For an overview of all the changes outlined by the Minister for Finance Michael Noonan click on the above link as published by the Revenue Commissioners.
Alternatively read the detailed listing below.
Taxation
Income tax
There are no changes in the existing rates or income tax bands. There are also no changes to existing tax credits.
However, Illness Benefit will now be taxed from the first day of payment; previously the first 6 weeks (36 days) were exempt from tax.
Domicile levy
The citizenship condition for payment of the levy is being removed. This will mean that liable non-residents will not be able to avoid the levy by changing their citizenship status.
Universal Social Charge (USC)
People with an income of less than €10,036 will no longer pay the Universal Social Charge. Currently, people with an income below €4,004 do not pay USC.
PRSI
The current relief of 50% of employer PRSI for employee contributions to pension schemes has been abolished (1 January 2012).
PRSI will be expanded to cover rental, investment and other forms of income from 2013.
Value-Added Tax (VAT)
The standard rate of VAT will be increased from 21% to 23% from 1 January 2012. This only affects goods which are already liable to the 21% rate.
The rate of VAT will be reduced from 21% to 13.5% on district heating, for example, where heating is supplied from a central source to a number of business premises within a building. This brings this form of heating in line with other energy suppliers.
Open farms will be liable to charge VAT at 9% on admission fees from 1 January 2012.
DIRT (Deposit Interest Retention Tax)
DIRT will be increased from 27% to 30% for payments made annually or more frequently. DIRT will be increased from 30% to 33% for payments made less frequently than annually. Exit tax on life assurance policies and investment funds are also being increased by 3% to 30% for payments made annually or more frequently and 33% for payments made less frequently than annually. (1 January 2012)
Excise duties
Tobacco Products Tax
Excise Duty on a packet of 20 cigarettes is being increased by 25 cents (including VAT) with a pro-rata increase on other tobacco products. (From midnight on 6 December 2011)
Alcohol
Legislation will be published in 2012 to deal with alcohol abuse issues (including low-cost alcohol sold in off-licenses and supermarkets).
Carbon tax
The carbon tax will be increased by €5 to €20 per tonne on fossil fuels.
The increase will apply to petrol and auto-diesel from midnight, 6 December 2011. Find out more about the impact of this change on page 21 of the Taxation Annexes document (pdf).
The increase will apply from 1 May 2012 to Kerosene, Marked Gas Oil, Liquid Petroleum Gas (LPG), Fuel Oil and Natural Gas. (This is to take account of the effect the increase would have on home heating costs over the winter months.)
The Carbon Tax will not apply to solid fuels, so there will be no increases for peat or coal.
Betting duty
It is proposed to extend betting duty of 1% to remote betting and to introduce a betting intermediaries’ duty (Gross Profits Tax of 15%) to cover betting exchanges. This provision is being legislated for in the Betting (Amendment) Bill. Following publication of the Bill there is a legal requirement to notify the EU Commission 3 months before enactment of the Bill. It is intended that the new taxation regime will commence from the second quarter of 2012.
Property taxes
Household charge
A household charge of €100 is being introduced in 2012. This charge will fund local services, in line with the requirement in the EU/IMF Programme of Financial Support for Ireland. The charge is an interim measure pending design and implementation of a full property tax in 2014.
Owners, not occupiers, are liable. The charge does not apply to social housing or housing provided by a charity. There will be a waiver for those on Mortgage Interest Supplement and for those residing in certain categories of unfinished housing estates. Provision will also be made to allow payment of the charge in instalments.
Mortgage interest relief (MIR)
Mortgage interest relief will no longer be available to house purchasers who purchase after the end of 2012 and will be fully abolished from 2018, as previously announced.
First time buyers in 2012 will get mortgage interest relief at 25%. Non-first time buyers in 2012 will get mortgage interest relief at 15%.
The rate of mortgage interest relief will be increased to 30% for first time buyers who took out their first mortgage between 2004 and 2008.
Stamp duty
The current stamp duty arrangements for residential property will continue to apply with 1% on transactions up to and including €1 million and 2% thereafter.
Multiple stamp duty rates for non-residential properties (including farmland, commercial and industrial buildings) will be abolished. The current top rate of 6% will be replaced with a flat rate of 2% in respect of instruments executed after 6 December 2011. (Midnight 6 December 2011)
Capital Gains Tax
Property purchased between midnight 6 December 2011 and the end of 2013 and held for at least seven years will not be liable for Capital Gains Tax for those seven years.
