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Budget 2016: How ‘family friendly’ is it?

Over recent weeks, there has been much talk of a general election, and with the last Budget before a general election traditionally being one that is generous, Budget 2016 had been heralded in the media as the ‘Family Friendly’ Budget.

Over recent years, families have been hit hard by budget cuts and tax increases, but what does this year’s increase of €1.5 billion in the budget mean for you and your family?

Key points for families:

  • The upper age limit of the ECCE scheme is being increased to five and a half
  • Dads will get two weeks paternity leave
  • Child benefit increased by €5 to €140 per child per month
  • Free GP care will be extended to children under the age of 12 from next year

Let’s break things down…

Income

The headline news is that the Universal Social Charge is being reduced and the bands are being widened. You can now earn up to €13,000 before you have to pay anything, this is up from €12,012. The rates of USC have also been decreased:

Budget 2016Budget 2016 Looks Promising For Parents
Budget-2015Budget 2015: What Does it Mean for Families?
  • 1.5% rate is reduced to 1%
  • 3.5% rate reduced to 3%
  • 7% rate reduced to 5.5%

These changes will result in 700,000 people moving out of the tax net and coupled with an increase in the minimum wage of 50c an hour will have a positive impact on people working part time on lower wages. The current rates of PRSI and PAYE are staying the same.

Indirect taxes

There will be an increase of 50c on a packet of twenty cigarettes, but motor tax and tax on alcohol will be staying the same. Also, the 9% vat rate applied in the hospitality sector will remain the same. The €5 euro annual charge for using your debit or credit card is going to be replaced by individual charges.

Social Protection

  • Paternity leave will be introduced in September 2016, and will be for a period of two weeks
  • The respite care grant has been restored to €1700, and increase of €325
  • Increase in the home carers tax credit has also been restored from €190 to €1,000
  • There will be an increase of 50% for people on long term social welfare payments for Christmas
  • Free GP care will be extended to children under the age of 12 from next year
  • The upper age limit of the ECCE scheme is being increased to five and a half
  • Pupil teacher’s ratios will be reduced from 28:1 to 27:1, and there will be 2,260 new teaching posts and 600 new resource teaching posts created also

Housing

The government has delayed the revaluation date for the Local Property Tax. It has been put back a year from 2016 to 2017. This will give people a bit of breathing space before it increases due to recent increases in house prices.

Most of the changes here will be welcomed; middle income earners with families have taken the brunt of the government cuts over recent years and will be relieved to finally be getting some breathing space. It will be a relief for many expecting families to see that paternity leave is being introduced and will bring us in line with the European average.

For this Government though, I suspect it is too little too late for many families who have been dealing with debt, unemployment and sky high childcare costs for quite a long time. There are still major issues for people with young families, with the expected tax relief on childcare costs not materialising and no direct assistance for people who are dealing with high rents. However, that is up to us the voters, and in the meantime, don’t spend it all in one shop!

Approximate estimate for the tax year 2016:

Budget-Income-Table-2016

If you are wondering how exactly these changes will affect you, the Department have published a guide available here.

You can also try this handy calculator from The Journal here

So what do you think of the Budget for 2016? Will an extra year of ECCE help you manage your childcare bills and would it help you decide to work full time?

Earlier this year, you told us that you would like to see 52 weeks of parental leave introduced, like in the UK. Is two weeks paternity for Dad enough?

READ ALSO: Work Life Balance Survey: Here’s What You Told Us

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