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Budget 2015

Budget 2015

Live updates from Budget 2015 with Eoin Burke-Kennedy

Eoin Burke-Kennedy Tue, Oct 14
 
LIVE: Budget 2015

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  • 12:03

    In two and half hours, Minister Noonan will end the Government’s long-standing austerity drive by announcing the State’s first expansionary budget in more than six years.

    The level of expansion is expected to be meagre – perhaps €600 million – not much when you consider the late Brian Lenihan front-loaded his 2010 budget with €6 billion in cuts.  

    From the kite flying of recent days, it appears the main aim is to deliver a small boost in after-tax incomes to low and middle-income earners, principally through a cut in income tax and a widening of the bands.

    Undoubtedly, the Coalition has an eye on the upcoming general election, which must be held sometime in the next 18 months.

    The key question – as today’s editorial put its – is whether the budget is being driven by a coherent strategy for public finances or by short-term political pressures.

    By way of a late intro, I’m Eoin Burke-Kennedy and I’ll be steering our live budget blog. As always, feel free to drop me a line.

  • 12:11
    The main breaking news so far today is that Minister for Social Protection Joan Burton looks set to announce a surprise increase in child benefit – something in the order of €5.The benefit has been cut by 25 per cent in the past five years.

    Throughout its tenure in office, Labour has been savaged for going back on a pre-election pledge to preserve child benefit at 2011 levels.

    On Twitter, outspoken economist Constant Gurdgiev describes it as “Noonan’s latest buy-back option on foregone kids showers”.

  • 12:15
  • 12:22

    Our in-house Kremlinologist Michael O'Regan says: Watch out for the palpable relief evident on the faces of Michael Noonan and Brendan Howlin today, as they introduce the first budget devoid of austerity in years.   They are both shrewd enough not to oversell it.  


    Hopefully, the Government backbenchers will be able to control themselves when any good news is announced. For most people, the recession is far from over. It seems a lifetime ago now since the then minister for finance, the late Brian Lenihan, told us the worst was over.   The worst was yet to come!

  • 12:32
    Noonan arriving at Dept of Finance this morning
    Noonan arriving at Dept of Finance this morning
  • 12:43

    What are we to make of the Budget Day tie?   In history, purple symbolised power, nobility, ambition. It is said to convey wealth and extravagance. Let the good times roll, then. Hold on a second, for God-fearing Christians, it is the colour of Lenten fasting and abstinence. In other words, we're not out of the woods just yet. So mixed messages on the sartorial front.  

  • 12:52
  • 12:55

    Our finance editor John McManus says: By ignoring the advice of the Fiscal Advisory Council and others who advocate using better than expected revenues to cut debt the Government has hung its hat on growth balancing the books.

    Probably the best way to judge the Budget today will be on whether it bolsters growth or not. From that perspective the cumulative effect of the various measures on consumer spending in the coming months is key.

  • 13:04

    It's worth noting, by the end of this year, about €30 billion in spending cuts and tax increases will have been taken out of the economy since 2008 – equal to 20 per cent of GDP – in six years, making Ireland’s austerity project nothing if not brutal.


    Relative to the size of the economy, it will go down as one of the largest retrenchments in modern economic history. Undoubtedly, the lopsided nature of Ireland's export-orientated economy makes austerity somewhat easier to digest, in macro terms. Many other economies would have flat-lined under the same level of consolidation.    

  • 13:15
  • 13:21
    According to the Herald, the five top budget measures are as follows:
    - €5 increase in child benefit
    - Top rate of income tax down 1%
    - 25% Christmas bonus on dole and pensions
    - €100 water charge relief for OAPs
    - 40 cent hike on a pack of cigarettes, bringing them to €10
  • 13:34
    Something we haven't touched on is the Government's expected plan to overhaul the State's corporate tax regime, largely a ruse to signal the ending of the notorious 'double Irish' mechanism.


    The significant take-away point, however, is that the Government plans to phase this out over five years. Undoubtedly, it has been lobbied hard by big business, especially the pharma sector, to stretch the process out for as long as possible. It would interesting to know if any significant patents elapse between now and 2020.

  • 13:43

    Cliff Taylor adds: An interesting issue will be to see what Michael Noonan does to claw back some of the gains of the cut in the top income tax rate from the highest earners. A one point cut in the top rate to 40 per cent would be a significant cash gain for the highest earners.