Section 23 reliefs – small investors
Reliefs in Section 23 type investments will continue at the present rate for investors with an annual gross income under €100,000. These small investors are regarded as being vulnerable to insolvency.
Capital Acquisitions Tax (CAT)
The current rate of 25% is being increased to 30%. This increase applies in respect of gifts or inheritances taken after 6 December 2011.
The current Group A tax-free threshold is being reduced from €332,084 to €250,000. This reduction applies in respect of gifts or inheritances taken after 6 December 2011. Group A applies where the beneficiary, the person receiving the benefit, is a child of the person giving it. This includes a stepchild or an adopted child.
Capital Gains Tax (CGT)
The current rate of 25% is being increased to 30%. This increase applies in respect of disposals made after 6 December 2011.
Property purchased between midnight 6 December 2011 and the end of 2013 and held for at least seven years will not be liable for Capital Gains Tax for those seven years.
Pensions
Approved Retirement Funds
The tax on the value of assets in an Approved Retirement Fund (ARF) at 31 December each year is being increased from 5% to 6% for ARFs with asset values over €2 million (or, where an individual owns more than one ARF, where the aggregate value of the assets in those ARFs exceeds €2 million). (31 December 2012 and future years)
It is proposed to apply a higher final liability tax rate of 30% to the transfer of transfer of ARF assets on the death of an ARF owner to a child of the owner aged over 21. The details of this will be published in the Finance Bill.
Personal Retirement Savings Accounts (PRSAs)
The provisions which apply to ARFs will also apply on the same basis to “vested” PRSAs, where the assets are retained in the PRSA rather than being transferred to an ARF. This includes an increased deemed distribution percentage of 6% for vested PRSAs with assets in excess of €2 million. Further details will be published in the Finance Bill. (31 December 2012 and future years)
Employer PRSI on pension contributions
The current relief of 50% of employer PRSI for employee contributions to occupational pension schemes and other pension arrangements is being removed. (1 January 2012)
Motor tax rates
Motor tax rates for all categories will increase. (1 January 2011)
Motor tax for cars in band A will go up from €104 to €160, and band B goes up from €156 to €225. Band C will go up from €302 to €330, Band D – €447 to €481, Band E – €630 to €677, Band F – €1,050 to €1,129, Band G – €2,100 to €2,258.
Motor tax rates based on engine size will also increase. For example, engines with 1,001 to 1,100cc will go from €259 to €278; 1,601 to 1,700cc engines will go from €471 to €506; 2,001 to 2,100cc engines will go from €784 to €843.
Motor tax on electric vehicles will increase from €146 to €157.
You can find full details on these changes from page 27 of the Taxation Annexes document (pdf).
Vehicle Registration Tax
The current CO2 bands will be reviewed with a view to adjusting the bands by 1 January 2013.
For full details see Annex C of the Summary of 2012 Budget and Estimates Measures (pdf).
Corporation tax
The 3 Year Tax Relief for Start-up Companies scheme provides relief from corporation tax on the trading income and certain gains in the first 3 years of trading. It is being extended to include companies which start up in 2012, 2013 or 2014.
Farmers
Stock Relief for Registered Farm Partnerships
An enhanced 50% stock relief (100% for certain young trained farmers) for registered farm partnerships is being introduced and will run until 31 December 2015 subject to clearance with the European Commission under State Aid rules.
Measures to incentivise timely farm transfers
Full retirement relief from CGT for intra-family transfers will be maintained for individuals aged 55 to 66. An upper limit of €3m on retirement relief is introduced for business and farming assets disposed of within the family (where the individual transferring the assets is aged over 66 years). This will incentivise earlier transfer of farms.
(The current unlimited amount applies for a transitional period of two years for individuals currently aged 66 or who reach that age before 31 December 2013.)
The current upper limit of €750,000 for assets transferred outside the family for individuals aged between 55 and 66 years will be maintained. The upper limit for retirement relief for business and farming assets transferred outside the family is reduced from €750,000 to €500,000 for individuals aged over 66 years.
(The current upper limit of €750,000 applies for a transitional period of two years for individuals currently aged 66 or who reach that age before 31 December 2013.)
Full details of these measures will be set out in the Finance Bill.
Social Welfare
The total adjustment in Social Protection spending is €475 million or just over 2% of the Department of Social Protection’s spend.
People of working age
There will be no changes to weekly rates of social welfare payments.
