Budget cuts aim to reshape Ireland
Finance Minister Michael Noonan presented first budget delivery yesterday
Howlin admitted, “As a Labor Minister I never expected that I would be making the type of announcements I am making today. We have been forced to make difficult and unpalatable decisions.”
When Noonan delivered stage two of the budget on Tuesday he emphasized its primary function was to create jobs.
Noonan said he was bringing in a range of measures to boost smaller firms, including tax credits on the first €100,000 spent on research and development.
A corporation tax exemption for new start-up companies was extended for three years to 2014, a move aimed at helping to kick-start the domestic economy, which would be the “real engine” for job creation, Noonan said.
There will also be incentives to be outlined in the Finance Bill, which will be delivered later, for the international financial services industry in Ireland.
There would be significant reductions in the rate of stamp duty for the transfer of commercial property, including farms, to encourage the transfer of family agricultural businesses on to the next generation.
One of the most significant tax changes in the budget will be to ease the burden of the Universal Social Charge, applied to the earnings of virtually all workers.
The threshold at which the 4% levy kicks in is to be raised from €4,004 to €10,036 from January 1, benefiting 330,000 people.
VAT rates will increase from 21% to 23%, but Noonan claimed that should not drive customers across the border to shop as the rate differential with Northern Ireland was now only 3% when it was 6% a few years ago during the big shopping rushes. He pledged there will be no more VAT increases in the term of the present government.
Cigarettes go up by 25 cents for a packet of 20 -- not enough, according to anti-smoking campaigners -- and petrol rises up by up to three cents per liter following a carbon tax increase of €5 per ton, and Environment Minister Phil Hogan is to increase motor tax in the New Year to raise €47 million,
In an attempt to add some optimism to the crippled property market, a new capital gains tax incentive has been drawn up. The gains on any property purchased between midnight on budget day and the end of 2013 and held for at least seven years will be exempt from the tax.
For first-time buyers who bought homes during the property boom between 2004 and 2008 and now facing negative equity, mortgage interest relief will be increased to 30%.
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