December 6th 2011  – Day Two of Budget 2012 – Taxation

These are the main points of the second day of Budget 2012

This article will be updated as the details are announced.

Income Tax – No Increases , No Changes to Tax Bands or Tax Credits

Universal Social Charge -  From January 1st the exemption level on the charge will rise from €4,004 to €10,036. No USC to be charged on people with total incomes below 10036.
Details of USC changes here

Carbon Tax – Increased tonight to €20 per tonne on Petrol and Diesel.  (Increase of 1.5c per litre from midnight tonight ) No increase on heating oil until May 2012. No extra carbon tax on solid fuel.

Car Tax Increases - more details  – upto 54% Increases !

Mortgage Interest Relief  -  An increased rate of mortgage interest relief to 30% for First Time Buyers who took out mortgage between 2004 and 2008.
Extend 25% Mortgage Interest Relief to first-time buyers for a final 12 months up until end of 2012. (It was due to be cut in Jan 2012)

VAT Increase  from 21% to 23% and guarantee no further hikes in this rate during the lifetime of this government.

Household Charge confirmed at €100 in 2012 – more details of Household Charge here

Duty on Cigarettes – adding 25c per pack of 20 from tonight. No increases on Alcohol.

CAPITAL ACQUISITIONS TAX Increasing from 25% to 30%

CAPITAL GAINS TAX Increasing  from 25% to 30% after today

DIRT Increasing  from 27% to 30%

CAPITAL GAINS  TAX  – Property purchased from midnight tonight and end of 2013 -held for at least 7 years – is exempt from Capital Gains

STAMP DUTY for commercial property transfers to be reduced from current rate of 6% to a flat rate of 2% from midnight tonight. This  lower rate applies to all non-residential property, including farmland as well as commercial and industrial buildings

PRSI :  Remove the remaining 50% employer PRSI relief on employee pensions
Further Broaden base of PRSI to cover rental, investment and other forms of income from 2013

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 .

A few days later than expected – as mentioned in our Budget 2012 Timetable  – the Finance Minister yesterday  unveiled the government’s  medium-term fiscal statement setting out the headline adjustments that will be made between 2012 and 2015.
The 2012  Budget will now  include €3.8 Billion of savings – with  €2.2 billion in spending cuts and €1.6 billion in additional taxation.  This is fairly close to the €3.6 billion figure that was expected.

The Irish public will not be impressed that these figures were released  in the same week that the Dept. of Finance found out that the national debt was in fact €3.6 Billion lower than they thought – because of accounting errors !

Mr Noonan  said there will be no changes to income tax rates, income tax bands or income tax credits in 2012 .

As previously announced  in November 2010 the top rate of VAT is  due to increase from 21% to 22 % – but it will now happen earlier than originally planned . The €100  property charge  or household charge was also confirmed again. The Carbon Tax  increase  was confirmed too. (Details on Budget Day)

Socail Welfare cuts were not mentioned – but it is very likely there will be reductions in the welfare budget in 2012  as they were mentioned in the four year recovery plan. (€0.6billion of savings were mentioned for 2012)

All of these changes were announced back in November 2010 as part of the Four Year Recovery Plan agreed with the IMF and EU . So they should come as no surprise to people in Ireland.

In 2012 – the day-to-day spending  by the government is also to be cut by €1.45 billion.  About  €750 million of the cuts will come from the capital investment budget.

The full details will be revealed on December  7th  – Budget Day

  Better Energy Scheme In Ireland – there have been grants available for a while now for homeowners who upgrade their old oil or gas boilers  to high efficiency condensing boilers i.e. – with a  “seasonal” efficiency of 90% or more.
A new scheme called Better Energy was launched in May 2011 as part of the new governments jobs initiative.

Under the new scheme Irish householders can get a grant of €560 Euro towards the cost of a new efficient oil or gas boiler. The grant  is only available if you also qualify for a grant towards upgrading your central heating controls.(Previously the grant was €700) The grant available for just an upgrade of heating controls is €400 .  Figures from OFTEC  – say that condensing  boilers could save as much as 18% in oil costs for heating and hot water. So if you currently spend €2000 a year on oil – you could save  €360 a year. You would recover the initial cost of the boiler and fitting  in about 3.5 years. With the freezing winter we have been  having – anything that reduces the cost of heating has to be a good thing.

Grants towards new boilers  are available from Sustainable Energy Ireland (SEI).  The Better Energy scheme is available to any owner of a dwelling built before 2006. The work must be carried out by a contractor from the SEI’s registered list.
More details below  of the amounts of grants available under the Better Energy Homes Scheme  .

In the Four Year  Recovery Plan released today – there is mention of a 100% increase in the Carbon Tax in Ireland by 2014.

Carbon Tax was introduced   in May 2010 and it put about €43 on 1000l of heating oil and about €75 a year on average gas bills in Ireland .
The plan states that the carbon tax will rise from €15 per tonne to €25 and then in 2014 it will rise to €30.

The new Carbon tax that was introduced in the December Budget will  take effect  from this Saturday  1 May 2010 on  Kerosene, Marked Gas Oil, Liquid Petroleum Gas (LPG), Fuel Oil and Natural Gas. VAT will also be charged on the carbon tax.

This new carbon tax will result in a price increase of Kerosene (Heating Oil) by 4.3 cent a litre including VAT. This will mean an extra €43 Euro on 1000 litres – which is an increase of about 6.5%

Natural gas prices will rise by €0.00307 per kWh consumed. With the average annual gas usage in Ireland around 25000 Kwh – this will mean an increase of around €76 a year on the average gas bill. (About 7%).

A new carbon tax of €15 Euro per Tonne was announced in the 2010 Budget. The tax will apply to Petrol and Diesel from midnight tonight.
Petrol will go up by 4.2c a litre and deisel by 4.9c a litre

The Carbon tax will apply from 1 May 2010 to Kerosene, Marked Gas Oil, Liquid Petroleum Gas (LPG), Fuel Oil and Natural Gas. VAT will also be charged on the carbon tax.

From May 1st 2010 – the new carbon tax will result in  a price increase of Kerosene (Heating Oil) by  4.3 cent a litre including VAT.  This will mean an extra €43 Euro on 1000 litres – which is an increase of about 6.5%

Natural gas prices will rise by  €0.00307 per kWh consumed. With the average annual gas usage in Ireland around 25000 Kwh – this will mean an increase of  around  €76  a year on the average gas bill. (About 7%)
See Our Gas Price Comparison here  to see if you could save money on your gas bill.

The application of the tax to coal and commercial peat will be subject to a Commencement Order.

For some reason -  Electricity is not subject to the carbon tax!

Update – Carbon Tax to be doubled by 2014 as part of National Recovery Plan

A new carbon tax is expected to be announced in the 2010 Budget today. The new tax is expected to result in increases of 5c on a litre of petrol, €54 Euro on 1000 litres of heating oil and 48c on a bale of peat briquettes.
The sales of paper log makers might go up after this budget. You can turn old newspapers into logs for your fire. See Below.