Jobseeker’s Benefit and Allowance
Where a Jobseeker’s Benefit recipient is working for part of a week, the payment entitlement will be based on a 5-day week rather than a 6-day week. This means that for each day that a person is unemployed, one-fifth of the normal rate of Jobseeker’s Benefit is payable and if they get part-time work for 2 days, they will get three-fifths of the normal Jobseeker’s Benefit for that week. (July 2012)
Sunday working will be taken into account when calculating the amount of Jobseeker’s Benefit or Jobseeker’s Allowance to be paid. (January 2013)
One-Parent Family Payment
The upper age limit of the youngest child for new claimants will be reduced to 12 years in 2012. (It is currently 14 years for new claimants.) It will be reduced further to 7 years on a phased basis in following years.
The means test for OPFP is being amended:
- The amount of earnings disregarded in the One-Parent Family Payment means test will be reduced from €146.50 to €130.00 per week in 2012 for new and existing recipients. Further reductions will be introduced over the following 4 years. (January 2012)
- The temporary payment of half of the rate of One-Parent Family Payment where the recipient’s earnings exceed €425 per week will be discontinued. Existing recipients of the temporary payment will not be affected. (January 2012)
People getting One-Parent Family Payment can get half-rate Jobseeker’s Benefit, Illness Benefit or Incapacity Supplement if they satisfy the qualifying conditions. These half-rate payments will cease for applicants for Jobseeker’s Benefit, Illness Benefit and Incapacity Supplement. (January 2012)
Farm Assist
The rate of payment will not change. The assessment of means from self-employment, including farming, is being raised from 70% to 85%. (January 2012)
The deductions from income for children are being halved to €127 per year for each of the first two dependent children and €190.50 per year for each subsequent child. (January 2012)
Back to Education Allowance
The Cost of Education Allowance, the annual grant which accompanies the Back to Education Allowance, will reduce from €500 to €300. (2012)
Employment Schemes
Community Employment
Entitlement to a Community Employment payment and another Department of Social Protection payment at the same time will be phased out over 3 years. From January 2012 new participants on Community Employment scheme will not be able to claim another social welfare payment at the same time.
If a person is on a Community Employment Scheme and One Parent Family Payment, Deserted Wife’s Allowance/Benefit or Widow(er)’s Pensions, payment of two qualified child increases will cease for both new and existing recipients.
The training and materials grant for Community Employment will reduce from €1,500 to €500 per participant per annum. (January 2012)
Job Initiative
In the Job Initiative scheme the materials allowance will be reduced and payment of the training budget will be discontinued.
Children
Child Benefit
Over two years the rates of payments of child benefit will be standardised for all children.
Child Benefit will be maintained at €140 per month for each of the first two children. The rates for the third and subsequent children will be standardised at €140 per child per month over the next two years.
The rate for the third child will be €148 and for the fourth and each subsequent child will be €160. (January 2012)
The additional monthly payment for twins and triplets will be maintained but the grant of €635 paid at birth, at 4 years of age and at 12 years of age for these multiple births will cease. (January 2012)
| Number of Children | Current Rate | 2012 Rate |
|---|---|---|
| 1 child |
€140.00
|
€140.00
|
| 2 children |
€280.00
|
€280.00
|
| 3 children |
€447.00
|
€428.00
|
| 4 children |
€624.00
|
€588.00
|
| 5 children |
€801.00
|
€748.00
|
| 6 children |
€978.00
|
€908.00
|
| 7 children |
€1,155.00
|
€1,068.00
|
| 8 children |
€1,332.00
|
€1,228.00
|
Back to School Clothing and Footwear Allowance
The age of eligibility for the Back to School Clothing and Footwear Allowance will be raised from 2 to 4 years of age. (2012)
The Back to School Clothing and Footwear Allowance will reduce from €305 to €250 for children aged 12 years or more and from €200 to €150 for children aged 4-11 years. (2012)
Domiciliary Care Allowance
The age of entitlement for Domiciliary Care Allowance will be extended from 16 years to 18 years of age. This is to compensate for the raising of the age of eligibility for Disability Allowance to 18. (January 2012)
Qualified Child Increases
If a person claiming Invalidity Pension, Carer’s Benefit, State Pension (Contributory or Transition) or Incapacity Supplement has a spouse or partner with income of over €400 a week, payment of the half-rate increase in respect of a qualified child will be discontinued. This will apply to new claimants and is in line with current arrangements for Jobseeker’s Benefit, Illness Benefit and Injury Benefit. (July 2012)
Payment of two qualified child increases where the person is on a Community Employment Scheme and One Parent Family Payment, Deserted Wife’s Allowance/Benefit or Widow(er)’s Pensions will cease for new and existing recipients.
