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Irish budget: Michael Noonan expected to announce cuts in personal taxation Irish budget: Michael Noonan says Ireland is on new path
(about 7 hours later)
The Republic of Ireland's finance minister is due to announce tax cuts and spending increases in the country's last budget before an election. Ireland is "on a new path" and the top priority is to keep recovery growing, the Irish finance minister has said.
Michael Noonan announced a series of tax cuts and spending increases in Ireland's last budget before an election.
The country exited its international bailout programme in 2013 and is now Europe's fastest growing economy.The country exited its international bailout programme in 2013 and is now Europe's fastest growing economy.
Finance Minister Michael Noonan is expected to announce a cut in personal taxation. He told the Dáil on Tuesday that the government was on track to recover all of the jobs lost in the "bust" years.
However, some analysts have warned that Mr Noonan should do more to tackle high levels of government debt. There would be no more booms and no busts, he told politicians.
Threshold About 1,100 jobs are being created every week, Mr Noonan said in his budget speech.
The governing coalition has indicated that there will be a modest giveaway of about 1.5bn euro (£1.1bn). "Our people are in a much stronger and certain position than 2011," he said.
About half of that will reportedly be used to cut the unpopular Universal Social Charge (USC) which is sometimes called "the bailout tax". "We are on track to recover all of the jobs lost and have more people working by the end of this decade than ever before."
The threshold at which people pay USC is expected to rise to 13,000 euros (£9,646). The governing coalition had indicated that there would be a modest giveaway of about 1.5bn euro (£1.1bn).
There is also expected to be a new tax credit for self-employed people and an increased threshold for inheritance tax. Mr Noonan said he would cut the unpopular Universal Social Charge (USC) which is sometimes called "the bailout tax".
There are reports that the old age pension will go up by 3 euros (£2.22) a week. There will also be an increase in the fuel allowance. The threshold at which people pay USC is to rise to 13,000 euros (£9,646), he said.
It is understood that the government plans to create 2,200 new teaching posts and at least 500 additional jobs in policing. The cuts in personal taxation would mean an extra week's wage at every point of income, he told politicians.
Mr Noonan is to address the Dáil at 14:15 BST. Public Expenditure Minister Brendan Howlin will set out spending plans when he speaks at 15:00 BST. The changes would mean a one-income family with two children earning 35,000 euros (£26,182) will see their take home pay increase by 57 euros (£42) a month due to this budget, he said.
The Republic of Ireland's economy, as measured by Gross Domestic Product (GDP), is growing at an annual rate of more than 6%. He has also reduced capital gains tax and raised the threshold at which inheritance tax is paid.
The Gross National Product (GNP) measurement, which strips out some of the distorting activities of multi-national firms, is showing growth of about 5%. The minister said the pension fund levy had "done its job" and would end this year.
Unemployment has come down from over 14% in 2012 to 9.4% in September, bringing welfare spending down significantly. Mr Noonan said the 9% VAT rate for the tourism sector would not change despite the fact that the need for it is diminishing each year.
Government debt has fallen to about 100% of GDP compared to a peak of 120% in 2012. He announced plans to make it easier to transfer farm ownership.
The country's independent Fiscal Advisory Council has said the government's proposed package is "at the upper end of the range of prudent policies". He also said that road tax for large good vehicles was too high compared to that in Northern Ireland and the rest of the UK. Rates would be simplified and reduced to five new rates, he said.
It warns that the country's debt to GDP ratio "remains extremely high leaving the economy vulnerable to adverse growth and interest rate shocks". Mr Noonan also announced more details of a "knowledge box" corporation tax rate. That will allow profits related to patents and software copyrights to be taxed at a rate of 6.25%. The UK "patent box" system is set at a rate of 10%.
Irish Prime Minister Enda Kenny has said that he intends to hold a general election in Spring 2016. He said Nama would deliver 20,000 new residential units before the end of 2020 - 90% of these will be in greater Dublin and about 75% will be houses, mainly starter homes.
His centre-right Fine Gael party is the senior partner in coalition with the centre-left Labour Party. The finance minister said this budget would "give certainty to the Irish people of a better future".
Both parties are struggling in the polls despite the improving economy.