    To try to avoid criticism of favouring the “fat cats”, Noonan is expected to do something to take at least some of the cash back from the those at the top of the income pile.  

  • 13:58
    Consumer correspondent Conor Pope says: A big surprise is the 40 cent hike to a pack of 20 fags. This will take some well-known brands to over €10, which means a 20-a-day smoker will €8,000 gross to fund their habit. If there was ever an incentive to give them up that's it.


  • 14:07

    I was at a recent Fine Gael event where Noonan regaled the crowd with a few one-liners, as he likes to do. Regarding the budget, he said he wished he had started one of his budget speeches with the line from Shakespeare's Julius Caesar: "If you have tears, prepare to shed them now."

    However, he said with the turning of the economy it may be too late to deploy the line. I don't think it would have gone down too well at the height of the crisis, however.

  • 14:10
  • 14:14
    What Budget 2015 means for you: From approximately 6.30pm this evening we'll have a budget calculator on the site.
  • 14:23
    Bloomberg: Ireland is moving into the post- austerity era as the economy recovers

    Reuters: Ireland is set to announce sweeping changes to its corporate tax structure in its budget

    Press Association: Ireland’s hard-pressed taxpayers are set for the first easing of austerity in seven years
  • 14:27
    With five minutes to go, atmosphere in Dail is definitely jovial. Standing orders being announced, including results of by-elections. New members being welcomed into the House
  • 14:29
    And off we go...Noonan opens with the "many people thought we'd fail" line, before rattling off the Coalition's achievements to date, including employment, economic growth and debt deals
  • 14:31
    Budget 2015 is about securing recovery...this Government will not be returning to the boom-and-bust model that has so spectacularly failed the Irish people, Noonan says
  • 14:32
    Department of Finance is forecasting unemployment to fall to just over 10 per cent next year, he says. "We expect to have two million people at work by 2016."
  • 14:35
    On a no policy change basis, growth will be 4.7 per cent this year   and 3.6 per cent next year. However, following budgetary measures next year's growth will jump to 3.9 per cent, Noonan says
  • 14:36
    Noonan says he's targeting budget deficit of 2.7% for next year - below the EU and bailout limit of 3%
  • 14:36
  • 14:38
    Total general Government revenue will be €65.2 billion in 2015 while total general Government expenditure will be €70.5 billion
  • 14:39
    As expected, the 12.5 per cent corporate tax rate - a red line issue for the Government - is here to stay, says Noonan.
  • 14:40
  • 14:42
    "The 12.5% tax rate never has been and never will be up for discussion... it is part of settled policy." Noonan confirms what any Irish government knows it can never backtrack on...
  • 14:45
    There goes the double Irish...however, for existing incumbents they have until 2020 to exit
  • 14:46
  • 14:47
    Coughing fit temporarily halts Ireland's economic turnaround
  • 14:48
  • 14:50
    The Ministers of the moment look jovial ahead of their respective speeches this afternoon. Photograph: Cyril Byrne/The Irish Times
    The Ministers of the moment look jovial ahead of their respective speeches this afternoon. Photograph: Cyril Byrne/The Irish Times
  • 14:50
    Noonan retaining the 9% VAT rate for tourism and related services, saying it's responsible for 23,000 jobs. Important decision for the sector.
  • 14:51
    Cliff Taylor says: The big new toy for corporate tax planners will be a “knowledge development box”. This will allow companies to pay a lower tax rate on profits derived from exploiting intellectual property in Ireland.

    It will be similar to a so-called patent box used in the UK, though its name suggests it may spread a bit wider in its scope. Noonan will wait for EU and OECD approval of such schemes before moving.  

  • 14:54
  • 14:59
    We're on to property now and more coughing. Measure to support first- time buyers, Noonan introducing a DIRT refund on savings used to purchase their home to a max of 20 per cent of price. Also says he wants State to have a fully functioning property market. Does anyone in Ireland even know what that is? Will first-time buyers measure fan further price hikes? Perhaps it will be overshadowed by new Central Bank restrictions.
  • 15:01
  • 15:05
    Here come the most flagged aspects of Budget 2015; income tax dropped from 41% to 40% + the threshold at which taxpayers enter top band to rise to €33,800 from €32,800 + changes to Universal Social Charge entry points
  • 15:06
  • 15:07
    Cliff Taylor says: USC changes are being used to limit gains for higher earners. A new 8 per cent rate for earnings over €70,000 and the 10 per cent rate on self-employed earnings over €100,000 increased to 11 per cent.
  • 15:09
    Heckling erupts, Ceann Comhairle asks: Why do we always have the same voices shouting?

