New usc exemption level will protect low-paid - Costello

6 December 2011

by Cllr Joe Costello

In the second part of Budget 2012, the Government has achieved fairness and promoted job creation in a very difficult environment. It has delivered on its commitment not to raise income tax, and it has removed 330,000 people on low incomes from the Universal Social Charge.

The changes in the Universal Social Charge will more than double the exemption level from €4,004 to €10,006. This will benefit low paid, part-time and seasonal workers and help people to move into the labour market. Following on from the restoration of the minimum wage earlier in the year, these are significant protections for the lower paid.

Moreover, the better off will make significant contributions to increasing revenues, with Capital Gains Tax, Capital Acquisitions Tax and DIRT all increasing to 30 percent.

The much needed support for the SME sector will help to promote jobs growth. Along with the Loan Guarantee Fund and Micro Finance Fund, changes to the R&D credit, the extension of the corporate tax exemption for start-up companies, and the foreign earnings reduction for smaller companies that plan to expand their export markets into the BRICS countries will all help drive recovery for the SME sector.

There were also significant measures to increase jobs in the construction sector. The property sector must never again become the overblown behemoth it was during the bubble; however, it is now operating at well below its long-term sustainable level. Over 164,000 jobs have been lost in the construction sector since the first half of 2007; therefore, it is appropriate to implement measures that promote construction and get the many unemployed construction workers back to work. The reduction in Stamp Duty for commercial property transfers and a Capital Gains Tax incentive for property bought until the end of 2013 should assist in restoring property transactions to more normal levels.

Finally, increases in mortgage interest relief for people who bought their first boom during the height of the property boom and increases in mortgage interest relief for homes bought in 2012 are most welcome.