Sinead Moriarty

The squeezed middle won’t be loosening belts any time soon

SO, HERE we are, witnessing our first balanced Budget for 10 years. Finance Minister Paschal Donohoe has found some wiggle room thanks to a strong corporate tax intake. The minister had promised to help the “squeezed middle”, who bore the brunt of the tax burden during the austerity years.

We are more than 10 years on from the beginning of the financial crisis, and many households across the country are still struggling after the years of austerity that followed.

So, what have the squeezed middle-income earners actually gained in this Budget?

Mr Donohoe outlined a range of modest tax cuts which will cost the Exchequer €350m.

The minister has widened the tax band by €750 and dropped the rate of the Universal Social Charge (USC) to 4.5pc (down from 4.75pc last year).

These changes essentially mean that a single worker earning €45,000 a year will save €150 a year on income tax, and a further €77 on USC – approximately €4 more in their hand per week.

A married couple with one income of €55,000 will save €150 in income tax a year and a further €102 in USC – or about €5 a week. Any increase is welcome, but it’s hardly life-changing.

One of the biggest issues for the squeezed middle is affordable childcare. Women are staying at home to look after their children because the cost of childcare is so prohibitive.

Mr Donohoe has promised to increase the threshold for families to access the Affordable Childcare Scheme.

The minister’s proposal will see an extra 10,000 children bought into the fold on top of the 42,000 already benefiting from the payments that range from €50 to €145 per week for children between six months and 15 years of age.

Last year, parents who earned €47,500 or less could avail of the scheme. But that threshold has been raised to €60,000 per year.

This will certainly help to lessen the burden of childcare for many more families somewhat.

A welcome, but all too short, parental leave has been introduced. Two weeks of paid leave will be provided to every parent of a child under one year, with the objective to increase this to seven weeks over a number of years. Let’s be honest here – two weeks will make very little difference to facilitating women who want to go back to work.

While the Budget looks positive on paper, the bottom line is that the squeezed middle is running to stand still. This modest increase in income will be swallowed up by the ever-rising cost of housing and fuel.

So, here is the point. We understand that Ireland had to pull together during the crisis and we did a pretty amazing job of it. The country has stabilised, the banks are not fully functioning yet, but they are off life-support and we have done an excellent job of continuing to attract quality foreign direct investment in the pharmaceutical and tech sector.

So why do we continue to lean so hard on the squeezed middle? Why do we continue to tax income so aggressively? When will these families get a proper break, when they can really breathe easy for the first time in a decade? Sadly, this Budget is not the solution.