Minister for Finance, Michael Noonan will deliver his second budget on Wednesday the 5th of December 2012. Budget 2013 will take place over a single day this year instead of the two days it covered last year.
The economic backdrop
The aim of this years budget is to get back at least €3.5 billion in a combination of cuts to spending and in increased taxation. Specifically, the government has talked about a ratio of €1.25 billion in increased to taxes and charges and a further €2.25 billion in spending cuts.
Budget 2013 Predictions
- The long awaited details of the new residential property tax will not be announced as part of the Budget – but we expect to hear about it soon afterwards. A figure of 0.5% of the property’s value had been mooted by the IMF however it is likely that the average tax will be in the region of €300 to €500 per house.
- It is likely that there will be changes to the PRSI system and that this tax will now be charged on income that is not from employment – such as rental income and dividends from shares. This will only affect PAYE workers as self employed individuals already pay PRSI on this income.
There are reports that the top rate of USC for PAYE workers will be increased to 10% on income over €100,000. Again this would not affect self employed individuals as they are already subject to this increased top rate on income over €100,000.There is speculation that tax relief on pension contributions will be cut. The 41% rate will probably may go down to something like 30% .
We can also probably expect increases to the following :-
Carbon tax – which will affect gas, petrol diesel .
Excise duty - on alcohol and tobacco .
VRT – which will increase the cost of new cars.
Motor tax – further restrucuring is expected (that means increases!)
We will publish our summary of how Budget 2013 affects your small business on our website here.