Money Guide Ireland

As announced in the  Budget 2010, a charge of 50 cents will be introduced on 1st October 2010  in respect of each prescription item dispensed to medical card holders.

The total charge per family per month will be capped at €10 and the HSE will put in place a refund system in order to refund families who exceed the €10 monthly ceiling.
Minister Harney expects  the new charges to  raise approximately €2 million per month. There has not been too much protest against these charges – which will basically result in poorer , sick people contribuing €2 Million a month to the state  from their low incomes .

An “expert group”  recently commented that this charge is unlikely to raise enough revenue to justify the costs of administering the charge. The same group also said the move could lead to some patients not taking medicines they needed.

The New Prescription Charges will not apply to :

1. Children in the care of the HSE who have their own medical card. This includes children in residential care, foster care, foster care with relatives and other care placements:

2. The Long Term Illness Scheme;

3. The Drugs Payment Scheme;

4. Persons who receive services under the Health (Amendment) Act 1996;

5. Or to methadone supplied to patients participating in the Methadone Treatment Scheme.

The Conservative led UK government announced an emergency budget today. The main points in the 2010 UK Budget are;

VAT to go up to 20% from 17.5%  – which will be good news for Irish businesses.

UK Capital gains tax for higher-rate taxpayers rises to 28%

Child benefit to be frozen for next three years

Two-year pay freeze for public sector workers

Tax credits reduced for families earning more than £40,000 and the Child element of child tax credit increased by £150 above inflation.

Housing benefit restricted to maximum £400 a week

Corporation tax cut to 27% in 2011  and then cut by 1%  a year for next three years to 24%

The idea of a National Solidarity Bond was announced in  the 2010 Budget – full details were released today.

The details of the new solidarity bond were confirmed today. It will  pay an annual interest rate of just  1% a year (fixed)  with added bonuses for those who leave the money in for five, seven and ten years .
The maximum bonus after 10 years is 40% – so the maximum gross return possible is  50% over 10 years .

If you cash in the bond at the end of 5 years you will get a 10% Bonus
At the end of 7 years you will get a 22% Bonus and if you keep the bond for 10 years you will get the maximum 40% Bonus.

DIRT will be payable on the basic interest – but not on the bonuses.

A 50% gross return over 10 years is  4.14% AER . After DIRT this comes to 3.96% AER.
A normal deposit account would need to be paying 5.28% before DIRT to match that rate.

An investment of €1000 in solidarity bonds for 10 years will result in a balance of €1475.  (3.96% AER Net)
Keeping €1000 in the solidarity bond for 5 years will give a balance of  €1137.50  – after DIRT which is 2.5% AER (Net).

The bonds  will be available for purchase in all post offices from Tuesday May 4th 2010.
With some instant access accounts paying as much as 3.3% before DIRT it will be interesting to see the level of take up for these new bonds that require a 10 year commitment to get the top rate of 3.96% Net.

There are already similar rates available  with An Post  : – the 17th Issue Savings Certificates over 5.5 years is paying 3.53% AER (Net)

The minimum individual investment in this Solidarity Bond is €500 . Savers can deposit a lump sum or put in  regular lodgements of €25 or more.  (The €25 a month will be put in an An Post deposit account  until you reach a balance of €500 – after 20 months).

The maximum individual investment allowed in the solidarity bond  is €250,000 .  (€500,000 for joint accounts) There are no fees, charges or sales commissions attached to the bond.

Savers can access their money at any time without penalty – but the longer money is left invested the greater the return in the form of bonuses.
Money invested in these solidarity bonds will be used by the government to finance  capital-investment programmes.

See other bank  savings rates for comparison.

Also see www.StateSavings.ie  for full terms and conditions of the solidarity Bond

Irish householders can  avail of grants of up to 40% of the cost of energy efficiency improvement measures under the Irish Government’s Home Energy Saving Scheme (HES).
This Scheme, which is administered by SEI, provides grant assistance to homeowners for retrofit energy efficiency measures such as attic and wall insulation, very high-efficiency boilers, heating controls and Building Energy Rating (BER) assessments. The scheme is open only to owners of  a house that was built prior to 2006

The HES was allocated €49 million in 2009 but only €16.2 million was paid out in grants.  The Scheme attracted 40,724 applications in 2009 -  of which 36,454 were approved for grant aid.  The grants were used to upgrade 18,183 homes.
For 2010 €29.5m has been allocated for the Home Energy Savings Scheme.
You can find out more on sei.ie

There is a new scheme in the pipeline – the  National Energy Retrofit Programme which was announced in the 2010 Budget . Details are yet to be defined – but In broad terms the Retrofit Programme will bring together the Home Energy Saving Scheme and the Warmer Homes Scheme as well as the support programme for business and the public sector. It will also also involve the development and promotion of energy services by the energy companies.