  • 15:10
    Cigarettes up 40 cents. No tax raised on alcohol, petrol, diesel, motor tax, vehicle registration.
  • 15:11
    Noonan finishing up with quote from Frost's "The Road Less Travelled", saying he's taking the quieter path
  • 15:12
    Tax on wine to remain unchanged. Relief on Twitter is palpable
  • 15:15
    Howlin on his feet now, insists country is on the road back from the greatest economic crisis in our history. To heckles from Opposition he says we've never believed in austerity for austerity's sake.  
  • 15:17
    An out-of-control property bubble played a significant role in our economic crash, Howlin says. That's a new one on me.
  • 15:20
    Howlin announces €2.2 billion three-year plan for social housing, to improve housing volumes. This is major. This capital investment will deliver 2,500 new homes next year, and more than 6,700 by 2017, he says
  • 15:23
  • 15:27
    "We are doubling the number of positions to 6,000 for the long-term unemployed on the Government's wage subsidy scheme -JobsPlus," Howlin says.
  • 15:29
    Labour minister just announced €5 increase to monthly child benefit, and pledges to increase it again next year by another €5. Major policy promise, there. Howlin also announces no new cuts to social welfare schemes.
  • 15:31
    Social protection measures will be funded by continuing fall in the Live Register, minister says
  • 15:32
  • 15:33
  • 15:34
    We're on to education now, Howlin pledges no increase in class sizes and an additional 1,700 new full-time teaching posts, including 920 teachers and 365 special needs assistants
  • 15:36
    €2.2 billion allocated to Justice, with more garda recruitment drives planned...

  • 15:39
    Additional EU Structural Funds - totalling €1.2 billion - for Border Counties over next seven years + an extra €212 million for the Arts
  • 15:43
    One to note: Howlin announces €600 million allocation for Development Assistance humanitarian fund, including €10 million annually "to support the Palestinian people" after Israel's bombardment of Gaza.
  • 15:44
    Howlin finishes by saying the improving economic statistics were a tribute to the Irish people
  • 15:45
  • 15:47
    We're on to the Opposition now and FF's Michael McGrath, who says this Government "believes it is invincible. I can tell you: you're not invincible."
  • 16:00

    Time for an intake of breath and a recap on what we've just heard. Here are the main takeaways

    - Top income tax rate reduced from 41% to 40% + entry point for top rate increased

    - New USC entry levels for low and middle-income earners

    - Child benefit up €5, with promise of further €5 in Budget 2016

    - Cigarettes up 40 cents but no change on alcohol, petrol, diesel and motor tax

    - Double Irish tax mechanism to be phased out over five years

    - Reduced 9 per cent rate of VAT for tourism industry to be extended

    - 0.6 per cent pension levy to end in 2014

    - €2.2 billion three-year plan for social housing

    - 1,700 new teaching posts, including 365 special needs assistants

  • 16:06
    Main employers' lobby Ibec clearly pleased with today's Budget. Group says measures will supports job creation, growth and consumer confidence. Chief executive Danny McCoy said: "The budget will add momentum to the recovery and sends an important signal to taxpayers and the international community that our era of austerity is over. Ireland is again on the front foot."

    On the torny issue of out corporate tax regime, he says: "The government has responded assertively to the changing global tax environment. Ireland has sent out a clear signal that we will continue to compete aggressively for mobile investment."
  • 16:10
    Before I forget, we'll have a Budget Q&A with our in-house and PwC panel on the website from 9am tomorrow. You can, however, post your queries now, here.
  • 16:15

    Hospitality sector uniformly welcoming Government's decision to retain reduced rate of VAT. A lot of lobbying went into that, methinks.

    Fáilte Ireland's Shaun Quinn said: “With regard to employment growth in the economy, tourism has shown, being a labour intensive industry, that it can generate jobs like no other – if the conditions are right. Today’s retention of the lower rate of VAT will ensure that those conditions remain job-friendly and will help to sustain the current levels of employment growth in the sector.”      

