Budget 2010

Budget 2010 is 'the last big push' of this economic crisis, according to the Finance Minister adding that 'the worst is over'. This was not a budget of tax increases; instead the focus has been on the reduction of expenditure.

From a business perspective there are no major changes except for the adjustments detailed below.
There were no changes to the following:

Business Taxation

Capital Allowances
There is an extension of the existing capital allowances scheme for energy efficient equipment purchased by companies from seven categories of eligible equipment to ten.

The Minister notes that he shall also be bringing forward changes in the Finance Bill which will strengthen Ireland's competitive edge in the international financial services sector with a view to making Ireland a European hub for the international funds industry.

Personal Tax

Indirect Taxation

The following package of measures will be introduced:

- Car Scrappage Scheme
- Extension of VRT exemption for Electric Vehicles
- Extension of VRT relief scheme for Plus-in Hybrid Electric Vehicles

The Minister has announced a car scrappage scheme which will apply from 1 January 2010 to 31 December 2010. The scheme will provide for up to a €1,500 reduction in Vehicle Registration Tax on a new car bought where a car of 10 years old or more is scrapped.

A carbon tax at a rate of €15 per tonne is being introduced on fossil fuels. The tax will apply to petrol and auto-diesel with effect from midnight, 9 December 2009; and from 1 May 2010 to Kerosene, Marked Gas Oil, Liquid Petroleum Gas (LPG), Fuel Oil and Natural Gas.

Summary of Other Changes:

Homeowners who are now in negative equity whose entitlement to mortgage interest relief would expire in 2010 or after, will now continue to receive relief up to end of 2017.

Unified social contribution scheme to replace PRSI, the Health Levy, and Income Levy to be introduced in 2011.

The NTMA will establish in early 2010 a new investment opportunity in a National Solidarity Bond. The bond will be open for investment by ordinary citizens early in the new year. The bond will be in addition to the current range of "state savings" products.

The Minister has announced the following reductions in excise on alcohol products as follows:

No changes are being made to the rate of excise on tobacco products.

Budget Framework / Other Measures

The Minister has announced the following reductions in Public Sector pay:

This produces overall reductions in salaries ranging from 5% to just under 8% in the case of salaries up to €125,000.

Child Benefit rates will be reduced by €16 per month from January 2010 bringing the lower rate to €150 per month and the higher rate to €187 per month.

The increase for a Qualified Child will be improved by €3.80 per week from 1 January 2010.

All Family Income Supplement (FIS) earnings thresholds will be increased by €6 per week per child.

Increase in DPS Threshold of €20
The monthly threshold for the Drugs Payment Scheme is being increased from €100 to €120.

Prescription charge of 50c per item

The number of prescriptions under the GMS has increased in recent years from 12.79m in 2004 to 15.65 m in 2008. The number of items dispensed in the GMS has increased from 35m to 48.21m in the same period. To address the associated rising costs a 50 cent charge per item subject to a monthly ceiling of €10 per family is being introduced for the GMS and LTI scheme.

For further information please contact Niall Dempsey, OSK Tax.

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