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Irish Prime Minister Enda Kenny Photo by: Google Images

Ireland’s brutal austerity Budget 2012 will cause the Irish pain

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Irish Prime Minister Enda Kenny Photo by: Google Images

The Irish Government announced one of its toughest budgets on Tuesday with the aim of raising €3.8 billion ($5 billion). Minister for Finance Michael Noonan said that although the budget may be seen as harsh, the Government tried to impose most of the burden onto those who could shoulder it the most.

The opposition has already accused the Irish Government of “dashing the hopes of struggling families with stealth charges and spending cuts”. Fine Gael and Labour believe that the new budget failed to give any hope to those 45,000 people who are unemployed across Ireland.

Michael McGrath, a Fianna Fail TD, told the Belfast Telegraph that it will take the people of Ireland days to recover from the cuts and increases in taxes.
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He said, “Its impact will be felt hardest by low and middle income families with children, by young people with disabilities, by vulnerable elderly people, and by students trying to build a better future.

"You had the option of closing loopholes and targeting higher income earners. Instead you have played your trump card by increasing VAT in the first year of the Government's five year life."

He also said that the Government had not been told by the IMF and the EU to make cuts to child benefits and fuel allowance, or to make cuts affecting vulnerable elderly people. He added, “These were political choices made by Fine Gael and Labour.”

Here are some of the main points for the second day of the budget, as reported by RTE:

Income tax: No increase

VAT: Raised by 2% to 23%

Universal Social Charge: Exemption raised to €10,000 - this affects 330,000 people

Carbon Tax: Increased from €15 per tonne to €20 per tonne

No Carbon Tax on solid fuels

Cigarettes: 25c increase on pack of 20

Alcohol: No change in excise duty

Legislation planned on low-cost alcohol

Motor tax changes to apply from 1 January:

Band A up €56 to €160

Band B up €69 to €225

Band C up €28 to €330

Mortgage Interest Relief:

30% for first-time buyers between 2004 and 2008

25% for first-time buyers in 2012

15% for non-first time buyers

€100 Household Charge: Waived for those on mortgage interest supplement and those in unfinished housing estates

Stamp Duty

No change to stamp duty on residential property

Commercial property rate lowered from 6% to 2%

Farming:

Lower commercial stamp duty rate will also apply to farmland

50% stock relief on registered farm partnerships

100% rate for certain young trained farmers

Incentives for timely transfer of farms before the current owners reach the age of 66

Capital Gains Tax incentive: Applies to property bought by end 2013 and kept for 7 years

Capital Acquisitions Tax: Up from 25% to 30%

Capital Gains Tax: Up from 25% to 30%

DIRT: Up from 27% to 30%

Corporate Tax Rate: To remain at 12.5%

Corporate tax: Exemption for start-ups extended

Research & Development

€100,000 of expenditure can be used as tax credit

Companies can use R&D credits to reward key employees

GDP: 1.3% growth forecast in 2012

Special Assignee Relief Programme: Initiative to attract key staff

50% Employer PRSI pension relief abolished

Approved Retirement Funds: Tax up 1% to 6% on transfer of funds

Gambling: Legislation planned on Internet betting

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