Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

Thanks, Mattie. The scheme will be introduced in 2019 in respect of VAT expenses incurred in 2018. Charities will be entitled to a proportion of VAT based on the level of non-public funding they receive. A fund of €5 million will be available to the scheme in 2019.

I am also pleased to say that work on equality and gender proofing of the budget continues. The Government is working with partners such as the Irish Human Rights and Equality Commission to achieve the goal set out in the programme for Government relating to equality and gender proofing of budget measures. Concrete steps include cross-departmental workshops with the commission, examination of international best practice and the development of a policy document which will be published today. This afternoon, I want to reconfirm that the Government will continue to provide leadership in this area. We will work with the commission and others active in this field to ensure that equality and gender proofing is delivered.

Rewarding Work

We cannot protect our most vulnerable citizens and create a fairer society unless we reward work and ensure our system of taxation is also fair. A system where those earning an average wage are charged the higher rate of tax is unfair. We cannot hope to remain competitive if someone on a relatively low income who decides to work a few hours overtime has nearly half that extra money taken in tax. I am announcing to the House that the point at which an income earner attracts the higher rate of income tax will rise next year by €750 per annum. The entry point for single earners increases from €33,800 to €34,550, thus making progress towards the goal of ensuring that people on average wages do not pay income tax at the higher rate.

I am also introducing targeted changes to USC that reduce the rates but that do not narrow the base. The entry point to USC will remain at €13,000 but I am reducing the 2.5% rate to 2% and increasing the ceiling for this new rate from €18,772 to €19,372 to ensure that full-time workers on the increased national minimum wage of €9.55 per hour do not pay the upper rates of USC. I am also reducing the 5% rate to 4.75%, thereby reducing the top marginal rate of tax on income up to €70,044 to 48.75%. This is the fourth budget in which this marginal rate has been reduced.

To further help small and growing businesses around the country to address the challenges in our changing environment and to build on the progress made in the last two budgets, I am providing for a €200 increase in the earned income credit, bringing it to €1,150 per year from 2018. This increase is further recognition by this Government of over 147,000 self-employed individuals generating economic activity across the country.

Research has shown that employee financial participation can be effective in increasing competitiveness and helping companies to attract and retain staff in a competitive labour market. Therefore, I am announcing a new Key Employee Engagement Programme, KEEP, to support small and medium enterprises in their efforts not only to attract but to keep key employees in a competitive labour market by providing for an advantageous tax treatment on share options. KEEP will allow small to medium enterprises to provide key employees with a financial incentive linked to the success of the company.

Further to last year’s increase in the home carer credit and a commitment in the programme for Government, I am providing for a further increase of €100 this year, bringing the value of the credit up to €1,200 per year. This credit is of assistance to over 80,000 families where one spouse works primarily in the home to care for children or dependants. As a next step, I am establishing a working group to plan, over the coming year, the process of amalgamating USC and PRSI over the medium term. A key objective of this group and of mine as Minister for Finance in the decisions that I make is that we do not narrow our tax base but ensure that we have a personal taxation system that is both competitive and resilient in the future.

Corporation Tax Certainty

In the area of corporation tax, we have seen unprecedented change and reform in recent years. Ireland has played its full part in this. We have a stable and competitive corporate tax regime which is internationally recognised as one of the most transparent in the world.

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