Brian`s Presentation

Brian Harvey
The Wheel,
21st October 2013
brharvey@iol.ie
• The seventh austerity budget
• Adjustment between €2.5bn and €3.1bn
• Spending down
• Down to €49.6bn
• Down -3% on 2013
• This is our baseline figure for today
• From 2008 to 2014
• Down from €53.4bn to €49.6bn
• Overall, cumulative reduction of -7.1%
• Voluntary and community sector down -8% to -10% yearly
Overview government spending
Cumulative fall -7.1% from 2008 to 2014
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Protection of basic rates [exc. Under 25s]
DSP budget down -3% €20.24to €19.65bn
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Supplementary payments -13%
Rent supplement -13%
Mortgage interest supplement -57%
Household benefits package -18%
Fuel allowance -4%
Back to work allowance -11%
Back to education allowance -3%
Back to school footwear & clothing allowance -5%
Job seeker allowance -10%
One Parent Family Payment -7%
Supplementary Welfare Allowance payments -32%
Other working age income supports -31%
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Community Employment +2% (€357m)
Tus +24% (€119.6m)
Community Services Programme -2% (€45.1m)
Reduction in supplementary payments means:
◦ Less demand as economic conditions improve (?)
◦ Fewer, lower payments?
◦ Stricter entitlements?
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Austerity budgeting means more poverty (over)
Poverty fell 2006-2009
And then began to rise again
Source: EU SILC, 2013
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Justice
Down – 6%
Equality and integration
◦ Women, Travellers, integration, refugees, charity regulation,
disability
◦ - 9%
◦ Remember against reference figure -3%
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Housing down -10%
◦ Voluntary housing €55.5m to €40.925m (-26%)
◦ Regeneration down €111.4m to €109.4m
◦ Government committed to 4,500 housing units, with 185
new homes (general) and 175 (people with disabilities)
◦ Social housing programme 1984 was 7,002
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Community and rural development -49%
◦ €199m to €102m [LEADER, LCDP, P3, Nat scheme]
◦ No explanation for this yet
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€48m, down €0.8m or -1.6%
Down from €84.7m in 2008, or -43.3%
Under Local Government Bill, 2013, s.35, will be
transferred to local authorities 1st July 2013
Will bring stream of independent community
development , begun 1891, to an end?
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Funding line for all ‘voluntary’ organizations
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Main funder for voluntary organizations
Down from €2.17bn to €2.142bn
Down -1%: will it be applied across-the-board?
DoH down €243 to €223m
HSE down €12.312 to €212.007bn
Drugs
◦ Down €29.951m to €27.951m, -7%
◦ Down from 2008 level of 44.3m, total -37%
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International development
◦ Overall, down €497m to €483m, -3%, -€14.1m
◦ But likewise, division NGO/state aid?
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Programmes for children and young people,
€320m, unchanged
But:
◦ Youth programmes -€2m
◦ Early intervention programme, -€0.8m
◦ Family Support Agency, €-2.1m
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Child poverty rate is even higher than overall rate,
18.8%
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Reduction public service obligation, -€18m
◦ Pressure on services, fares?
◦ More privatization?
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Irish Sports Council, -€0.9m
Rural Transport Programme, -€0.9m
Why?
One reason is the rising cost of servicing debt, but does not
explain reductions in spending areas affecting disadvantage,
voluntary & community organizatiions
Prospects 2015-2016
The cutbacks will bottom out in 2015,spending rising again in 2016
But will this include social spending, voluntary & community
organizations?
Arts, Heritage, Gaeltacht
Children & Youth
Education & Skills
EECLG
FA & Trade
Health
Justice & Equality
Social Protection
2014 2015 2016
207 205 205
417 410 410
8219 81808180
455 445 445
687 675 675
13263 13050 13050
2097 2060 2060
19631 19365 19365
Social spending areas will not benefit in 2016 rise in spending
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Social housing
Equality
Initiatives against drugs
Development
Reference point
(LCDP
Health
-26%
-9%
-7%
-3%
-3%
-1.6%)
-1%
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Traveller education*
-86.6%
Traveller accommodation*
-85%
Traveller equality measures*
-76.3%
National Traveller organizations* -63.6%
FAS Special Initiative Travellers* -50%
LCDP
- 43.3%
Initiatives against drugs
- 37%
Reference point
-7.1%
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*2013 only
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Reference point is -3%
DSP reductions suggest reduced safety net
Upward trend in poverty likely to continue
Social spending, lines which impact voluntary &
community organizations continue to be more
affected, especially for disadvantaged
Health-funded organizations may not fare as badly
Examination of proposed spending 2015, 2016
suggest worst is yet to come.
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Thank you for your attention!
Credentials Presentation
Post Budget Breakfast Briefing
Members of The Wheel
Eamonn Griffin, Partner
RSM Farrell Grant Sparks
Connect to:
www.rsmfarrellgrantsparks.ie
Spending Pressures
There are 350,000 more people in Ireland than in 2006
Compared to 2008 there are:
• 540,000 more medical card holders (1.89m)
• 200,000 more people receiving jobseekers payments
• 78,000 more students in education (1.04m)
• 65,500 more people of pensionable age
Follow the Money
• Local Property Tax €250m
• Changes to maximum allowable pension fund €250m
• Bank Levy €150m
• Alcohol tax €145m (+ cigarettes €15m)
• DIRT €140m
• Reduction in Medical Insurance Relief €127m
• Home Renovation Relief – cost €32m (from 2015)
• VAT – Retention of 9% rate – cost €350m
Rates & Credits 2014
Other Taxes 2014
• Capital Gains Tax
– No Change 33%
• Capital Acquisitions Tax
– No Change 33%
– No Change Class Thresholds
• Value Added Tax
– Tourism & Hospitality stays @ 9%
– No Change other Rates
• Stamp Duty
– No Change to Rates
• Dirt
– Increased to 4%
Other Features
• Employers PRSI to revert to 8.5%
• PRSI 4% on PAYE Employees Unearned Income
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Rents
Deposit Interest
Dividends
Other Investment Income
• Medical Insurance Relief Restricted
– Adult €1,000
– Child €500
– Standard Rate 20%
Other Features Contd.
• One Parent Family
– Principal Carer of Child
– Tax Credit €1,650
• Home Renovation Incentive
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Qualifying Expenditure
Tax Credit of 13.5% over 2 years
Minimum Expenditure €5,000
Maximum Expenditure €30,000
Principal Private Residence Only
Contractors Tax Compliant
Other Features Cont.
• Start Your Own Business
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Tax exemption up to €40,000 per annum
2 Years
Unincorporated Business
Previously unemployed at least 15 months.
• Illness Benefit denied first six days (from 3 days)
• Flat Rate Maternity Benefit €230 per week (taxable)
• Top Slicing Relief on ex-gratia payments scrapped (01/01/14)
Medical Insurance Premiums
Tax relief restricted to first €1,000 per adult (€500 per child)
Example:
• Couple with 2 children - Medical Insurance cost of €5,000
• Net premium payable to Health Insurance
– Yesterday €4,000 after tax relief
– Today €4,400 after tax relief
• Additional cost €400
Pensions
• Tax relief continues at marginal tax rate
• From 1 January 2014 tax relief only available for contributions to
fund a pension up to €60,000 p.a.
Pre Retirement access to AVCs
• Individuals will be able to withdraw up to 30% of the AVC value
• Option available for 3 years only from passing of Finance Bill 2013
• Withdrawals taxed at individual’s marginal rate
Tax Risk Assessment
• Casual Wages
• Employee Expenses
• Freelance Consultants
• Local Property Tax