Irish Budget 2018 – Main points
The Minister for Finance gave an upbeat assessment of the economic situation with growth forecast at 4.3% in 2017 and 3.5% in 2018. The government forecasts unemployment to average 5.7% in 2018 vs 6.1% currently. However he cautioned on the the ‘still too high’ debt burden and said reducing that burden is critical.
The expected ‘Rainy Day Fund’ will commence with a transfer of €1.5 billion from the Strategic Investment Fund in 2018, followed by €500 million per annum from 2019.
Capital expenditure will increase by 17% to €5.3 billion in 2018.
Housing
Government will spend €1.83 billion on social housing in 2018 and increase the HAP scheme by €149 million.
€750 million will be allocated from ISIF to ‘Home Building Finance Ireland’ to provide funds to private residential developers.
Commercial property stamp duty will be increased from 2% to 6% with immediate effect, but refunds will be available for residential development.
The levy on vacant sites will increase from 3% to 7% effective in 2019.
CGT waiver for property purchases from budget 2012/3 will reduce from 7yrs to 4yrs.
Mortgage interest relief to be phased out by 2020
Health, Education
€685 million increase on health spending to €15.3 billion (circa +5%). Education spending will be more than €10 billion.
Extra 1,800 healthcare and 1,300 teaching staff to be hired in 2018.
BREXIT
Brexit loan scheme of €300 million to be made available to SMEs @market rates for short-term working capital needs.
VAT
No change to reduced VAT rate for tourism industry
Personal & Corporate Taxes
Higher rate tax band increasing from €33,800 to €34,550.
USC rates cut from 2.5% to 2% and 5% to 4.75% respectively.
Earned income tax credit increasing by €200 to €1,150 for the self employed.
SMEs can avail of a new scheme to grant share options to employees.
Corporate tax rate of 12.5% unchanged. “Will remain a core part of our offering”
In summary despite a lot of small positives, Budget 2018 provided few surprises and will not result in a meaningful financial difference to individuals, families or SMEs.
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