Budget 2004 - Summary

This Budget has four key objectives:

• To foster employment and growth
• To continue a prudent approach to our public finances
• To invest more in infrastructure
• To secure competitiveness by keeping inflation low

thereby giving the resources needed for social inclusion

• Economic growth at over 3%
• Employment up by 23,000
• Unemployment held at 5% on average
• Inflation down to 2½ %
• Gross spending up just under 7% , to €41.1 billion
• Exchequer borrowing of €2.8 billion

General Government Deficit at 1.1% of GDP

• €300 million in tax reductions
• Employee (PAYE) tax credit increased by €240 to €1,040 per annum
• 90% of minimum wage will remain out of the tax net
• Income Tax exemption limits for those aged 65 years and over increased by €500 to €15,500 p.a. single and by €1000 to €31,000 p.a. married
• Over 41,000 taxpayers will be removed from the tax net next year
• Tax Allowance for Trade Union subscriptions raised to €200 p.a.

• Business Expansion and Seed Capital Schemes extended to 31 December 2006. Company limit increased to €1 million
• Film Relief extended from end-2004 to end-2008. Cap on funding amount (per film) eligible for tax relief increased from €10.48m to €15m from 1 January 2005
• New tax credit for R&D by firms to encourage higher value jobs
• New Holding Company tax relief to encourage head-office firms and jobs to come here
• Renewable Energy Tax Relief extended to 2006
• Urban Renewal Scheme and other Schemes extended from 31 Dec 2004 to 31 July 2006

From mid-night 3 December:

• Cigarettes up by 25c per packet of 20 (including VAT)
• Excise duty on petrol and auto diesel up by 5c per litre (including VAT)

• Increase in annual tax exemption limits for leased farmland - €7,500 for 5 to 7 year leases, €10,000 for 7 years or more. Age limit lowered from 55 to 40
• Farmers/Flat Rate VAT raised to 4.4%
• Gaeltacht summer college (mná tí) income exempt from tax
• Capital allowance for farm pollution control measures extended for 3 more years
• New Rural Social Scheme to create up to 2,500 community-related employment places

• Major programme to decentralise Government Departments and Offices
• Over 10,000 jobs for 53 centres in 25 counties
• €20m in capital provided for up-front investment
• Programme to involve voluntary staff transfers

(from January 2004, except where stated)

• €630m full year increase in Social Welfare as follows:
• Increases in rates well ahead of inflation
• Maximum rates for old age and related pensions increased by €10 per week
• Over 66 Widow(er)'s Contributory Pension and Deserted Wife's Benefit increased by €11.50 per week
• All other personal weekly rates increased by €10 per week
• Special Increase of €16.10 in the Invalidity Pension Qualified Adult Allowance rate where the qualified adult is aged 66 or over
• Child Benefit to increase by €6 (1 st and 2 nd children) to €131.60 per month and by €8 (3 rd and subsequent children) to €165.30 from April 2004
• Family Income Supplement income thresholds increased by €28 per week and a €7 increase in the minimum payment
• Increase in Respite Care Grant to €835 per annum from June 2004
• Increase in Widowed Parent Grant to €2700 from Budget day

Additional €25 million allocation to assist persons with intellectual, physical or sensory disabilities

For new entrants, the Government is introducing the following:

• Minimum pension age increased to 65 for most new entrants from 1 April 2004
• Minimum pension age for certain categories (Gardaí , Prison Officers) to be increased to 55 , and Defence Forces to 50
• Minimum pension age increased to 65 for Oireachtas members and Office Holders elected or appointed on or after 1 April 2004
• Present compulsory retirement age of 65 will be removed for new entrants enabling staff to remain in work if they wish

For existing public servants:

• New integration arrangements with Social Welfare to assist lower paid public servants
• A single Additional Voluntary Contribution type scheme is to be introduced

• 5 year rolling envelopes for all capital investment. Commitment to keep capital investment at up to 5 per cent of GNP during next five years
• Extra €30m for School Building works

Additional once-off €30m provided in 2004 for the Exchequer contribution to the Local Government Fund