Monday 18 February 2019

From tax cuts to a €5 pension hike, everyone can be a budget winner

Finance Minister Paschal Donohoe after the Budget. Photo: Gareth Chaney Collins
Finance Minister Paschal Donohoe after the Budget. Photo: Gareth Chaney Collins

A hike in the state pension plus income tax cuts were among the key measures Paschal Donohoe pledged yesterday to provide "sustained improvements in people's lives".

Delivering his first Budget as Finance and Public Expenditure Minister, he also vowed to keep a government promise to balance the books and safeguard Ireland's finances.

Measures include:

  • An extra €5-a-week in the State pension.
  • The same rise for all other welfare payments including disabilities allowance and jobseekers' benefit.
  • Cuts in the Universal Social Charge (USC) for low and middle income workers.
  • A 50c hike in taxes on cigarettes.
  • Funding for almost 5,000 teachers, health workers and gardai.

Mr Donohoe also confirmed that a Christmas Bonus will be paid to all welfare recipients this year at a rate of 85pc.

Supports for lone parents include increasing the earnings disregard for the One Parent Payment and the Jobseekers' Transitional Scheme by €20-a-week.

He said that the hike in payments and measures to help working families will reduce the risk of poverty and inequality.

A €10m increase in funding for the Free Travel Scheme and €8.5m to extend the fuel allowance season from 26 to 27 weeks were also announced.


There will be a new Telephone Support Allowance of €2.50 a week for people who get the Living Alone and Fuel Allowances.

There will be no increase to the childcare subsidies introduced last year.

However, an extra €20m in funding for childcare will close loopholes, which will see around 20,000 three and four-year-olds benefit from additional free care under the pre-school programme.

Families with a stay-at-home parent will get an extra €100 a year in the form of an increase in the home carer credit to €1,200.

Mr Donohoe said the credit helps more than 80,000 families where one spouse works primarily in the home to care for children or other dependants. There was no change to excise duty for petrol, diesel or alcohol.

However, today a box of cigarettes will hit €12 for the first time, following a 50c increase.

In relation to taxes on work, Mr Donohoe said he wanted to ensure the system is fair and he raised the threshold where the higher rate of income tax kicks in and lowered two rates of USC.

The entry point for the higher rate of income tax for single earners is being increased by €750 from €33,800 to €34,550.

The move had been a priority for Fine Gael, while Fianna Fail pushed for reductions in the USC as had been agreed in the confidence and supply deal under which it facilitates the minority government's budgets.


The 2.5pc USC rate is being reduced to 2pc and the 5pc USC rate cut to 4.75pc.

Mr Donohoe said the ceiling for the new 2pc rate is being raised from €18,772 to €19,372 to ensure that full-time workers on the new increased national minimum wage of €9.55 an hour won't pay the upper rates of USC.

He said will set up a working group over the next year to plan the process of merging USC and PRSI over the medium term. Housing remains a "priority" for the Government, Mr Donohoe said.

He announced a plan to fund 3,800 "social housing" homes next year and increased funds for the Housing Assistance Payment Scheme.


In other measures, the Budget provides increased funding for education of €554m and includes provision for 1,280 new teaching posts and more than 1,000 special needs assistants.

A total of 305 of the jobs will help to reduce the pupil to teacher ratio from 27:1 to 26:1.

Mr Donohoe said new health funding will pave the way for 1,800 more staff across front-line services - including acute care and the mental health, disability, and community care sectors.

A further €471m has been made available for capital spending in health between 2018 and 2021 ,including funding for the delivery of the new National Children's Hospital at the St James's site in Dublin.

Meanwhile, Mr Donohoe announced funding to allow the recruitment of an additional 800 Gardai during 2018.

Another 500 civilian staff will also be hired.

The Justice Budget has been increased by €63m.

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