermuda. In short, it was a tax loophole and it needed to be closed.

The 12.5% Corporation Tax which is a corner stone of the government's Foreign Direct Investment Strategy will not change.

I welcome the Social Welfare improvements announced in Budget 2015. I welcome the beginning of the restoration of the Christmas Bonus paid to long term social welfare recipients with a 25% bonus this Christmas.

In 2015, €1.97 Billion will be paid for Child Benefit with 613,000 families getting an extra €5 per child per month.
The Living Alone Allowance for 177,500 pensioners and people with disabilities will be increased to €9 per week.
I commend this Bill to the House, and I see it as the beginning of the way forward for an Ireland in recovery.