Carers
Carer’s Allowance
New applicants for Carer’s Allowance, who are not living with the person for whom they are providing care, will not be entitled to the Household Benefits package. The person receiving care may be entitled to the Household Benefits package in their own right. (April 2012)
Carer’s Allowance weekly rates of payment will not change. The half-rate Carer’s Allowance will continue to be paid to people who are full-time carers and who are getting another welfare payment. The extra payment for caring for more than one person is retained. Carers will continue to get the annual Respite Care Grant of €1,700 for each care recipient.
People with disabilities
Disability Allowance
The age of entitlement for Disability Allowance will increase to 18 years in line with other social welfare payments. The age of entitlement for Domiciliary Care Allowance will be extended from 16 years to 18 years of age. (January 2012)
For new claimants aged 18 to 24, the rates of payment for Disability Allowance will be aligned with Jobseeker’s Allowance rates for that age group (€100 per week for people aged 18 to 21 and €144 per week for people aged 22 to 24). (April 2012)
People who are aged under 25 years and are already getting a full-rate Disability Allowance payment will not be affected. If people under 25, who are currently getting Disability Allowance, take up opportunities for education or training (for example, by availing of the Back-to-Education scheme or Community Employment) or leave the country and subsequently revert to Disability Allowance, they will not be subject to the reduced rates.
Disablement Benefit
New applicants for Disablement Benefit must have a disability classified at more than 15% to qualify for the payment. (January 2012)
Supplementary Welfare Allowance
Rent Supplement
The minimum contribution by single tenants towards rent for the purposes of the Rent Supplement scheme will increase by €6 to €30 per week (from €24 per week). The minimum contribution payable by couples will be €35 per week. (January 2012)
Rent limits will be reviewed. (2012)
Mortgage Interest Supplement
The minimum contribution for the purposes of the Mortgage Interest Supplement scheme will increase by €6 to €30 per week for a single person (from €24 per week). The minimum contribution payable by couples will be €35 per week. (January 2012)
Payment of Mortgage Interest Supplement will be deferred for 12 months while the person engages with the Mortgage Arrears Resolution Process. This approach is consistent with the reports of the Mortgage Arrears and Personal Debt Group and the Inter-Departmental Working Group on Mortgage Arrears. (2012)
People getting Mortgage Interest Supplement will be granted a waiver from the new €100 Household Charge.
Fuel Allowance
The Fuel Allowance season will be reduced by 6 weeks from 32 weeks to 26 weeks for all recipients (It will now be paid for six months from mid-October to mid-April).
Treatment Benefit Scheme
The frequency of the grant for hearing aids will change from 2 years to 4 years. (January 2012)
The maximum grant available for one hearing aid will change from €760 to €500 and from €1,520 to €1,000 for two hearing aids. (January 2012)
Older people
There will be no change in the rates of State pensions or other payments for those aged over 66, for example, Living Alone Allowance, Household Benefits Scheme and Fuel Allowance.
Changes to contributory State Pensions
Currently a person with an average of 20-47 PRSI contributions per year over their working life receives a weekly State Pension of €4.50 less than a person with a yearly average of 48 or more PRSI contributions. A lower pension will be payable to new applicants for State Pension who have a yearly average of less than 48 PRSI contributions. (September 2012)
Currently, late claims for certain contributory pensions can be backdated on a reducing scale for up to 5 years. This backdating period will be reduced to a maximum of 6 months. This applies to State Pension (Contributory & Transition), Surviving Civil Partner’s Contributory Pension and Widow(er)’s Contributory Pension. (April 2012)
Widow(er)’s Contributory Pension and Surviving Civil Partner’s Contributory Pension
The total number of paid PRSI contributions needed to qualify for Widow(er)’s Contributory Pension and Surviving Civil Partner’s Contributory Pension will increase from 156 to 520 contributions. (July 2013)
Half-rate payments
People getting Widow(er)’s Pension, Surviving Civil Partner’s Pension or One-Parent Family Payment can get half-rate Jobseeker’s Benefit, Illness Benefit or Incapacity Supplement if they satisfy the qualifying conditions. These half-rate payments will cease for applicants for Jobseeker’s Benefit, Illness Benefit and Incapacity Supplement. (January 2012)
Means testing for social assistance payments
For new and existing claimants, income from employment as a home help funded by the HSE will be assessed in means tests for social assistance schemes. The existing earnings disregards in line with all other employees will apply. (January 2012)
Income from weekly Carer’s Benefit and Carer’s Allowances will be included when calculating entitlement to Family Income Supplement in line with other welfare payments. (January 2012 for new applicants and on renewal for all others)
The amount of earnings disregarded for the purposes of the One-Parent Family Payment means test will be reduced from €146.50 to €130.00 per week in 2012 for new and existing recipients. Further reductions will be introduced over the following 4 years. (January 2012)
The temporary payment of half of the rate of One Parent Family Payment where the recipient’s earnings exceed €425 per week will be discontinued. Existing recipients of the temporary payment will not be affected. (January 2012)
Other savings
The cost of medical certificates for illness and disability related schemes will be reduced by 10%. This is an administrative saving in the Department of Social Protection.
