This was certainly a Budget where spending took priority and where the spending was practically already disclosed.
Housing was a major recipient of spending plans:
- €2.3bn allocated to the housing programme for 2019
- €93m for Local Authority house funding for 2019
- €1.25bn allocated for the delivery of 10,000 new social homes in 2019
- €123m for the Housing Assistance Payment scheme €60m capital funding for emergency accommodation
- €30m for homelessness services
- An extra €69m in 2019 for the Serviced Sites Fund for Local Authorities to provide affordable housing
- Tax relief on interest for landlords increased to 100% from 01/01/2019
So far in this Government, we have spent €4bn on housing supports. It is hard to see where the progress has been made with this spending, the continuing lack of available housing and affordability moving further out of reach for people.
Health was a big beneficiary of spending too:
- €700m to meet the 2018 shortfall
- €1.05bn additional spending for 2019
- Additional €84m spending on Mental Health Services
- Additional €150m spending for Disability Services (congrats to Finian McGrath!)
- Extra €20m for the National Treatment Purchase Fund
- A further €174m for the capital budget
This means an increase of 15% over the past two years in Health. This cannot be sustainable.
While nobody could object to spending being increased in these vital areas, throwing money at them is not the total solution. It requires top class management with responsibility and accountability at the forefront.
Allied to the spending increases in benefits:
- Reduction in prescription charges from €2 to €1.50
- €10 reduction in the monthly Drugs Payment scheme threshold from €134 to €124
- The €25 weekly increase in the weekly income threshold for GP visit cards.
Social Welfare spending increases include:
- €5 per week increase on all payments from next March
- A 100% Christmas bonus this year
- Increases in the income thresholds for One-Parent Family Payment and Working Family Payment
- Increases in U-12 Child Payment of €2.20 p.w. and O-12 Child Payment of €5.20 p.w.
- A €25 increase in the Back to School clothing and footwear allowance.
Education spending increases by 6.7% bringing the total budget for 2019 to €10.8bn with the intention of school posts, additional special needs teachers and school building and refurbishment costs.
Business and Agriculture has to be assisted because of Brexit:
- €950m funding in total for the Department of Business and Enterprise for 2019 to continue to attract new businesses
- A Future Growth Loan Scheme for SMEs and the Agricultural and food sector of up to €300m
- The National Training Fund levy increases from 0.1% to 0.2% to fund an additional 15,000 places in higher education, further education and training sectors
- €110m for essential Customs requirements
- The KEEP share option scheme to attract and retain employees is increased to 100% of salary and a lifetime limit increase to €300,000
- €60m to improve resilience in the farm sector
- Extension of 3 years in the Young Farmers Stamp Duty exemption
- Stock Relief for farmers and income averaging to be continued
- €53m additional for Rural Regeneration and Development Fund
- Additional €286m spending on new transport infrastructure
- Tax relief for start-up companies to be extended to 2021
- Film Tax Credit continued with a 5% addition for regional spending
Other Government Departments including Justice and Crime, Defence, Environment, Sport and Culture all received an increase in their 2019 budget to assist in funding specific projects of capital and current funding nature.
Taxation benefits for 2019 include:
- Increase in 20% rate band per individual by €750
- The Home Carer Allowance increased by €300
- The Earned Income Credit for self-employed increased by €200
- The third rate of USC reduced from 4.75% to 4.5%
- The second rate band of USC increased from €19,372 to €19,874
- An increase in the Minimum Wage to €9.80 per hour. Perversely, an individual working 20 hours per week on the minimum wage takes home less than a person on Social Welfare unemployment benefit.
- An increase in the lifetime exemption threshold from €310,000 to €320,000 for gifts/inheritances between parents and child.
Taxation raising measures include:
- Increase in VAT rate back to 13.5% from 9% for hotels, restaurants and hairdressers to raise €560m p.a. The 9% remains for papers and sports facilities and now for electronic media
- A 1% increase in VRT on diesel cars to raise €25m p.a.
- Betting Tax doubled on bets wagered in the State and an increase from 15% to 25% on commission earned by betting intermediaries to raise €52m p.a.
- Cigarettes to increase by 50c on a packet of 20 (the only “Old Reliable” touched) and increases in related tobacco products to raise €62m p.a.
- National Training Fund Levy will raise €77m p.a.
- A new exit tax where companies go non-resident with unrealized gains taxed at 12.5% with yield unknown
- Introduction of a new tax regime for Controlled Foreign Companies with yield unknown
- The PAYE modernization scheme hurtling down the track for 1st Jan 2019 which is to simplify matters for Employers is stated to raise an extra €50m for the Exchequer in 2019. Who needs modernization when it costs money!!
If you require assistance in relation to Budget 2019, please do not hesitate to contact us on (1) 799 8300