The Irish government on Tuesday unveiled its pro-growth 2017 budget, which will see a range of tax cuts and spending increases worth a total of 1.3 billion euros (about 1.44 billion U.S. dollars).
Under the new budget, there will be 500 million euros worth of tax cuts, the government said. But it said it will increase tax revenue by 195 million euros next year.
Among the headline measures include a new help-to-buy scheme for first-time house buyers, further cuts to the three lowest rates of the Universal Social Charge of 0.5 percent; freezing on the reduced tourism and hospitality VAT rate of 9 percent; a two-year extension to the home renovation tax-break scheme credited with kick-starting the construction industry.
But the government said it will increase the price of cigarettes by 50 cents from midnight on Tuesday, bringing the cost of a 20-pack to about 11 euros.
Cigarettes duties have been increased in every budget for the past five years. Meanwhile, a new sugar tax on soft drinks will be introduced alongside Britain in April 2018.
On the spending side, key measures include: an affordable childcare scheme with both means-tested subsidies for children aged between six months and 15 years and universal subsidies for all children aged six months to three years, to be introduced next September; a 5-euro-a-week rise in the state pension and all other weekly social welfare payments, including the carer's allowance, disability allowance and jobseeker's benefit and allowance; an accelerated police recruitment drive, taking on 800 new officers next year. During his speech in parliament, Irish Finance Minister Michael Noonan said it was his sixth budget since 2011 and the economy is in good shape and growing strongly. He said his department is forecasting GDP growth of 4.2 percent in 2016 and 3.5 percent for next year, adding that the projected deficit for 2016 is 0.9 percent of GDP and the forecast for 2017 is 0.4 percent of GDP. Noonan said a new domestic target of a debt to GDP ratio of 45 percent to be reached by the mid-2020s or thereafter depending on economic growth. The national debt peaked at over 120 percent of GDP during financial crisis, according to the Irish minister. But he said it will be down to 76 percent of GDP at the end of this year. "We will continue to reduce it to achieve the target of 60 percent of GDP in accordance with the European Stability and Growth Pact," he added.
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