Budget 2010 Highlights

Below is a summary of the key points announced by the Minister of Finance in Dail Eireann on Wednesday 09 December 2009.  For a more detailed analysis please download our Budget 2010 analysis.

• Public sector pay bill to be cut by €1 billion. Pay reduction for high earning public servants will be as follows:

• 8% for salaries from €125k to €165k
• 12% for salaries from €165k to €200k
• 15% for salaries over €200k

• From 1st January 2010 all public sector pay will be reduced as follows:

• 5% - Earnings up to €30k
• 7.5% – Next 40k of Earnings
• 10% - Earnings from €70k - €125k

• Taoiseach salary is to be reduced by 20%.  Ministers and General Secretaries salaries are to be reduced by 15%

• A Carbon Tax is to be introduced of €15 per tonne.

• Petrol or Diesel tax will apply from tonight. Heating Oil and Gas taxes will be introduced from next May. Low income families will benefit from an allowance to offset some of this additional cost.

• Consumptions taxes to be reduced.  Alcohol excise duty to be reduced as follows:

• 12c Beer / Cider
• 40c Spirits
• 60c Bottle of Wine

More Talking Points:

• 0.5% Reduction on standard rate of VAT.
• €4 billion to be cut from overall expenditure to reduce the Budget Deficit, with a cut of €2 billion from day to day spending.
• A return to positive economic growth in Ireland is expected in the next 6-9 months.
• General Price levels will moderate next year but continue to fall slightly.
• Further increases in taxes are not an option given the tax increases of previous budgets.
• A universal social contribution payment will be introduced in 2011, which will replace PRSI, Income Levies and Health Levies. This will be for all, but at a low level.
• Water metering and property taxes are to be introduced in the future. Further details to be announced at a later date.
• All Irish Domiciled Non Resident individuals with worldwide income of more than €1m or Irish Capital Value of €5m will have to pay €200,000 levy per annum
• All pension recommendations from Pension Review body to be considered and reviewed further in 2010
• New single pension scheme to be introduced in 2010, and bring public pensions more into line with private pensions, linking the pension to career earnings average rather than earnings just before retirement. Those retiring in 2010 will not be affected.
• Social Welfare - For new applicants, Job Seekers Allowance to be reduced to €100 per week for those aged 20—21. For those aged 22 – 24 it will be reduced to €150 per week.
• The State Pension is not going to be changed.
• Child Supplement -€3.80 per week increase for the Qualified Child Supplement.
• A National Solidarity Bond will be introduced an open for investment in the New Year. This will be aimed at small investors and the funds will be used to support business and investment growth.
• The Financial Regulator to be asked to extend the 6 month moratorium on mortgage arrears actions to 12 months.
• Mortgage interest relief for first time buyers and those in negative equity to be extended to 2017

Please contact us if you would like to discuss the impact of the budget changes on your finances.  Our team of financial specialists provide a comprehensive financial planning service to examine all the different aspects of your finances and lifestyle.