Who will be hit hardest by cuts in this week's Budget?
09 October 2013
Budget 2014 is just around the corner, so there is a great deal of apprehension about the onslaught of yet another batch of austerity measures. While no one knows for sure what will happen, it is safe to say that Budget 2014 will bring with it some tough changes – and cuts and tax increases aplenty.
At this stage, it is not expected that there will be any adjustments to income tax rates, bands or credits in the coming Budget. However, some prior Budget items are expected to kick in next year, for example the introduction of PRSI on passive income and further reductions in the rent credit.
If you look at the PRSI change, an interesting point to note is that interest income will now be taxable (if we consider PRSI as an additional tax) at 37 per cent, while only a few years ago it would have been taxed at just 20 per cent. That is an 85 per cent increase in the rate for this type of income.
With income tax rate hikes off the table, the Government may look at the Universal Social Charge as a means to raise funds. One such way to do this could be to introduce a surcharge on employees earning over €100,000 (similar to the surcharge currently applicable to the self-employed). PRSI is another potential target – as unpopular as it may be – and the Government could look at an increase in rates for the self-employed so engineers could be a group that is affected by this.
While we have already seen huge rate increases in capital taxes over the last few years, from 20% up to the current rates of 33 per cent, there is still some opportunity for the Government to look at the annual exemption amount of €1,270 (CGT) and maybe bring more small gains into the charge. Another possibility is that they will introduce a tiered system with a higher rate applying to higher gains.
We expect that Budget 2014 may also reveal further information on the new public broadcasting charge, but it is expected that this will not impact on people currently paying their TV licence. People who have not been paying for a license (people who may not have a TV) may now face an additional charge.
The one about which everyone is holding their breath is child benefit. Many expect to see this in the firing line, but whether or not the Government will take the hatchet to this remains to be seen.
Budget 2014 will be unveiled on Tuesday, 15 October. For Budget updates or information on filing your tax return ahead of the deadline, check out taxback.com for more details.http://www.engineersjournal.ie/2013/10/09/who-will-be-hit-hardest-by-cuts-in-this-weeks-budget/http://www.engineersjournal.ie/wp-content/uploads/2013/10/Budget-1024x685.jpghttp://www.engineersjournal.ie/wp-content/uploads/2013/10/Budget-300x300.jpgNewsfinance