Budget 2013 Predictions

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.

• 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.