TAX-RAISING measures aimed at generating about €1 billion for the exchequer were announced by Minister for Finance Michael Noonan yesterday.
When added to tax revenues of €600 million from the full-year effect of measures already introduced in last year's budget, this will achieve the €1.6 billion "revenue consolidation" required in 2012 to meet the 8.6 per cent general Government deficit target agreed with the IMF/EU/ECB troika.
Income taxes were not touched, but a range of increases in indirect and capital taxes were announced.
Low-paid workers will be able to avoid the hugely unpopular universal social charge introduced last year by the previous Fianna Fáil-Green Party administration.
From January 1st, the pay threshold at which workers will be exempt from the charge will rise from €4,004 to €10,036. This will apply to 330,000 workers, many of them part-time or seasonal employees. As widely flagged, the higher rate of VAT is to rise by two points to 23 per cent from January 1st.
"During the lifetime of this Government, we will not increase the standard rate of VAT beyond the 23 per cent being announced today," Mr Noonan pledged.
He said the 9 per cent VAT rate introduced recently to aid tourism and leisure activities would be retained, as would the standard rate of 13.5 per cent that applies to home heating oil, residential housing, general repairs and maintenance.
With the differential in VAT rates with Northern Ireland set to be 3 per cent next year, Mr Noonan said he did not expect an increase in cross-Border shopping.
He said Opposition claims that the VAT rise would cost households €500 per annum on average was "incorrect".
The VAT hike is the biggest earner for the Government, yielding an expected €560 million in 2012.
The current rates of capital gains and capital acquisitions taxes will rise from 25 to 30 per cent respectively.
The rate of Dirt tax on interest earned from savings products will increase to 30 per cent from the current level of 27 per cent.
"We do not need to incentivise savings when the savings rate has already moved to 14 per cent," Mr Noonan said.
The Minister also proposes to broaden the base for PRSI by removing the remaining 50 per cent employer PRSI relief on employee pensions.
PRSI will also be applied to cover rental, investment and other forms of income from 2013.
Mr Noonan flagged his intention to abolish the citizenship condition for payment of the domicile levy. This is to ensure that tax exiles cannot avoid it by renouncing their citizenship.
"I intend to keep the contentious issue of the tax treatment of tax exiles under constant review."
The old reliables were also hit. The carbon tax has been increased to €20 a tonne from the current level of €15 a tonne.
This added 1.4 cent to a litre of petrol and 1.6 cent to a litre of diesel from midnight.
However, it will not apply to home heating oil until May 2012 and will not be applied to solid fuels, such as peat or coal.
A packet of 20 cigarettes increased by 25 cent overnight with pro-rata rises for other tobacco products.
Alcohol was exempted from an increase in excise duties, given that the VAT rise will affect sales in an already flagging sector.
The Minister said the Government would legislate in 2012 to deal with the issue of low-cost alcohol sold in supermarkets and off-licences.
Legislation is also being drafted to extend the 1 per cent betting duty to online gambling while betting exchanges will be subject to a 15 per cent tax on their commissions.
This is expected to yield €10 million in 2012 and €20 million in a full year.
