Main Points of Today's Budget
The Minister for Finance unveiled his 2010 Budget earlier today.
The most significant aspect of this budget is a dramatic reduction in Government expenditure across all departments .To review the outline details of these cuts please follow the following link to the Government website.Government Budget Document
The other principal features of the budget are::
- Included in spending cuts are significant salary cuts for civil servants.Their salaries will be cut by of 5% on the first 30k ,7.5% on the next 40k and 10% on the next 55k from January of next year.The big surprise here is that those on less than 30k were hit by a 5% reduction
- As expected social welfare has also been hit with significant reductions in job seekers allo3wance for young unemployed people..
- On the houseing front mortgage interest relief for homes purchased after 01 January 2004 will be available to 2017..This measure was introduced to cushion the blow for homeowners who purchased at the height of the housing boom and may now find themselves in negative equity.
- There were no increases in income tax.
- Child benefit is being reduced by 16 euro per month per child.
- Property tax and water tax are expected to be introduced in 2011 .In addition,in 2011 we can expect a new taxation and social insurance scheme will be introduced to replace the existing rates and charges...
- Included in spending cuts are significant salary cuts for civil servants.Their salaries will be cut by of 5% on the first 30k ,7.5% on the next 40k and 10% on the next 55k from January of next year.The surprise here is that those on less than 30k were hit by a 5% reduction.
- Excise duty on alcohol reduced - 12c cut on beer and cider, 14c cut on a measure of spirits, 16c cut on a bottle of wine
- No change on tobacco tax
- 50c charge for every medical card prescription from April
- Carbon tax of €15 per tonne .Petrol/Diesel prices will increase bu approx 5 cents
- Hospital consultants will see their pay cut by up to 15%
- Irish domicile levy of €200,000 per year for high net worth individuals
- Public servants' pensions to be linked to average salary across career, rather than final salary
- Taoiseach's salary to be reduced by 20%
- Flood relief - More than €70m to be given to help victims and stop future floods
- National Solidarity Bond aimed at small investors to be launched
- Discounted rail vouchers to be given to senior citizen tourists to Ireland
- Scrap page scheme announced - Get around €1,500 off your Vehicle Registration Tax on a new low-emission car, if you trade in a car at least 10 years old
Whether the budget will encourage confidence remains to be seen.By indicating that this is likely to be a harder budget than the two budgets to follow, the Government are working hard to portray a position that we are at the bottom of the recessionary curve,Confidence is a frame of mind but it's foundations need to firmly based on reality. Some factors which may add to confidence include.
- The deatils of the budget will act to eliminate the degree of uncertainty that previously existed .
- Nama will be up and running shortly. The Banking system needs to play a key part inour recovery process.It is incredibly important that we establish the true extent of loss provisions in our banking system,recapitalize and move forward.
- We firmly need taht there needs to be a strong focus on creating more competition in the Banking sector
- With the European economies coming out of recession it is likely that we will follow but at a slower pace.
- The downward trend in wages and the dramatic fall off in property prices will make us more competitive.Our low tax regime remains very attractive to outside investors.
- Taxation from property related transactions has fallen dramatically over the past two years.The introduction of a property tax in 2011 will help even out the flow of taxation from this source.
- If we are at the bottom of the curve the only way is up.
For many years economists assumed our property prices were simply based on supply and demand.This is not true as an equally important ingredient is the supply of funds for properly buying. Poor supply of funds and inadequate competition among lenders will hinder demand and keep prices down. The market needs an adequate supply of capital to function properly but lenders need to be very prudent in the level of funds they are prepared to advance for home buying so that prices don't start to run away again.