Some of the M50 toll charges are being lowered from today – January 1st 2010 – because of  the VAT reduction to 21% announced in the December Budget

The reduced tolls do not affect cars or minibuses with upto 8 seats – but all other vehicles will have a 10c reduction in the toll. The 10c reduction applies to registerd vehicles with tags, vehicles with video registration and non registered vehicles usin the M50 toll plaza.
The VAT reduction is only 0.5% – but rounding of calculations means the charge will be reduced to the nearest 10c.

The VAT rates are changing from today – January 1st 2010 in both Ireland and the UK.
Here in Ireland – the  VAT rate is dropping half a percent to 21%. This drop was announced in the latest Budget and is hoped to help increase retail sales.
The UK dropped VAT in December 2008 by 2.5% – it is now reversing that temporary change and VAT in the UK will rie back to 17.5%.  The difference in VAT between the UK and Ireland has decreased by 3 percentage points – but it is still 3.5% more here in Ireland. The changes in VAT might reduce the incentive for Irish shoppers to go into Northern Ieland to do their shopping .
Online retailers outside Ireland are supposed to charge the Irish rate of VAT on orders delivered here. Amazon - one of the biggest online retailers correctly charges Irish VAT to Irish customers. The changes in UK and Irish VAT mean that all Amazon UK prices will have just an extra 3.5% added at checkout to take account of the VAT differences.

The minister for finance in his recent Budget speech – seemed to imply that by cutting the duty on booze – he could stop people going to Northern Ireland to do their shopping. He must think that everyone is piling over the border to stock up on cheap drink – well he musn’t have seen the recent CSO figures on cross-border shopping.
The CSO survey into Cross Border shopping was based on figures from April to June 2009.

The average  household  spend per trip was €286 . Of this – the highest amount was spent on groceries  (€114 ).

Breakdown of spending on other categories:

€77 on Clothing and durables

€53 on Other

€32 on Alcohol – only 11% of the total

€11 on Cosmetics

Other stats show that 44% of trips involved the purchase of Alcohol – while 79% bought groceries and 42% bought clothing etc. 26% bought cosmetics and 19% “Other”

The drop in alcohol prices here in Ireland will have very little effect on the thousands of people going to Northern Ireland to shop. If the government think it will – they are either misleading us or they are stupid.

Ref: Cso Report

The 2010 Budget announced that the  salaries of Ministers and Secretaries General of government departments will be reduced by 15% and the  Taoiseach’s salary will be reduced by 20%.

In the Budget speech – Brian Lenihan made it sound like it was a  bigger cut when he said ..

“those at the top would lead by example in the downward adjustment of pay. He said the largest percentage reduction would be taken by the Taoiseach, who will face a 20 per cent cut in salary. He said that this reduction in addition to the pension levy introduced earlier this year meant that the Taoiseach’s salary will be cut by close to 30 per cent in total”

Of course – that was misleading because he was including the pension levy in that 30% and also the voluntary 10% pay cut taken in  2008 . This 30% figure will probably be printed and published all over the world – and everyone will assume it is the truth.

The Taoiseach’s salary will actually fall from €257,024 to €228,466 – a cut of €28,558, or 11%.

Ministers’ salaries will fall from €202,676 to €191,417 – a cut of €11,259, or 5.5%.

All Cabinet members took a voluntary 10% cut after  the October 2008 Budget. This reduced the Taoiseach’s salary from €285,582 to €257,024 and a minister’s salary from €225,196 to €202,676. But because these were “voluntary” pay cuts,  their “official” salary levels were still recorded at €285,582 and €225,196 respectively – even though they were getting less.

TDs and senators will also see their pay reduced in line with that of the equivalent public service grades. A  TD on the basic salary of €100,190 will see their pay fall by €7,519 to €92,671.

Note: The UK  prime minister’s salary is £194,250  – which is about €214,000