(14 Apr 2009)
There has been a lot of uncertainty about our economic position. It seems that people have battened down the hatches when it comes to spending and who can blame them. The usual economic indicators speak for themselves and little notice is taken of the political rhetoric.
This supplemental budget aims to give people some certainty about the future so that you can plan accordingly. It is hoped that for those with disposable income that they will have enough confidence to spend., at the same time, the gap between the public expenditure and tax receipts has to be drastically reduced. Whether the government was successful with this budget, only time can tell.
Let’s look for a moment to see what this budget will mean for you.
There are two areas of tax affecting your every day purchasing power; how much income you have and the cost of goods, and services.
Your take home income will drop as the income levy has been increased. Your overall level of income will determine the levy amount. If you earn €15,000, the rate is 2% of your entire income. This rate is further increased to 4% if you earn €75,000 and to 6% if you earn €175,000 or over. Putting it simply, if you earn €35,000 per year, you now have to pay a €700 income levy in addition to your ordinary income tax and PRSI contributions.
There is some relief with this supplemental budge. The costs of goods or services have not been affected to any great extent. The VAT rates will remain the same along with petrol and alcohol duties. However, smokers will pay 25 cent more for a packet of cigarettes and diesels has been increased by 5 cent per litre.
For those wishing to sell property where Capital Gains Tax (CGT) applies, more of your profit from the sale will now go to the State as CGT rates have increased to 25%. This is the same for Gift Tax (known as Capital Acquisitions Tax) which has also been increased to 25%, leaving you with less of the gift than you had originally thought.
The changes in the tax rates will come into effect on the 1May 2009. This means that there is some time to consider the implications of tax changes and good tax planning now, can minimise your exposure at a later date.
For further information please contact Seán Cryan at scryan@johnasinnott.ie