Budget 2010:
Restoring, restructuring, recovering

GDP has fallen by 7.5%. An adjustment on day to day spending of approximately €2 billion will be made in 2011.

Regaining international competitiveness a key focus of this Budget.

The Department of Finance is expecting return to growth in the next 6-9 months.

Average GDP for 2010 is expected to fall by 1.25%.

In 2011 changes to the income tax system will be made in 2011 whereby there will be a replacement social welfare contribution system and a reform of the income tax bands.

From 2011 income tax will be applied on a progressive basis to those on higher incomes.

Introduction of Carbon tax effective to €15 per tonne. Petrol and diesel will increase with effect from midnight tonight. Oil and gas will increase from 1 May 2010.

Irish domicile levy of €200,000 will be introduced with effect from 2011 for those whose world income exceeds €1m and Irish capital in excess of €5m.

The €4 billion adjustment will comprise of the following:
€1 billion savings in public service pay;
€766 million savings in social welfare;
€980 million savings in day to day spending;
€960 million savings in investment projects.

Property Tax planned.

Plans under way to introduce water charges based on consumption.

Reductions in Job Seekers allowance for those 24 or under.

Reductions in Job Seekers allowance for those aged over 24 where they refuse job offers.

State pension remains unchanged.

Child benefit decreased. Legal and logistical obstacles to making the child benefit taxable or means tested.

Increase in Qualified Child Allowance for Welfare-dependent families.

New universal social contribution will replace PRSI, health and income levy.

Mortgage interest relief for those who bought at the height of the property market to continue until 2017.

Car scrappage scheme to be introduced. VRT reduction of up to €1,500 will be available under this scheme for cars of 10 years and older.

Excise duties on alcohol products to be reduced:
12c per pint of beer or cider;
14c per half glass of spirits;
60c per bottle of wine.

No changes to excise duties on tobacco products.

Corporation tax rate of 12.5% will not change – it is here to stay.

Recommendations of Innovation Task Force in relation to R&D credits to be considered.

Exemption for start-up companies extended to companies incorporated in 2010.

Changes to strengthen Ireland’s competitive edge in the funds sector to be introduced in Finance Bill.

Accelerated capital allowances for energy efficient equipment to be enhanced.

Prescription charge of 50c to be introduced for those on medical card scheme.

0.5% reduction in the standard VAT rate with effect from 1 January 2010.

Public Service Pay reductions as follows:
15% for those on salaries over €200,000;
12% for those on salaries between €165,000 to €200,000;
8% for those on salaries between €125,000 and €165,000;
5-8% for those on salaries under €125,000.

Taoiseach’s salary to be reduced by 20%.

Public service pensions to be based on “career average” earnings rather than final salary at retirement.

Pension lump sums below €200,000 should not be taxed. The tax treatment of amounts over €200,000 will be considered by National Pensions Framework.

See our Budget 2010 tax calculator here

Personal tax tables

Budget 2010 commentary and analysis PDF

Finance Bill 2010 commentary and analysis

There were few surprises in the 2010 Budget speech, with most of its key features widely leaked in the pre-Budget weeks. The Minister was true to his word and resisted further tax gathering measures in his Budget, apart from the Carbon Tax, which was itself signaled in the Commission on Taxation report. The main focus of the budget was on cutting public expenditure and stabilising the Budget deficit and this is to be welcomed. The Minister achieved savings of €4bn as targeted with, as expected, a large slice coming from public service pay and social welfare cuts. Read our analysis below:

Income tax	Corporation tax	Indirect taxes	Government reform
Individuals	Business tax	Financial services

Budget 2010: Restoring, restructuring, recovering

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Budget 2010:
Restoring, restructuring, recovering