Budget 2015 - The Day in Review

Yesterday, the 14th October, Minister of Finance, Michael Noonan, and Minister of Public Expenditure and Reform, Brendan Howlin, announced the Budget of 2015. There was much speculation in recent weeks as to what the document would contain; would the Government relieve those who avail of Social Protection? Would they give back to the ‘squeezed middle’? Or would the Government insist on caution and make little to no change in expenditure or on revenue?The first two of the three options were what the Government decided on, although not a pre-election budget, it is what Brian Dobson of RTE described as an entrance into the election cycle.The first half of the budget was announced by Minister Noonan in what was quite a light-hearted speech with references to Robert Frost and his poem ‘The Road Not Taken’. However, there were some notes towards recent austere budgets, saying that “debt is still high in comparison to our other EU members” and that we were “prudent and responsible” with the results being that investor confidence has returned.In Noonan’s speech, the main points were corporate tax, the deficiency of housing, income tax and excise duty, with the latter being an interest to students. Noonan was adamant that corporate tax would remain and that is was a “low, competitive tax rate… key to attracting FDIs.”The 9% VAT for the tourism sector, brought in last year, will be retained as well with Noonan acknowledging its work in employing an extra 23,000 people in the industry. There was bated breath when Noonan said that the low VAT rate was being funded by the 0.6% pension levy but Noonan relaxed the country when he said that this year the levy would not be extended to fund the lower VAT rate but would expire at end of year, with the 0.15% pension levy concluding at the end of 2015.In recent months, students have had great difficulty with student accommodation, in part as a result of Section 50, which saw tax relief for landlords renting to students, expiring at the end of this year and for which UCD Student’s Union and Young Fine Gael have been advocating to be extended. Noonan said that the relief tax had “achieved its objective” and was “no longer needed” but that the lack of supply was to be addressed. The Minister said that “the market is not meeting demands of its citizens” and that the Government would be removing blockages on the construction industry to meet supply.Noonan admitted that “working families have seen falls in both their wages and take-home pay” but assures that the Government will reform the income tax system we currently have, with the reform starting today. The income tax threshold has increased by €1,000 to €33,800 for a single individual and that the higher rate of income tax has seen a decrease from 41% to 40%. Noonan has said that the new thresholds and rates “enhance progressivity” of the tax system and that it “sets the direction and parameters” for the reform and that the Government will “continue to ease the burden for those in the middle.”Excise duty, the tax that the majority students take an interest in, both enlightened and disheartened. The cost of 20 cigarettes increased by 40c, with ‘rollies’ increasing by 25c. However, there was no increase on any alcohol products, diesel or petrol.There was some commotion in the Chamber with the Ceann Comhairle asking the TDs “why do we always have the same voices shouting?” to which Noonan responded to the TDs by saying that no other taxes were going to be raised and that more money was going into the domestic economy. The Minister said that we were at an “important crossroads” and asked whether we should “return to the past… with boom bust policies” or “take the road not yet taken.”Minister of Public Expenditure and Reform, Brendan Howlin, spoke then, with his introduction saying that Budget 2015 “marks an end of budget austerity” and that the Government of Fine Gael and Labour were “forced to reduce expenditure… scale of damage inflicted by a Fianna Fail Government.” The Minister said that the key priorities of the budget were Social Protection, Health, Education and Housing and that he expected expenditure to rise in these areas in future budgets but that this was all dependent on future economic growth.Minister Howlin said that unemployment was falling faster in Ireland than anywhere in the EU and that our current point of just over 11% is expected to fall to 10.2% in 2015. Minister Howlin referenced a number of initiatives being invested in to boost employment and provide skills for the unemployed.However, Minister Howlin said that economic recovery is not an end in itself and that social recovery is a primary focus for the Government. It was announced that €19.4 billion is to go to the Department of Social Protection and that it was the first year since 2009 that there have been no cuts to social welfare. Child benefit is to be increased by €5 per child from January and increased by a further €5 in 2016. €9 is to be increased on the living alone allowance. There is to be a 25% bonus to social welfare at Christmas due to a decrease of those on the Live Register.€8.3 billion is to go to the Department of Education and that there is to be no increase in class sizes but 1,700 full time teaching positions for 920 mainstream teachers, 480 resource teachers and 300 special needs assistants. There is to be a further €530 million increase in capital expenditure for Education.Howlin ended his speech by saying that the recent recovery is a “tribute to the Irish people” and that Irish people will not thank anyone who repeats the mistakes of the past. Opinions of the Budget have been divided, with many coming out and saying they still can’t afford it and that the Government should have given more back, but then there are those who believe that the Government were over-generous, that they are being too dependent on GDP forecasts for the next few years and are dependent on economic growth continuing.