The first time we had a Carbon Tax in Ireland was back in the 2010 Budget .  It was introduced at a rate of  €15 Euro per Tonne.
The Carbon Tax is due to be increased in the 2012 Budget - this has been known for a long time -  (Budget 2012 What to Expect)

Back in 2010 the new Carbon Tax  resulted in price rises on Petrol of  4.2c a litre and deisel of 4.9c a litre. It  also  resulted in a price increase of Kerosene (Heating Oil) of  4.3 cent a litre including VAT.

Carbon Tax caused natural gas prices  to rise in 2010 by €0.0031 per kWh  – which for an average annual gas usage of 25000 Kwh –  added around €75 a year .

For the 2012 Budget we are expecting Carbon Tax to be  increased to at least €20 a Tonne – and possibly  to €25 a tonne – which is a 66% increase. (Don’t forget – VAT is charged on top of the Carbon Tax too)
If carbon tax rises to €25 a tonne – we can expect Petrol and heating oil prices to rise by about 3c a litre .

The Car Scrappage scheme was introduced in 2010 – and enabled people to claim a refund of VRT when buying a new car and scrapping an old one . See Full details of Scrappage Scheme here .
In Budget 2011 – it was announced that the car scrappage scheme is being extended to 30 June 2011.
But – the maximum relief will be reduced from €1,500 to €1,250.
The good news is that the extended scrappage scheme is now available to a spouse or civil partner.

It has finally arrived  – the Budget 2011  date of December 7th was announced back in September  – and at last it is here.

The minister for finance Brian Lenihan will start the Budget speech at 3.45pm today and it is expected to be the toughest Budget in the history of Ireland.  Maybe more people will be looking for some Free Cheese after this Budget?

We will be posting all the Budget 2011 details here as they are announced.

The 2011 Budget is expected to be voted through – with the support of  Gombeen Independent TD’s Jackie Healy Rae and Michael Lowry.

As mentioned here previously – cuts to the Minimum Wage and  Social Welfare are expected – as are tax increases.

Disposable Income levels of unemployed people has risen in recent years – whilst that of workers has dropped – so welfare cuts will be hard to argue against.

State Pensions may not be touched – even though CSO figures show that over  65′s seem to be faring better than the rest of the population.

There is also speculation that duties  on alcohol, cigarettes and petrol will all be raised sharply.
There was also some mention at  the weekend that  ministerial salaries could be cut by 10%-15%, and there could be pay cuts for  “semi-state” company bosses.

These are the 10 highest paid  sate or semi state employees in Ieland…

1. Head of ESB: €752,568

2. Head of Dublin Airport Authority: €568,100

3. Head of An Post: €500,000

4. Head of Coillte, the forestry commission €417,000

5. Head of Voluntary Health Insurance: €412,003

6. Head of Bord Gais: €394,000

7. Head of Bord na Mona (turf energy agency): €392,000

8. Head of RTE: (TV): €326,000

9. Head of CIE (transport): €252,416

10. Head of Health Services Executive: €335,913

Some more comparisons with the UK here

One of the big  Budget day dilemmas on Twitter is which  hash tag to use . Is it #budget11 or #budget2011 .  If that was our only worry we would be fine!

The state pension was left untouched in the 2010 Budget – and  there have been calls from a few politicians to leave it alone in 2011.
All welfare benefits were cut in 2010 by about 5% – and it looks like at least similar cuts to welfare benefits could be announced on December 7th.
The recent CSO survey on household incomes in Ireland once again throws up a few statistics and figures that will not help those arguing for no cuts to pensions. (Survey sample size was 5,183 households and 12,641individuals)

One example is the “at risk of poverty” measure.
The CSO did an analysis of the Irish population and their risk of poverty – by age group.
The age group with the highest percentage of risk of poverty  (18.6% ) is  the 0-17 age group and there were  13% of 18 to 64 year olds  at risk of poverty.
The  figure for 65 to 74 year olds is 8.9% (down from 12.1% in 2008) Half that of the under 18′s.

