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Republic reeling from recession budget

By Aine Kerr

The Irish Government’s budget yesterday unleashed an abundance of hefty new charges, taxes and cutbacks which will hit all families and workers in the Republic.

Chief among the Minister for Finance’s most devastating blows was the introduction of a temporary income levy of 1% on all incomes up to €100,000. High earners will be hit with an increased levy of 2% on the balance over this threshold.

In his lengthy statement to the Dail yesterday, Minister Brian Lenihan made no mention of how long the temporary income levy would last but stated it would yield €815m in 2009 and €1.18bn in a full year.

Workers will also see their PRSI contributions rising in line with the ceiling increasing from €50,700 to €52,000.

Although first-time buyers, and in effect property developers, will benefit hugely from changes to the mortgage interest relief regime, their 5% increase will come on the back of a 5% decrease for non-first time buyers.

Under the substantial change, hundreds of thousands of non-first time buyers will now only receive relief of 15% after becoming reliant on monthly relief totalling to 15%.

Targeting the 20m people who use Irish airports every year, the Government yesterday introduced an airport tax of €10 on all outbound flights, with the exception of those under 300 kilometres in length.

Destinations such as Glasgow, Liverpool and Manchester will be hit with a €2 charge, but crucially London, which attracts massive numbers of Irish travellers, will come under the €10 bracket.

Private jets will be completely exempt from the new airport charge which was last night deemed a daring move for the Fianna Fail-led Government as it will be introduced next April, only months before the local and European elections.

With education and health facing the stiffest increases in charges, students attending third-level institutions are to see their registration fees jump by a staggering €600 next September. Parents will also have to shell out €300 for post-primary school transport.

Creating further financial turmoil for parents, the monthly child benefit of €166 will now cease for 18-year-olds from January 2010 but will first be halved from January 1 next year. The early childhood allowance, which was only introduced in 2006, will now cease once a child reaches five and half years of age.

In the health arena, older people aged 70 and over will no longer have an automatic entitlement. Instead, they will receive an annual cash grant of €400 if they fail to qualify for the medical cards under a rigorous means-test assessment.

In line with the policy of “full economic charging for such services”, there will be a 20% increase in private and semi-private bed charges in public hospitals.

Last night, there was speculation private health insurers would pass on the increase to customers.

In addition, the A&E charge will increase from €66 to €100 for non-medical card holders who attend A&E departments without a letter from their GP.

The increase in motor tax rates is also significant, with cars below 2.5litres facing a 4% hike, and cars above the 2.5 litres threshold seeing a 5% increase imposed. The new rates will apply to motor tax discs taken from January 1, 2009. Excise on cigarettes and wine will increase by 50c, while petrol will see a hike of 8cent per litre. Those with a second property rented or used as a holiday home will have to pay the local authority a fee of €200.

Belfast Telegraph

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