We are pleased to provide you with an overview of Budget 2015, prepared by Purcell McQuillan Tax Partners in association with the CPA Ireland.
Michael Noonan delivered his fourth Budget Speech to the Dáil today. The speech signalled the end of austerity with tax cuts for lower and middle income earners and the announcement of a corporation tax reform package. Higher earners will see the reduction of the top rate of income tax to 40% being mostly offset by a 1% increase in the USC charge. The 12.5% corporation tax rate is not up for discussion but the so called “Double Irish” structures will be abolished. A new enhanced intellectual property regime will be introduced.
Unemployment which currently stands at 11.1% is forecast to reduce to 10% next year down from 14.5% at the height of the recession. GDP is forecast to grow by 3.9% next year with the budget deficit at 2.7% below the 2.9% required target. Agribusiness and tourism are seen as the two most important indigenous industries. Improvements have been introduced to the tax regime for farmers and the 9% VAT rate for tourism has been retained. Conditions for reliefs recently introduced such as EIIS, FED and SARP have been relaxed.
The improvements to the EIIS are welcome to the SME Sector but there is little else in the Budget to encourage entrepreneurship. This is in contrast to the excellent work on corporation tax reform for international business. It is hoped in the next Budget that a similar roadmap will be prepared for Irish indigenous business and there will also be reductions in the tax burden for middle and higher paid earners. 24% of taxpayers are paying 80% of the tax, this is not sustainable.
Finance Bill 2015 is due to be published on 23 October 2014 and will contain further detail on some of the measures announced.