Savings will be achieved on the Electricity Allowance.
Redundancy and insolvency
The employer rebate of statutory redundancy payments will reduce from 60% to 15%. (1 January 2012)
Enforcement/Compliance
The Revenue Commissioners will continue to obtain information on payments made by other Government bodies (in particular the Department of Social Protection) to allow Revenue to cross check the status of individuals and improve its collection.
Rates of payment
| Maximum Weekly Rates | Weekly Personal Rate | Qualified Adult Allowance | Child Rate | ||
|---|---|---|---|---|---|
| Current | 2012 | Current | 2012 | ||
|
State Pension (Contributory)/(Transition)
|
|||||
|
Under Age 80
|
€230.30 | €230.30 | €153.50 (Note 1,Note 2) | €153.50 (Note 1,Note 2) | €29.80 |
|
Age 80 and over
|
€240.30 | €240.30 | €206.30 (Note 1,Note 2) | €206.30 (Note 1,Note 2) | €29.80 |
|
Widow’s/Widower’s/Surviving Civil Partner’s (Contributory) Pension/Deserted Wife’s Benefit
|
|||||
| Under Age 66 | €193.50 | €193.50 | €29.80 | ||
|
Aged 66 and under Age 80
|
€230.30 | €230.30 | €29.80 | ||
|
Aged 80 and over
|
€240.30 | €240.30 | €29.80 | ||
|
Invalidity Pension
|
|||||
|
Under Age 65
|
€193.50 | €193.50 | €138.10 (Note 1,Note 2) | €138.10 (Note 1,Note 2) | €29.80 |
|
Aged 65
|
€230.30 | €230.30 | €206.30 (Note 1,Note 2) | €206.30 (Note 1,Note 2) | €29.80 |
|
Carer’s Benefit/Constant Attendance Allowance
|
€205.00 | €205.00 | €29.80 | ||
|
Disablement Benefit
|
€219.00 | €219.00 | |||
|
Jobseeker’s/Illness/Health & Safety/Injury Benefit
|
€188.00 | €188.00 | €124.80 | €124.80 | €29.80 |
|
Death Benefit
|
|||||
|
Under Age 66
|
€218.50 | €218.50 | €29.80 | ||
|
Aged 66 and under Age 80
|
€234.70 | €234.70 | €29.80 | ||
|
Aged 80 and over
|
€244.70 | €244.70 | €29.80 | ||
| Maximum Weekly Rates | Weekly Personal Rate | Qualified Adult Allowance | Child Rate | ||
|---|---|---|---|---|---|
| Current | 2012 | Current | 2012 | ||
|
State Pension (Non-Contributory)
|
|||||
|
Aged 66 and under Age 80
|
€219.00 | €219.00 | €144.70 | €144.70 | €29.80 |
|
Age 80 and over
|
€229.00 | €229.00 | €29.80 | ||
| Carer’s Allowance | |||||
| Under Age 66 | €204.00 | €204.00 | €29.80 | ||
|
Aged 66 and over
|
€239.00 | €239.00 | €29.80 | ||
|
Blind Pension
|
€188.00 | €188.00 | €124.80 | €124.80 | €29.80 |
| Widow’s/Widower’s/Surviving Civil Partner’s (Non-Contributory) Pension | €188.00 | €188.00 | |||
| Deserted Wife’s/Prisoner’s Wife’s Allowance | €188.00 | €188.00 | |||
| One-Parent Family Payment | €188.00 | €188.00 | €29.80 | ||
| Pre-Retirement/Disability Allowance | €188.00 | €188.00 | €124.80 | €124.80 | €29.80 |
| Supplementary Welfare Allowance | €186.00 | €186.00 | €124.80 | €124.80 | €29.80 |
| Jobseeker’s Allowance | €188.00 | €188.00 | €124.80 | €124.80 | €29.80 |
| Farm Assist | €188.00 | €188.00 | €124.80 | €124.80 | €29.80 |
| Weekly Personal Rate | Qualified Adult Allowance | Child Rate | |||
|---|---|---|---|---|---|
| Maternity/Adoptive Benefit – Minimum Rate | €217.80 | €217.80 | |||
| Guardian’s Payment (Contributory)/ (Non-Contributory) | €161.00 | €161.00 | |||
Note1: for those under age 66 years
Note2: for those aged 66 years or over
| Number of Children | Current Rate | 2012 Rate |
|---|---|---|
| 1 child |
€140.00
|
€140.00
|
| 2 children |
€280.00
|
€280.00
|
| 3 children |
€447.00
|
€428.00
|
| 4 children |
€624.00
|
€588.00
|
| 5 children |
€801.00
|
€748.00
