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4 Year Plan - Silver lining to the dark cloud?

#TaxTipsIreland

There are few happy faces to be seen on the streets of Dublin today as reactions of the Irish people to the 4-year plan announced yesterday by the government are clearly evident across the country, with polls reporting that 61% of the people do not believe that the plan is fair. It would appear that there is little to look forward to in the next four years with the bulk of the pain to be imposed in January 2011.

Further details of the actual 2011 position will be announced in the Budget speech on 7th December. However, a taste of what is to come over the next few years includes:

  • A reduction in standard rate bands and tax credits resulting in the reduction of the entry point for income tax falling from €18,300 to €15,300 and an increase in tax bills for all
  • A universal social charge to replace PRSI, health levy and income levy
  • A reduction in the minimal wage by €1to €7.65 per hour
  • A reduction of social welfare spending
  • An introduction of water charges by 2014
  • An introduction of a site value tax in 2012
  • Student's contribution charge to rise from €1,500 to €2,000
  • A broadening of the base for Capital Gains Tax (CGT) and Capital Acquisitions Tax (CAT) and a reduction in the level of reliefs and exemptions available
  • A number of restrictions on reliefs available to individuals in respect of contributions to pension schemes
  • Measures to affect public sector workers to include a 10% pay cut for new entrants and a cut in public service staff bringing them back to 2005 levels
  • Ex-gratia termination payments and pension lump sums in excess of €200,000 to be taxed
  • Abolition of other tax exemptions and reliefs to include relief in respect of trade union subscriptions, rent credit (to be phased out by 2017) and age related credits and exemptions
  • Removal of PRSI, health levy and income levy relief in respect of shares acquired under Revenue approved schemes
  • Removal of PRSI and health levy relief in respect of shares acquired under unapproved schemes

Is there a silver lining to the dark cloud looming over Ireland today? Only time will tell but there is hope that the imposition of this plan will result in a growth in the economy in the coming years and we will all smile once more!