BU D G ET S P ECI A L

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE -

MANY work­ers will be bet­ter off fi­nan­cially next year than they would have been at the height of the Celtic Tiger in 2006 — as long as their pay packet is no more than €70,000. This is be­cause many such earn­ers will lose less of their in­come to tax un­der Bud­get 2018 than they did un­der Bud­get 2006. Not all of those earn­ing up to €70,000 will end up with more take-home pay next year than they did in 2006 — but those that don’t should be close to bridg­ing the gap.

How­ever, high earn­ers will still be con­sid­er­ably worse off next year than they were in 2006 — as it is largely these who have been worst hit by the ex­tra taxes in­tro­duced by the Govern­ment dur­ing the re­ces­sion. So the take-home pay of many high earn­ers will still be much lower next year than it was at the height of the boom.

These are some of the find­ings of an anal­y­sis by the Sun­day In­de­pen­dent into the im­pact of Bud­get 2018 on the pock­ets of work­ers, pen­sion­ers and sin­gle moth­ers on wel­fare.

For this anal­y­sis, we teamed up with ex­perts at Pricewater­house­coop­ers, Deloitte, KPMG, EY and the Ir­ish Na­tional Or­gan­i­sa­tion of the Un­em­ployed (INOU) to find out which peo­ple will be worse — or bet­ter — off un­der Bud­get 2018 than they were in 2006. To en­sure our fig­ures were com­par­a­tive, we as­sumed that the earn­ings or in­come for each of the in­di­vid­u­als or cou­ples we ex­am­ined was the same in 2006 as it will be in 2018.

Some of those on so­cial wel­fare are among the big­gest win­ners of the Bud­get mea­sures in­tro­duced since the Celtic Tiger, our anal­y­sis found. For ex­am­ple, a sin­gle mum on so­cial wel­fare could now be get­ting more than twice as much wel­fare pay­ments as she did at the height of the Celtic Tiger. Other win­ners in­clude pen­sion­ers on mod­est in­comes — and the self-em­ployed.

Here’s the full low­down. at the height of the Celtic Tiger in 2006 — and this is largely be­cause less of your earn­ings are get­ting hit for the higher rate of in­come tax.

Bud­get 2018 has in­creased the point at which earn­ings get hit for the higher rate. So you will now pay the higher rate on earn­ings over €34,550 — rather than on earn­ings over €33,800, as had pre­vi­ously been the case. At €34,550, the amount you can earn be­fore the higher rate is still be­low the av­er­age wage. How­ever, the higher en­try point for the top tax rate is a step in the right di­rec­tion.

An­other rea­son why your take-home pay is bet­ter off now than in 2006 is that the tax credit for PAYE work­ers is also higher to­day than it was back then.

At €30,193, you will take home €1,817 more pay (or €35 more a week) af­ter pay­ing tax next year than you did in 2006, ac­cord­ing to Lau­ren Clabby, as­so­ciate di­rec­tor with KPMG. You will still pay more tax levies (through the USC) next year than you did in 2006 (through the then health levy) and your PRSI bill will also be higher. How­ever, you will pay less USC next year than you did last year due to the cuts an­nounced in Bud­get 2018.

You don’t, how­ever, get any ben­e­fit from the Bud­get 2018 cuts to the USC — as the USC does not ap­ply to your State pen­sion or pri­vate pen­sion. (The State pen­sion is ex­empt from the USC and so too is in­come from pri­vate pen­sions if that in­come is be­low €13,000 a year, as is the case for each in­di­vid­ual in this cou­ple.)

You may also be dis­ap­pointed by the lack of move­ment on the in­her­i­tance tax thresh­olds in last Tues­day’s Bud­get. The Govern­ment had pre­vi­ously com­mit­ted to in­creas­ing the tax-free thresh­old on in­her­i­tance tax from a par­ent to a child to €500,000. Last year, the Govern­ment raised that thresh­old to €310,000, al­low­ing a child to in­herit up to €310,000 from a par­ent with­out hav­ing to pay in­her­i­tance tax. How­ever, this thresh­old wasn’t in­creased un­der Bud­get 2018 and so should you de­cide to leave your fam­ily home to one or both of your chil­dren, you may well trig­ger an in­her­i­tance tax bill for your chil­dren when do­ing so — depend­ing on the value of the home. the amount of money you can earn as a mar­ried cou­ple be­fore get­ting hit for the higher rate of in­come tax.

The hike in com­mer­cial stamp duty how­ever is a big down­side of Bud­get 2018 —if you buy farm­land next year, your stamp duty bill could be three times what it pre­vi­ously was.

Newspapers in English

Newspapers from Ireland

© PressReader. All rights reserved.