Don’t Forget Budget 2015

With all the publicity about the  Water Charges that kicked in this month – there seems to have been a lot less media coverage about the upcoming 2015 Budget. Will we see more cuts in the next Budget?

Budget 2015 will be announced on Tuesday October 14th. This is the second year of an October Budget day since it was moved from December in 2013.
The politicians are only just back from their summer holidays – so they don’t have as much time to be making vote grabbing promises or negative slurs as they used to have with a December Budget.

The state of the nation’s finances are still not great despite the positive talk we seem to keep hearing from government.

There is still an estimated  €7 Billion gap between annual government revenue and expenditure.  This gap is 5 times higher than it was at the start of the financial crisis.
More government borrowing  has added to the existing large stock of debt accumulated during the crisis. The general government gross debt was €215 billion as at March 2014. That is 122% of GDP . One third of the increase in govt debt since 2008 is due to bank bailouts.

The plan up to now was to make “adjustments” of €2 Billion in Budget 2015 . That would have come on top of the previous austerity measures amounting to almost €30 billion between summer 2008 and 2014.
Those plans could be revised now because of better financial figures this year  – but we still expect fairly significant spending cuts and tax increases for 2015.

Banner - Savings (3.75% IR)>

Today (Oct 2nd)  Joan Burton TD mentioned that 750m of  expected spending cuts were no longer needed and were “off the table”

Water Charges are expected to bring in €340 million in 2015 – (based on €238 a year average and 1.28 million households charged)  – so any Budget cuts to income will be on top of these.
The Property Tax will not be changed in the 2015 Budget . Some people may end up paying less LPT in 2015 where local Councils have decided to adjust it. See 2015 Property Tax Amounts here.

We have had a few “leaks” based around possible income tax cuts . Fine Gael want to gradually cut the top marginal tax rate from 52%  – and they are expected to start that process  in Budget 2015. They could adjust some or all of the following:  – the income tax bands , the actual income tax rates or possibly USC rates and bands .
They will probably also look at some of the many tax relief schemes to reduce some of them and get extra revenue that way.

The IMF have a few ideas about what Ireland could do in Budget 2015 – see them here.