  • 16:18
    "Ireland's plan to close a 'double Irish' tax loophole could cost US companies including Apple and Google billions of dollars, although a new break and pressure to tackle tax avoidance elsewhere means they are unlikely to decamp." - Reuters

  • 16:21
    A solitary protestor outside Leinster House as Noonan delivers budget speech
    A solitary protestor outside Leinster House as Noonan delivers budget speech
  • 16:23
    Nice shot from inside Buswells Hotel courtesy of PA
    Nice shot from inside Buswells Hotel courtesy of PA
  • 16:25
  • 16:30

    Sting in the tail for high-income earners?

    Mark Paul reports: A widely-tipped cut in the top income tax rate to 40 per cent and changes to the top rate band formed the centre piece of Minister Noonan’s tax reform package. These measures, together with cuts to the Universal Social charge, will cost a total of €585 million next year.

    There is a significant “sting in the tail” for higher earners, however, with a new USC rate of 8 per cent on incomes over €70,000. The Minister was clearly looking to assuage the “squeezed middle” who took the brunt of the crisis-era tax rises in successive budgets.

  • 16:37

    Budget 2015 measures are the first tentative steps away from austerity — now we need some signposts and a roadmap to an inclusive Ireland, says European Anti Poverty Network Ireland.

    Separately, Minister for the Arts Heather Humphreys salutes €4 million allocation for integrated plan to commemorate 1916.

     

  • 16:41
    Taoiseach and Tanaiste during the Budget speeches
    Taoiseach and Tanaiste during the Budget speeches
  • 16:54

    European Commission welcomes move on 'double Irish'

    Our Brussels correspondent Suzanne Lynch reports: EU Commissioner for Taxation today welcomed Ireland's move to get rid of "double Irish" loophole.

    Speaking following a meeting of EU finance ministers this afternoon in Luxembourg, Algirdas Semeta said the Commission “welcomed” Minister for Finance Michael Noonan’s announcement that the "double Irish" tax device would be closed to new entrants from 2015 and phased out for existing recipients by 2020.

    “Of course, we at the Commission will have to look at the detail and how it will work in practice but the intention I think is a very good one. “

  • 17:00

    Finance deputy editor Dominic Coyle says: The Minister confirmed the 0.15 per cent levy of private sector pension pots would expire next year as planned.

    The industry had been nervous as he had promised a previous 0.6 per cent levy would be in place for only four years to this year, only to announce a new two-year 0.15 per cent levy in his last   2014 budget.

    But there will be no levy after the end of 2015. To date, it has brought in over €2bn to the Exchequer, more than local property tax or water charges.

  • 17:05
    Noonan's Budget speech abridged to six minutes can be viewed here
  • 17:15
    Compared to some of the budgets delivered by Charlie McCreevy when he was in full pomp, Budget 2015 was was not a giveaway or election budget, Irish Times Political Correspondent Harry McGee writes. But compared to the workhouse rations of gruel that were meted out over the past seven years, this was a bonanza budget. There can be no doubt about that. Read more
  • 17:31
    All told, a projected €2 billion retrenchment for Budget 2015 forecast at the beginning of the year has morphed into a €1 billion expansion on the back of stronger-than-expected economic growth. Good news for struggling households, with income tax and USC dividends on the way.

    The size of expansion, however, will certainly raise concern among austerity hawks in Brussels.

    The Government's position is something of a gamble though as it is based on predictions which take a pretty optimistic view of the flat-lining growth in the euro zone, meaning the Coalition believes its temporary. There's no doubt the Government is now firmly on an election footing.

    International investors' faith in the current Government seems unshakeable - Ireland's 10-year benchmark dropped to 1.6 per cent following the Budget, which means markets approve, for now.
  • 17:45
    Sinn Fein's Mary Lou McDonald has been asked to leave the Dáil chamber by the Ceann Comhairle over remarks she made about his intervening.   Separately, Independent TD Catherine Murphy of the Technical Group says Ireland still liable for every red cent of debt run up by banks and property developers. She says water charges are only here due to bank debt.
  • 17:52
    Remember, we'll have a Budget Q&A with our in-house panel on the website from 9am tomorrow morning. You can, however, post your queries now, here.
  • 17:55

    More reaction, this time from teachers' union Asti. Group says Budget will do nothing to prevent the ongoing damage to second-level schools and to students’ education caused by years of cuts.

    President Philip Irwin said education cuts over the last five years have included the withdrawal of subject teachers, guidance counsellors, specialist teachers and in-school management posts. “As a result of these cuts schools have lost teachers and vital services for young people have been withdrawn or curtailed,” he said.

