Prescription charge cut of €5 is planned for the Budget

PRESCRIPTION charges for medical card holders under 70 are to be cut by €5 a month in Tuesday’s budget.

A housing agency that lends funds to construction companies to build houses will be another major feature, along with a freeze in alcohol taxes and income tax cuts.

Finance Minister Paschal Donohoe will also announce a huge capital expenditure plan that will concentrate on the construction of housing, roads and schools, the Irish Mail on Sunday has learned.

Cabinet sources last night

An extra €700m has been found to spend

said that due to revenue-raising measures, about €700m extra has been found to spend.

This will bring the Government total purse for additional current spending and tax cuts to €1bn.

Sources at the Department of Health said Health Minister Simon Harris would receive a greater allocation than expected.

The Health Minister, it is understood, has agreed with the Finance Minister to reduce prescription charges for medical card holders under the age of 70 by 50c. Last year, prescription charges for the over 70s were cut by the same amount.

‘At the moment you pay €25 a month maximum if you’re under 70, and this would bring it to €20 a month maximum. So it will save you €60 a year on prescription charges,’ a Department of Health source said. The extra €700m will also allow the Government to pay the social welfare Christmas bonus out of this year’s revenue streams. Last year the Government paid 80% of the pre-crash Christmas bonus.

There will be at least €5 increase on the old-age pension and that may be replicated across all welfare payments.

Alcohol duty will not be increased, according to source at the Department of Finance, and increases in the tax on a packet of cigarettes will not be as substantial as in the past.

A sugar tax will also be introduced but is unlikely to come into force until April.

A €300m tax package is yet to be fully agreed between the Government and Fianna Fáil. But it is all but agreed that there will be an increase in the threshold at which people enter the top income-tax band. It will rise by at least €1,000 from €33,800.

Much of the additional revenue will come from a substantial increase in stamp duty on commercial buildings. A one percentage point increase would bring in almost €100m, and it is expected to rise by several points.

Measures to tackle the housing crisis will form a major part of the Budget day speech. The Government is expected to increase next year’s housing fund by €400m. Funding for such capital expenditure is not classed as part of the €1bn in day-to-day spending.

A new agency is expected to take charge of finance for housing construction but will draw on Nama’s expertise.

Cabinet sources said last night that Independent Alliance Ministers Shane Ross and Finian McGrath were still locked in negotiations.