|
| 6 children |
€978.00
|
€908.00
|
| 7 children |
€1,155.00
|
€1,068.00
|
| 8 children |
€1,332.00
|
€1,228.00
|
| Family Size | Current Income Limit | 2012 Income Limit |
|---|---|---|
| 1 child |
€506.00
|
€506.00
|
| 2 children |
€602.00
|
€602.00
|
| 3 children |
€703.00
|
€703.00
|
| 4 children |
€824.00
|
€824.00
|
| 5 children |
€950.00
|
€950.00
|
| 6 children |
€1,066.00
|
€1,066.00
|
| 7 children |
€1,202.00
|
€1,202.00
|
| 8 children or more |
€1,298.00
|
€1,298.00
|
| Level of FIS payment will continue to be based on 60% of the shortfall between net weekly family income and the applicable weekly family threshold. | ||
Housing, Employment, Small and Medium Enterprises, Education
Housing
A household charge of €100 is being introduced in 2012. This charge will fund local services, in line with the requirement in the EU/IMF Programme of Financial Support for Ireland. The charge is an interim measure pending design and implementation of a full property tax in 2014. Owners, not occupiers, are liable. The charge does not apply to social housing or housing provided by a charity. There will be a waiver for those on Mortgage Interest Supplement and for those residing in certain categories of unfinished housing estates. Provision will also be made to allow payment of the charge in instalments.
The minimum contribution for the purposes of Mortgage Interest Supplement will increase by €6 to €30 per week for a single person. The minimum contribution payable by couples will be €35 per week. (January 2012)
Payment of Mortgage Interest Supplement will be deferred for 12 months while the mortgage-holder engages with the Mortgage Arrears Resolution Process under the Central Bank’s Code of Conduct on Mortgage Arrears. (2012)
The minimum contribution by single tenants towards rent for the purposes of the Rent Supplement scheme will increase by €6 to €30 per week. The minimum contribution payable by couples will be €35 per week. (January 2012)
Rent limits for Rent Supplement will be reviewed in 2012.
Some €76 million is provided for energy-efficiency measures under the Better Energy: Warmer Homes Scheme.
There is continued funding to assist in the implementation of the Affordable Energy Strategy through Better Energy: Warmer Homes.
An extra €10 million is provided to allow transfers into the Rental Accommodation Scheme.
Employment
Redundancy and Insolvency Scheme
Statutory redundancy lump sums are generally paid by employers who are currently entitled to a rebate from the State of 60% of the relevant amount. From 1 January 2012 this rebate will be reduced from 60% to 15%.
Employment schemes
Entitlement to a Community Employment payment and another Department of Social Protection payment at the same time will be phased out over 3 years. From January 2012 new participants on Community Employment scheme will not be able to claim another social welfare payment at the same time. If a person is on a Community Employment Scheme and One Parent Family Payment, Deserted Wife’s Allowance/Benefit or Widow(er)’s Pensions, payment of two qualified child increases will cease for both new and existing recipients. The training and materials grant for Community Employment will reduce from €1,500 to €500 per participant per annum. (January 2012) In the Job Initiative scheme the materials allowance will be reduced and payment of the training budget will be discontinued.
