Belfast Telegraph

Budget boosts working families and welfare payments but sparks homelessness row

Ireland's hard-pressed working families and people on welfare are set to gain a fiver a week or more in a budget of modest payback.

But while the Republic lurches from one set of record homelessness figures to another, the minority Government took a hammering from opponents who accused ministers of repeating commitments on social housing.

And with farmers and food businesses reeling from the unknowns of Brexit, 300 million euro of low-cost loans are to be directed at firms suffering from cash flow crises.

Taoiseach Leo Varadkar set the scene for 1.2 billion euro package of tax and spending by heralding it as a chance to give back something to the Republic's 2 million workers.

He said average families will benefit by 500-600 euro a year.

But within hours of the pronouncement the government's PR spend came under fire as it emerged a new strategic communications unit, billed earlier this year as cost neutral, is set to be financed with 5 million euro next year.

Finance Minister Paschal Donohoe told the Dail parliament the budget aimed to guard against three main threats to Ireland - Brexit, the potential impact of US trade tariffs and various geo-political threats.

"It will help reduce the chances that future crises are home-grown and will mean that our economy and public finances are in a better position to weather crises stemming from external factors beyond our control," Mr Donohoe said.

"The list of potential external risks is lengthy."

On Brexit-proofing the initiatives were limited to business loans, funding for farmers, hiring more enterprise experts and expanding Ireland's diplomatic footprint in North and South America, India and Japan and across Europe.

Unveiling a war chest funding package, one big ticket item from Mr Donohoe was a move from midnight targeting commercial property deals with a tripling of stamp duty to bring in 400 million euro.

That will help cover the cost of five euro a week increases to most welfare payments, including the dole and state pensions, but people will have to wait until the end of next March to reap any benefits.

And some of the money coming in will pay for modest changes to income tax, including the deeply unpopular Universal Social Charge (USC) that was created at the height of the recession.

Mr Donohoe said the top marginal rate of tax on income up to 70,044 euro will come down to 48.75% as a result of the changes.

The threshold for the higher rate of income tax is being raised by 750 euro to 34,550 euro while a new 2% USC rate will kick in at 19,372 euro, up from 18,772 euro, so minimum wage workers will not pay the upper rates and a second USC rate will drop to 4.75%.

But by far the biggest challenge for the minority Government - in power with the support of the main opposition party Fianna Fail and Independents - is to solve the crisis of more than 8,000 homeless people and families in emergency accommodation and more than 90,000 people on housing waiting lists.

Sinn Fein finance spokesman Pearse Doherty accused Mr Donohoe of repeating commitments already made for 3,800 new homes next year.

"This is a budget that tolerates and normalises mass homelessness of young people and children," he said.

Other key measures include:

:: 50 cent on cigarettes taking the price of a standard packet to about 12 euro - one of the highest in Europe.

:: In a bid to slash skin cancer rates in Ireland - among the highest in the world - VAT on sunbed services is to soar from 13.5% to 23%.

:: A sugar tax on sweetened drinks, due next April, with 30 cents a litre put on those with more than eight grams of sugar per 100 millilitres and 20 cents a litre on drinks with between five and eight grams per 100 millilitres.

:: Alcohol was not hit by any rise.

:: A "rainy day" fund is being created to protect against future economic downturns with an initial 1 .5 billion euro deposit and 500 million euro a year from 2019.

:: A freeze on the reduced tourism and hospitality VAT rate of 9%.

:: 750 million euro is to be paid into the new Home Building Finance Ireland scheme to lend to house builders while a levy on vacant development sites will more than double from 3% to 7% if the land is held untouched for a second or subsequent years.

:: P rescription charges for all medical card holders under 70 will fall 50 cent to two euro per item, with the monthly cap falling from 25 euro to 20 euro.

:: 800 gardai and 500 civilians will be recruited into the force next year.

:: The pupil teacher ratio in primary schools will fall to 26:1.

:: Interest relief for mortgages taken out from 2004-2012 will run until 2020 but at 75% of the rate next year, 50% in 2019 and 25% in the last year.

:: Free preschool childcare is also being extended to two years for kids accessing the ECCE scheme of 15 hours a week.

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