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What we know so far about Budget 2019

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The final countdown is on: What we know so far about Budget 2019

Budget 2019 is looming – but what does it mean for your back pocket?

The Government has €3.4bn for new spending next year, but €2.6bn of this has already been committed for public sector pay hikes and demographics.

This leaves just €800m, which will be split 2:1 in favour of spending over tax cuts.

Independent.ie are keeping you up-to-date with the latest tips ahead of Budget Day – tomorrow, Tuesday, October 9.

Here’s what we know so far:

Old reliables

Excise duty on cigarettes will increase – but it is not yet decided whether the 50c hike applied last year will be repeated. The tax on gambling is also set to be doubled to 2pc.

USC

The USC rate of 4.75pc is to be cut by 0.25pc.

Carbon tax

Carbon tax is expected to rise to €30 per tonne.

The Government is also likely to push the line that Ireland is viewed as lagging behind when it comes to actively tackling climate change.

Carbon tax is used internationally as a way of changing habits and encouraging people to use more green energy.

In Ireland it applies to kerosene, marked gas oil, liquid petroleum gas, fuel oil, natural gas and solid fuels – but the rate, which is €20 per tonne, has remained unaltered since May 2014.

There has been some speculation that as well as hiking carbon tax, Mr Donohoe could raise the excise duty on diesel in a bid to promote electric vehicles.

One source close to the Budget talks said on Monday the carbon tax hike could be half of what was previously expected or even postponed.

If carbon tax hikes are more limited, Mr Donohoe will have little choice but to raise the 9pc VAT rate for the hospitality sector back to 13.5pc in one swoop.

Fuel allowance

One option being looked at is an increase in the weekly fuel allowance of €22.50, which is paid to people who are dependent on long-term social welfare payments.

Housing

The minister is hoping to get extra money for his budget by reducing Mortgage Interest Relief for 300,000 homeowners to 50pc of the original rate. As flagged last year, Mr Donohoe will reduce the level of relief available for people who took out a mortgage between 2004 and 2012.

It was reduced to 75pc this year, and faces a further 25pc cut in 2019.

The budget will also see the Help-to-Buy scheme for first time buyers retained.

A ‘granny flat grant’ is to be introduced to allow larger homes to be turned into rental apartments.

Some €300m is also set to be allocated for a new Affording Housing Scheme.

There will be extra incentives for landlords in a bid to reduce rents.

Pensions and Welfare

€5 hike to old age pension from March.

Christmas Bonus to be fully restored to 100pc.

€5 hikes to all social welfare payments.

Increase to Qualified Child Allowance.

Self-employed are expected to get dole entitlements.

Health

Overhaul of Fair Deal for farmers and small business owners.

Prescription charges reduced by 50c for older people to €1.50 per item.

Cap on family’s monthly Drugs Payment Scheme bill to be reduced by €4 to €130.

Allocation for the National Treatment Purchase Fund to rise from €55m to €100m in bid to cut waiting lists.

Partial restoration of cuts in the fees paid to GPs for services to medical card holders.

Carer’s allowance

Home carer’s tax credit is expected to go up by €300.

Income Tax

Threshold 40pc higher income tax rate is to be raised above €34,550. There is also expected to be an increase to earned income tax credit or self-employed.

DIRT

DIRT- the tax on savings – is to decrease from 37pc to 35pc.

Special VAT for hotels and restaurants

There will be some sort of change to the special 9pc VAT rate for hotels and restaurants. As mentioned above, if carbon tax hikes are more limited, Mr Donohoe will have little choice but to raise the 9pc VAT rate for the hospitality sector back to 13.5pc in one swoop.

Education levy

The Government are expected to hike education levy paid by businesses.

Enterprises will also have to pay more into the National Training Fund next year. The levy will rise from 0.8pc to 0.9pc, with the money to be channelled into the higher and further education sectors.

There will be subsidy to schools for each child in attendance to be increased.

Gardai

Garda overtime is expected to be cut but funds will be allocated to recruit more gardai.

Parental leave

Plans for two extra weeks of parental leave are to be announced in tomorrow’s Budget – but they won’t come into effect for at least a year.

Rainy Day Fund

Some €500m is expected to be put into a ‘Rainy Day Fund’.

However, Taoiseach Leo Varadkar said it could be raided in the event of a “chaotic Brexit”.