The same survey also shows that the only age group to have in increase in disposable income in 2009 were the 65 to 74 age group – who had an increase of 4.4% to 22,321 Euro.
Other age groups experienced a drop in disposable income – with 0-17 year olds having the biggest a drop of 6.8% to 21,244 Euro.
Last years survey showed that in 2008 the 65-74 age group had a 9.9% increase in disposable income – while 0-17′s were at 3.3%

Last year we reported here  that Households headed by an unemployed person had an increase of  25.2% in their disposable income between 2007 and 2008.
The figures from 2009 show that there was an increase in the disposable income of households headed by an unemployed person of  6.4% (from 35,208 to 37,450).
This compares to working households where disposable income dropped 4.2% to 58,405.

It is hard to justify rising disposable incomes of the  unemployed and pensioners to continue to rise while workers incomes drop.   The minimum wage will be falling by 12% in 2011 – so it is expected that Jobseekers benefits will be reduced by a similar amount. Will the government be brave enough to drop the state pension  also?

Ref:  http://www.cso.ie/releasespublications/documents/silc/current/silc.pdf

Below is  is a post which  we have from November 2009 -  which makes interesting reading in the light of the today’s minimum wage reduction and the forthcoming Budget 2011  which is expected to cut many welfare benefits…..

The CSO published a report in 2009  – “Survey on Income and Living Conditions “  which several newspapers picked up on and wrote about.
Most of the reports in the press that I saw were headlines such  as  ” One in seven people at risk of poverty”  or   ” One fifth of all households report arrears “   or even  “Ireland’s  poverty rate above EU average ”

In amongst all the doom and gloom and bad news – were some interesting figures – especially with the  Budget looming.
Maybe the headlines should have been ” You might be  better off not Working“  or ” Irish people are better off than they think”

The report tells us that in 2008 the average net disposable household income in Ireland increased by 2.2%  to €49,043 (from €47,988 in 2007 ).

In 2008 – Irish households in which the head of household was unemployed had an average disposable income of €35,208 – which is 58% of the average household income of households where the head of household was at work (€60,977).

Households headed by an unemployed person had an increase of  25.2% in their disposable income between 2007 and 2008. This compares with an increase in the average  disposable household income of just over 1% in the same period for households where the head of household was in work.

Disposable income is  net  of tax and PRSI.

Another interesting statistic was  that between 2007 and 2008 – Irish households where there was no person at work experienced a 13.1% increase in their net disposable household income .  This compares with an increase of 6.8% in households where one person was at work and  a decrease of 1.5% in households where two people were at work.

The figures for welfare benefits will have  to come down in line with other people’s income

Comparison with UK :
UK figures for 2007/2008 show that the average household disposable income (net of tax . National Insurance and Council Tax)  was £27,769. Even if we ignore the Council Tax – (Av £1100 ) – that still leaves a national UK average of £28,869
Comparisons are complicated by fluctuating exchange rates – but the Irish figure is about 70% more than the UK figure  (ignoring currencies).
Maybe these figures will help explain some of the pricing differences between goods in UK and Irish shops?  If the average Irish disposable household income is 70% more than the UK  (ignoring exchange rates) – then we should not be surprised if something that costs £40 in the UK costs €60 Euro here in Ireland .(50% more)
Even when using an exchange rate of 1.50 – the converted UK figure comes to €43,300 – still  €6k below the Irish income figure.
We realise that averages can hide lots of other things and can be swayed by very high or very low figures – but it still is an interesting comparison which may make Irish people realise that maybe things are not that bad here after all? No Council Tax or Water Rates either….

References  :  CSO Survey ; UK National Statistics

As announced in the  Budget 2010, a charge of 50 cents has been  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 Irish 2011 Budget will be announced on Dec 7th 2010 .

See Latest Budget 2011 News Here
The 2011 Budget is expected to bring in as much as   €4 Billion in savings -  through increased taxation and spending cuts.

Brian Lenihan has said he plans to reduce capital spending by €1 billion  – which could mean things like the Dublin Metro  being reconsidered.
He also said the other €2 billion would be achieved by cutting the cost of the public service and reforming how income is taxed.

A  new property tax and water charges have not been  ruled – but they would both require the setting up of collection systems that could take a while to implement.

It is looking likely that Income Tax will be increased somehow.
There has been mention of new “social charge”  to be paid by all income earners – this would replace PRSI and the health and income levies.

There could also be  cuts t0  the social-welfare budget running to hundreds of millions of euro.

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%