This year’s budget has delivered modest savings across the board for most employees.
Over the past few years, Budget Day has struck fear into the hearts of many. As a society, we have come to expect austerity, disappointment and dread.
While the predictions for this year’s budget were sunnier than in previous years, An Taoiseach Leo Varadkar, TD, seemed to want to avoid getting people overly excited by describing it as “no big bonanza” and further discouraging joy by warning that there wouldn’t be any “fireworks”.
Budget 2018 has delivered modest savings for employees by decreasing USC, cutting the 2.5pc rate by 0.5pc and the 5pc rate by 0.25pc. Finance Minister Paschal Donohoe, TD, said this would guarantee that full-time workers earning minimum wage would not pay higher rates.
Cutting the 5pc USC rate would reduce the top marginal rate of tax on income up to €70,044.
The threshold for entering the higher rate of tax of 40pc has been increased from €33,800 to €34,550 for a single person – an increase of €750.
An increase in the earned income credit of €200 from €950 to €1,150. #Budget18 #Budget2018 pic.twitter.com/g8NDLJ7TpO
— Deloitte Ireland (@DeloitteIreland) October 10, 2017
Donohoe stated that unemployment is currently at 6.1pc and he expects it to fall to 5.7pc in 2018, adding that the rate of unemployment during the height of the recession was 15pc.
For self-employed people, the earned income credit will increase by €200, bringing it to €1,150 a year starting next year.
CPA Ireland criticised the government for its “failure to end tax discrimination” against self-employed workers, though it did welcome a newly introduced scheme to allow SMEs to give staff share options.
It called the €200 increase “derisory” and pointed out that there is a “significant gap of €500” between self-employed and PAYE workers, which is “unfair and a disincentive to entrepreneurs”.
Meanwhile, employees can be assured that their commute won’t get any more expensive, as petrol and diesel prices have not increased. Your after-work tipple is also unaffected, with the duties on alcohol left unchanged.
Working parents will be pleased to hear that an additional €20m has been allocated towards supporting childcare measures, including the expansion of the free pre-school programme, which Minister Katherine Zappone, TD, said will benefit 20,000 children between the ages of three and four.