HOW DID THE BUDGET AFFECT REAL FAMILIES?

THESE case studies done for the Irish Daily Mail by accountants Mazars show how Budget 2016 will benefit you. As we’ve highlighted elsewhere, families and middle income earners do best. The low paid are supposedly a target group. But as you can see from our tables, it’s hard to reward low-income earners with tax cuts. Percentage reductions inevitably reward those on big incomes more. So a single earner on €30,000 gains just €302 from Budget tax cuts – just one third of what his or her counterpart on €70,000 gets (€902). There are minimal gains from USC cuts and the raising of the USC threshold to €13,000 for those lower down the income scale. However, the bulk of their Budget gains comes from an increase to the minimum wage, which is not covered here. Someone working part-time on €10,000 gets no tax benefit whatsoever from the Budget, mainly because they don’t pay any. But even on €15,000, the gain is just €75 a year – or €1.50 a week. And at €25,000, the income improvement is just €227. In sharp contrast, middle-to-upper income families do very well indeed. The biggest winners are the pair of civil servants, who gain around €2,000 a year, no matter what income they are on. This doesn’t include the child benefit, extra free childcare and free GP visits for children, which are worth thousands more. The top gain of them all is the €2,277 for a couple in the public sector on €110,000 a year between them. And that’s not an unusual wage in the public sector where wages average over €900 a week – more than 40 per cent above their private sector counterparts. The gain in our table is boosted by reduced pension charges flowing through to them in the latest Haddington Road Agreement from 2016. Another big winner are pensioners on €87,703, who get €1,004 extra as they are seriously exposed to the 7 per cent USC rate, which will be cut to 5.5 per cent from next year. Pensioners over 70 on less than €60,000 a year escape this level of USC anyway, so their gains are comparatively less now that it has been slashed.

The self employed also do well thanks to their new €550 tax credit, which is worth exactly that into their hand. Thanks to this, a self-employed person on €40,000 will get a major gain of €1,002. But his or her counterpart on €80,000 will pocket €1,452 extra. And the gains are no more than that further up the self-employed income scale as they are hit by high-rate USC on incomes over €70,000. In fairness, the scope for giveaways was limited this year to €750million, almost all of which was spent on cutting the Universal Social Charge. Yet at least this is a start. The bad news is that it would take 20 more budgets of this level to unravel all the pain inflicted during austerity. So roll on 2036!