  • 17:57
    Newly elected TD Paul Murphy arrives at Leinster House earlier
    Newly elected TD Paul Murphy arrives at Leinster House earlier
  • 18:02
    “To say we are disappointed with today’s Budget is an understatement. We were looking for an indication of commitment to this sector via real investment, but we got none," Teresa Heeney chief executive of Early Childhood Ireland says.

  • 18:08
  • 18:10
  • 18:13
    Michael Noonan and Brendan Howlin sought to deliver a little something for a lot of people this afternoon, but no-one will feel wealthy after their fourth Budget. Read Arthur Beesley's analysis of Budget 2015.

  • 18:16
    Newly elected Socialist deputy Paul Murphy says Budget concessions "will not quell revolt of water charges"
  • 18:23
    People Before Profit TD Richard Boyd Barrett says Budget is a "con-trick" because the small crumbs given back in income tax and USC changes will be more than wiped out by the cost of water and home taxes for the majority of low-income households.


    “Let’s not forget as these paltry crumbs are being thrown out to people, that next year we’ll be paying €8 billion in interest on the odious debt of bankers – that’s money that could have financed a serious housing programme and proper investment in Health and Education and give real relief to struggling families”.
  • 18:26
    Green Party leader Eamon Ryan accused the Government of putting short-term political interests over the State's long-term economic future.

    “The Government had a choice today about how to allocate the small amount of additional resources that our tentative economic recovery has allowed for. Spending twice as much on new current spending instead of vital long-term capital investment makes it clear Minister   Noonan is taking the well-travelled, populist path in Irish political life. He is thinking more about the next election than our long-term economic future," he said.

     “We should have invested in fixing the infrastructural bottlenecks that threaten our recovery and hamper greater productivity and competitiveness. The cuts in spending on higher education (-4%), broadband (-29%), energy (-12%), and transport (-2.9%) will have lasting negative consequences."
  • 18:36

    Double Irish was slur on State's reputation, says Noonan


    Minister for Finance Michael Noonan said this evening the Government decided to get rid of the "double Irish" tax loophole because it was becoming a "slur" on Ireland's reputation.

     "I want to make sure that the slur of the "double Irish" is no longer attached to Ireland's reputation and it had become something that was thrown at us internationally," he told Reuters.

    "There's a big advantage I believe for Ireland to be the first mover. Our competitor countries, if you were investing there tomorrow you would still be uncertain about what the regime would be in two years time."

  • 18:46
    How much more will you have in your pocket after Budget 2015 income tax changes? Check out our interactive graphic.
  • 18:53
    Key words in terms of frequency in Noonan's speech
    Key words in terms of frequency in Noonan's speech
  • 18:58
    Fantasynews.com: Germany pledge to play three at the back in response to Government's move on "double Irish".
  • 19:08
    Google responds to move on 'double Irish' tax loophole

    Google, which has used the ‘double Irish’ structure, was one of the first companies to react today to its abolition.

    John Herlihy, head of Google in Ireland said: “As we’ve always said, it’s for governments to decide the law and for companies to comply with it. We’re deeply committed to Ireland and will work to implement these changes as they become law.”
  • 19:13
    Department of Social Protection says fall-off in unemployment is funding child benefit and living alone allowance increases. In a statement tonight, the department said total welfare expenditure in 2015 will amount to €19.415 billion, a reduction of €188 million on 2014.
  • 19:19
    Calculate how much better off an unmarried couple with psychedelic bed linen are after today with our Budget calculator, going live on the site soon
    Calculate how much better off an unmarried couple with psychedelic bed linen are after today with our Budget calculator, going live on the site soon
  • 19:22
    Fianna Fail spokesman on social protection Willie O’Dea says despite a number of Government u-turns on welfare payments in this Budget, most low income families are still worse off today because of a series of regressive measures brought in by Minister Joan Burton over the past three Budgets.

  • 19:44
    Our live blogging is coming to an end. To sum up, we've witnessed the Government making a huge bet on the country's future economic wellbeing, turning a projected €2 billion consolidation into a €1 billion expansion.

    The success of this move hinges on current growth rates being maintained. The big elephant in the room, which nobody seems to be heeding is the flat-lining euro zone economy.

    That said, Budget 2015 marks an end to six years of debilitating austerity, a reason to be positive. It also marks the beginning of election season.

    On that note, I'll sign off