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.
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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.