Minsiter Brian Lenihan introduced his eagerly awaited budget speech this evening at 3.45pm presented as one with Ireland ‘on the road to economic recovery’, ’signalling to the world that we are willing to put our house in order’ and ‘difficult measures taken by Ireland this year to date have ben commended by international economic interests’.  In this light and with a 4billion correction in spending required for 2010 and a target of reducing our deficit below 3% of GDP by 2014 here our the ‘highlights’.

• 6-9 months timeframe expected to see positive growth in Irish economy
• need to compete internationally with export lead growth
• income tax system considered to be ‘imbalanced’ and need to simplify and broaden the tax base
• from 2011 a new system of social welfare contributions will replace health, prsi and income levies
• a new property tax is being planned following recommendations of commission on taxation report
• domestic water rates to be introduced
• those taxpayers availing of tax incentive schemes the tax free amount is being reduced from € 250,000 to € 125,000 and any excess over this will be taxed at 30% rather than 20% in addition to the normal levies that also apply. (MOM- This will therefore affect clients who avail of artist exemption scheme)
• our non- resident tax is considered to be in line with world economies
• New tax of € 200,000 per annum on Irish domiciled individuals i.e. those with income greater than € 1million pa and Irish capital assets of € 5 million plus. (This appears to affect non-resident Irish domiciled individuals….therefore for non-domiciled Irish residents there appears to be no changes to remittance basis of taxation……..)
• Public servants pay to be reduced between 5 and 15%
• cost of living has reduced by 6.5% during last 12 months
• child benefit to be reduced by € 16 per child
• Employers PRSI exemption will be available to encourage employers to hire unemployed people
• Excise duties to be reduced on drink (as a measure to stop cross border trade, which account for 44% of all cross border trade)
• VAT rate reduction from 21.5% to 21%
• Car scrappage scheme for cars 10 years old in 2010
• New credit review system for SME’s making credit applications…with independant review body to oversee and appeals on applications can be made
• Agriculture…a new 5 year agri-environment scheme to be introduced (MOM- presumably this to replace the REPS scheme which was discontinued for new enterants after May 2009)
• Corporation tax …no change to the 12.5% rate which firmly remains.
• Corporation tax …The 0% rate introduced in 2009 to be extended to new companies who begin trading in 2010 (MOM- This is a welcome incentive to business to encourage new start-ups both domestic and international, which can have a spin off effect to the economy in relation to creation of new jobs etc)

I will have more information once the detail unfolds over the coming days and will be happy to update you and answer any questions you may have….O’Mahony Donnelly Chartered Certified Accountants Contact Details