It’s another year, another budget with fresh hopes grounded on new developments and success. Considering all the elements of current Covid19 uncertainties, employment considerations, taxation matters, welfare and pensions, child care and parenting; the much-awaited Irish Budget 2022 has been announced earlier today.
Paschal Donohoe opened his Budget speech with a reflection on the pandemic. The worst global pandemic in a century was unprecedented, he said, and we couldn’t have predicted the devastation it would cause.
“We are now entering a new phase” as we emerge from Covid and the Budget will seek to address the challenges facing the public and businesses in the years ahead, the Finance Minister said.
Let us walk you through the key takeaways from the economy, policy, tax announcements made by the Irish Finance Minister Paschal Donohoe in the Budget speech.
The Budget will offer supports in line with growing inflation.
Mr Donohoe said: Inflation is expected to hit 3.7% in September, the highest since June 2008. The Budget will aim to respond to this by offering supports as the cost of living rises.
€4.7 billion financial package announced.
Pandemic supports has been extended to April 2022.
The reduced VAT rate of 9% will remain in place.
The reduced VAT rate of 9% for the hospitality sector will remain in place.
TAX will be increased.
Each of the personal tax credits, employee tax credits and income tax credits will be increased by €50. The ceiling of second USC rate band to is to be increased from €20,687 to €21,295.
An increase of € 1500 to Income tax thresholds or rates on income tax standard rate band for all earners, from €35,300 to €36,800 for single individuals and from €44,300 to €45,800 for married couples / civil partners with one earner.
The exemption limits, tax credits, and standard rate bands applicable for the tax year 2022 are set out in detail on the last page.
People working from home will be able to claim income tax deduction amounting to 30% of the cost of vouched expenses for electricity, heating, and broadband in respect of those costs incurred while working from home.
UNIVERSAL SOCIAL CHARGE
The second slab rate of the USC changed to 21,295. No other changes in USC. It is important to note that no one earning less than €13,000 pays any USC at all; for those earning above this level, all their income is caught by the charge. Also, like PRSI, it is a straight charge on what you earn and is not affected by whether you are assessed as an individual taxpayer or jointly with a partner.
On the first €12,012 : 0.5%
On the next €9,283 : 2%
On the next €48,749 : 4.50%
Over €70,045 : @ 8%.
Self-employed income over €100,000: 3% surcharge.
Medical cardholders and individuals aged 70 years and older whose aggregate income does not exceed €60,000 will now pay a maximum USC rate of 2%.
The national wage will also be increased.
The national wage will also be increased by 30c to €10.50 per hour..
A Zoned Land Tax will be introduced in response to the housing crisis.
“I am proposing a two-year lead-in time for land zoned before January 2022, and a three-year lead in time for land zoned after January 2022,” he added.
For vehicle registration tax changes, from January 2022, a revised VRT table be will be introduced.
“When it comes to vehicle registration tax changes, from January 2022, a revised VRT table be will be introduced. Depending on the bands, these will rise by increments of 1%, 2% or 4%. And to encourage the uptake of electric vehicles, the €5,000 relief for Battery Electric Vehicles has been extended to the end 2023.
Increasing excise duties on a packet of cigarettes by 50c.
This means a pack of 20 will now cost up to €15.
Core health spending will increase by €1 billion.
Core health spending will increase by €1 billion to a record level of €20.38 billion. Additionally, kids aged 6 and 7 will be eligible for free GP care with the intention that this scheme will be extended to under 12s. A further 19 ICU beds will also be added to hospitals nationwide next year.
New social housing units.
9,000 new build social housing units will be delivered next year as well as over 4,000 affordable homes.
Welfare.
- The Pandemic Unemployment Payment (PUP) is to remain in place until the end of February.
- An increase of €5 in the main weekly welfare payments.
Weekly pension payments will also increase by €5. - The Living Alone Allowance (for those on pensions) will increase by €3 per week.
- Changes to the income thresholds for Carer’s Allowance will mean a single person earning €350 per week and a couple earning €750 per week will still qualify.
- Parents Benefit is to be increased by two weeks to seven weeks from July 2022.
- The Back to School Allowance will be increased by €10.
- Fuel Allowance payments are set to rise by €5 per week – this kicks in from tonight.
- The full Christmas bonus will be paid to welfare recipients.
- The national minimum wage will increase by 30 cents to €10.50 per hour
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