Action Plan for Jobs
The Government recently committed to deliver a multi-annual Action Plan for Jobs, with quarterly targets for delivery every year and a monitoring group to oversee implementation. The Action Plan for Jobs will address 7 principal areas:
- Improving competitiveness and intensifying competition in sheltered sectors
- Supporting indigenous start-ups
- Assisting indigenous business to grow
- Attracting inward entrepreneurial start-ups
- Developing and deepening the impact of Foreign Direct Investment
- Developing employment initiatives within the community
- Exploiting sectoral opportunities, identified as priorities
A Micro Finance Loan Fund, to provide loans on a commercial basis for start-up businesses and micro-enterprises will operate from early 2012. It is expected that the businesses that will primarily benefit will be those at the margins of commercial lending decisions.
The Temporary Partial Loan Guarantee Scheme is expected to be in place in the first quarter of 2012. Under the Scheme, the government will partially guarantee loans by traditional lenders to viable businesses that are at the margins of commercial lending decisions and have difficulties accessing credit, either because they have insufficient collateral or the lender does not have the skills or experience to carry out a proper assessment of the proposition, due to a lack of knowledge of new sectors, markets or technologies.
Find out more about the Partial Loan Guarantee Scheme and the Micro Finance Loan Fund.
Labour market activation
€20 million has been allocated for a new Labour Market Activation Fund which will be specifically targeted at the long-term unemployed and will deliver over 6,500 training place in 2012.
The Government will shortly publish a policy statement, Pathways to Work, which will set out its strategy to reform labour market activation policy to prevent the drift into, and help the reduction of, long-term unemployment.
Administrative efficiencies/rationalisation
The Department of Jobs, Enterprise and Innovation’s Comprehensive Review of Expenditure led to the following key outcomes:
- Implementation of changes to business process aimed at delivering services more efficiently
- The streamlining of the State’s employment rights bodies (i.e. the Labour Relations Commission, the National Employment Rights Authority, the Employment Appeals Tribunal, and the Labour Court) will create a single entry point for all users of the employment rights machinery
- Greater utilisation of eGovernment tools in the Companies Registration Office
- A strong commitment to the public service reform agenda, in particular in the areas of shared services and outsourcing models in appropriate cases, including high-volume case processing operations
Small and medium enterprises
In addition to the Loan Guarantee Fund and Micro Finance Fund, there will be the following targeted measures for the SME sector:
- The first €100,000 of R&D expenditure of all companies will be allowed on a volume basis for the purpose of the R&D Tax Credit
- The outsourcing arrangements for R&D purposes will be improved in a targeted manner to allow the greater of the existing percentage arrangement or €100,000
- Companies will have the option to use some portion of the R&D credit to reward key employees who have been involved in the development of R&D
- The corporate tax exemption for new start-up companies is being extended for the next three years and will be available for companies that commence trading in 2012, 2013 and 2014
- Smaller companies will also be able to avail of the planned foreign earnings deduction where they plan to expand their export markets into the BRICS countries (Brazil, Russia, India, China, South Africa).
Other job creation measures will also be examined with a view to their inclusion in the Finance Bill.
Credit for SMEs
The Government has set the two pillar banks (AIB and Bank of Ireland) the following SME lending targets: €3 billion each in 2011, €3.5 billion each in 2012 and €4 billion each in 2013.
Universal Social Charge (USC)
From 1 January 2012, the exemption level for the Universal Social Charge (USC) will be raised from €4,004 to €10,036 and the USC will be collected on a cumulative basis.
Absenteeism
The existing tax exemption for the first 36 days of Illness Benefit and Occupational Injury Benefit is removed. The Minister for Social Protection will bring forward proposals around absenteeism in both the public and private sectors in 2012.
Education
Third-level education
The student contribution is increased by €250 per year from the academic year 2012/2013.
The student grant is reduced by 3%. This reduction applies to existing and new grant-holders from January 2012. The value of certain capital assets will be taken into account in the means test for student grants from 2013.
New postgraduate students whose means would formerly have qualified them for the special rate of student grant will now only get a fee grant. They will not get a maintenance grant. A €2,000 fee grant will be paid to a further 4,000 students. Existing grant-holders will not be affected.
The allocation to the Fund for Students with Disabilities is reduced by 20%.
The 5 scholarship schemes for higher education will be replaced by a single bursary-type scheme.
Core funding for higher education is reduced by 2%.
The Technological Sector research programme will be terminated.
School transport
The primary school transport charge increases from €50 to €100. The maximum family payment for school transport for primary pupils increases from €110 to €220. The primary school transport charge for concessionary students reduces from €200 to €100.
