Budget 2017 Tax Implications

Tax Implications of Budget 2017

11 October 2016.
The Minister for Finance Michael Noonan T.D. today delivered Budget 2017. The overall Budget package was €1.3 billion, of which a net amount of just over €300 million was set aside for tax measures.

As was widely reported in the run up to the Budget, the Minister announced changes to the lower USC rates and bands. Institute President Mark Barrett welcomed the Minister’s proposals to reduce the USC burden for all taxpayers but highlighted the need for wider reform of the personal tax system.

“An overall analysis of the personal tax system post Budget 2017 gives us further evidence that we need to reform our regime in the medium to long term. The personal tax system is becoming increasingly skewed, with middle and high income earners accounting for an even greater percentage of the overall personal tax take after the Budget. Post this Budget, workers on €35,000 will pay 12.5 times the tax of someone on €18,000; it was 10.9 times before the budget. Workers on €75,000 will pay over 51 times the tax of someone on €18,000; up from a multiple of 44 times the tax prior to the budget”.

The Minister also announced a number of positive proposals for entrepreneurs and SMEs. As expected the Earned Income Credit has been increased, and the Government has also committed to introducing an SME focussed Shared-Based Incentive in Budget 2018.

Commenting on the Minister’s announcement the Institute President said: “The Share Based Incentive Scheme for SMEs is a welcome move which has been sought for some time. When the measure is brought in next year it’s important that it is as competitive as the range of regimes that have already existed in the UK for a number of years.”

A number of important non-tax measures were also announced as part of the public spending package. In particular, a new Single Affordable Childcare Scheme will be introduced from September 2017, which will provide both means-tested subsidies, based on parental income, for children between 6 months and 15 years and universal subsidies for all children aged 6 months to 3 years.

Some of the budget provisions are set out below

Personal Tax

Entrepreneurs and SMEs