Budget 2016: Main points of what we know so far

Reductions in USC, increase in Old Age Pension and more teachers to be announced today

Minister for Finance Michael Noonan and Minister for Public Expenditure Brendan Howlin will today announce the last budget of the Fine Gael-Labour Coalition’s term of office.

The two parties are directing their resources at reductions in the Universal Social Charge as they seek to lay the foundation for re-election.

However, the €1.5 billion package of tax cuts and spending increases also contains a number of sweeteners.

Here are the main points we know so far:

  • Mr Noonan will spend some €600 million on USC changes, the centrepiece of which will be a 1.5 per cent reduction in the 7 per cent rate to 5.5 per cent. The 3.5 per cent and 1.5 per cent rates will be reduced by half a per cent each.
  • The entry point to the USC will rise from €12,012 to €13,000. The threshold to the new 5.5 per cent rate will also rise from €17,756 and the threshold for the highest, 8 per cent USC rate will also increase from its current €70,044.
  • A tax credit for the self-employed, akin to the €1,650 PAYE tax credit, will be given to to the self-employed and farmers. It will be rolled out over a number of years and will be worth around €500 next year.
  • Mr Noonan will increase a tax credit for people who are carers in the home from € 800 to € 1,000.
  • The inheritance tax threshold for children inheriting the family home will raise to €280,000, the start of a process that will see it increase to €500,000 over a three to five year period.
  • Capital gains tax for the self employed and entrepreneurs will drop to 20 per cent from 33 per cent.
  • The Old Age Pension will increase by €3 per week.
  • The Fuel Allowance will be increased by €2.50 per week.
  • The Christmas bonus for social welfare recipients will be restored to 75 per cent of the recipient’s weekly payment. It means a pensioner on the current rate of €230 will receive a bonus of €173 and a dole claimant receiving unemployment benefit of €188 will get a bonus of €141.
  • Child benefit will increase by €5 per week.
  • The respite care grant for carer’s will be restored to its previous level of €1,700.
  • The price of a pack of cigarettes is to increase by 50 cent
  • Children between the age of three and five will be entitled to free pre-school education until they reach primary school.
  • More teachers will be hired to reduce the pupil-teacher ratio from 28:1 to 27:1.
  • Minister for Justice Frances Fitzgerald is expected to confirm the recruitment of up to 700 extra gardaí and to announce investment in specialist operations to stem the number of burglaries.
  • Funding to tackle homelessness will increase by 20 per cent to €70 million.
    There will also be a €56 million increase in capital spending for housing.

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