The maximum family payment for second-level pupils stays at €350 and the overall maximum family payment stays at €650 per year.
Pupil/teacher ratio
The pupil/teacher ratio for fee-charging post-primary schools will increase from 20:1 to 21:1 (2012/2013)
Staffing for all 199 DEIS Band 1 primary schools will be based on a general average of 1 teacher for every 22 pupils. This will replace the present arrangement of giving a “top up” allocation on the existing standard staffing schedule in order to implement reduced class sizes.
All 195 DEIS second-level schools will have a reduced pupil/teacher ratio of 18.25:1. (A pupil/teacher ratio of 19:1 applies in non-fee-paying second-level schools.)
Staff numbers in primary schools with 4 teachers or fewer will be adjusted on a phased basis from 2012/2013.
Post-primary schools will have to manage guidance provision from within their existing pupil/teacher ratio allocations.
Other measures for schools
Capitation grants to schools are reduced by 2%. The primary rate will be €183 and the second-level rate will be €317. The enhanced grant for schools in the DEIS (Delivering Equality of Opportunity in Schools) programme is not changing.
Supports will be withdrawn on a phased basis from some schools that are in educational disadvantage schemes which pre-date the DEIS programme.
The Modern Languages in Primary Schools Initiative is being abolished.
Almost €10 million is provided to start implementation of actions in the Literacy and Numeracy Strategy, work on Junior Cycle reform and phased rollout of high-speed broadband to second-level schools.
Changes will be announced to the operation of the school book grant in order to incentivise the establishment of book rental schemes in schools. (early 2012)
Labour market activation
€10 million is allocated to the Springboard initiative to provide part-time higher education opportunities for unemployed people.
€20 million has been allocated for a new Labour Market Activation Fund which will be specifically targeted at the long-term unemployed and will deliver over 6,500 education and training places in 2012.
Training and further education programmes provided through the new further education and training authority (SOLAS) and the VECs etc. will focus actively on helping unemployed people to return to the labour force. Both SOLAS and the VECs will liaise closely with the National Employment and Entitlements Service in the Department of Social Protection.
Further education and training
Weekly allowances paid to 16-17 year olds on Youthreach, Community Training Centres and FÁS courses will be reduced to €40.
The number of apprenticeship places will be reduced.
Capitation grants for further and adult education courses such as Post Leaving Certificate (PLC), Vocational Training Opportunities Scheme (VTOS), Youthreach, the Back to Education Initiative, and adult literacy will be reduced by 2%.
Health, Children, Other announcements
Health
The threshold for the Drugs Payment Scheme will increase from €120 to €132 from January 2012.
There will be no change for medical card holders – the 50 cent per item charge on drugs remains.
People who claim free drugs under the Long Term Illness Scheme will now have free GP care.
€35 million will be invested in community mental health teams and services, as recommended in A Vision for Change. The timescale is given as “in the medium term”.
There will be a further increase in the charges for private beds in public hospitals.
Legislation will be introduced to abolish the existing system where hospital beds are designated as private or public and to allow hospitals to raise charges in respect of all private patients.
Greater efficiencies such as a shift from inpatient to day care and a more rigorous allocation of home help hours have been signalled.
Additional funding of €55 million is to be made available for the Nursing Homes Support Scheme (“Fair Deal”) in 2012.
Children
The Community Childcare Subvention rate to be reduced by 5%.
There will be a €25 weekly contribution to costs from FÁS and VEC trainees for Childcare Education and Training Support.
Children’s Services Committees, Family Resource Centres and Family Mediation Service funding allocation to be reduced by 5%.
(See ‘Social Welfare’ above for changes to Child Benefit and other payments.)
Other announcements
The Government will reduce the size of the public service to 282,500 by end 2015, as set out in the Public Service Reform Plan (published in November 2011).
31 Garda stations are to be closed during 2012 and a further 8 which are not currently operational will be formally closed. Also, a number of Garda stations in the Dublin Metropolitan Region will no longer be open to the public between 10pm and 8am. Find out more on justice.ie.
REPS payments will be reduced by 10% in future years, subject to approval by the EU Commission. As well as the provision of funding for capital programmes, a range of Targeted Agricultural Modernisation Schemes have been re-opened. Find out more on agriculture.ie.
The State’s budgeting process will be changed to include features such as performance based budgeting and three year budgeting frameworks. A Fiscal Responsibility Bill will be introduced in 2012 to give effect to these changes.
You can find out more in the Comprehensive Expenditure Review Estimates Part III (pdf).