Brian Lenihan delivered the harshest and most austere budget in the history of the state at 3:45 today in Dail Eireann. The eyes of Europe are on Ireland today as we try to get our National budget deficit (€19bn) under control. Below is a summary of the main points of his speech. Economy expected to grow by 2% per annum. IMF and EU Bailout still required, even though they expect growth, purely to protect us from having to borrow from the markets, which could be hugely detrimental and expensive. Income tax changes will bring us back to 2006 levels.

Income Taxes

  • Tax Credits to be reduced by 10% (Currently €3,660 for married couple)
  • Tax Bands reduced by 10% (Currently €36,400 for married couple)
  • PRSI ceiling is abolished
  • Income Levy and Health levy abolished and a new universal Social charge

Example – A Couple on €25,000 will see their net income fall by 2.8%.

Overall Top rate tax - 41% + 7% Social Charge + 4% PRSI

Capital Taxes

  • Section 23 relief will be restricted to section 23 property income. All property based reliefs to be abolished by 2014.
  • Inheritance tax thresholds to be reduced by 20% (Currently €414,000)
  • DIRT increased to 27%, and 30% for longer term deposit accounts
  • Stamp Duty reduced to 1% for transactions up to €1m for everyone.

Other Tax changes

  • 4c increase on petrol
  • 2c increase on diesel
  • No change to cigarettes and alcohol
  • Air travel tax to be reduced to €3, temporarily until end 2011.

Benefits changes

  • Child benefit to be reduced by €10, and a further €10 for a third child.
  • No reduction in the State Pension
  • 4% reduction in working age welfare payments (further reductions in coming years likely)

Other notable points

  • €250,000 cap on public sector salaries.
  • Third level registration fees increased to €2,000. Families with more than one child will pay €1,500
  • Ministers to pool ministerial cars and take a pay cut of €10,000 per annum
  • One of the state jets to be sold
  • Public sector pensions to be cut.
  • No change to the state pension
  • 10% cut in pay to all new entrants to the public sector
  • Following up on last years reform announcements for public sector pensions

If you have any questions please feel free to leave a comment below and we will do our best to respond

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