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Homeowners will avoid significant increases in property taxes, and people living in new homes will pay nothing for at least another year.
A revision of the local property tax (LPT) has been deferred for the fourth time, which means there will be no change in 2021, however, homeowners and motorists will still be affected by increases in carbon tax. in the next budget.
The government is now working on the assumption that the UK will exit the EU without a deal in January and will borrow between € 15 billion and € 19 billion next year before additional budgetary measures are taken into account.
Public Spending Minister Michael McGrath has said: “There is nothing the Irish Government can do that comes close to matching the scale of the disruptive impact” that a no-deal Brexit will have.
Income tax will not be touched in the 2021 Budget and the Government will focus on supporting the companies and specific sectors that have been most affected by the pandemic.
Ahead of next month’s budget, McGrath and Finance Minister Paschal Donohoe have revealed:
- The carbon tax will be increased. It is expected to rise another € 6 per tonne, the same as last year;
- No changes will be made to income tax, USC or PRSI credits or bands;
- This year’s spending is 23% higher than expected at the beginning of the year due to Coivd-19;
- No decision has been made on changes to social assistance payments;
- There will be no more tinkering with pandemic unemployment payment rates.
It comes as Donohoe confirmed that a review of the LPT has been postponed, meaning there will be no change to the amount charged until 2022 at the earliest.
The postponement also means that around 100,000 homeowners who have purchased newly built homes since 2013 will be exempt from paying anything, as they have never undergone an appraisal.
Donohoe said: “As with many aspects of our economy, the pandemic has introduced volatility to the residential real estate market and I am also aware of the need to allow sufficient time for the Commissioners of Revenue to introduce the necessary changes to the LPT regime sooner. of any new valuation date “.
Donohoe said he would introduce legislation in 2021 to bring new homes that are currently exempt from the LPT into the tax system.
Meanwhile, the budget watchdog, Ireland’s Tax Advisory Council, has urged the government to launch a “substantial” five-year stimulus package as part of the 2021 Budget.
The council effectively wants the October budget to be packaged as a five-year fiscal roadmap for the country; setting out spending and tax intentions for the next five years and including an enhanced emergency fund and economic contingency measures in the event of a no-deal Brexit and further economic impacts from the Covid-19 pandemic.
“The 2021 budget must ensure that there is substantial multi-year stimulus to 2021 and beyond to continue targeted support measures and to support demand,” said Ifac President Sebastian Barnes.
“Given the high uncertainty surrounding Covid-19 and Brexit, establishing an appropriately sized contingency would help manage risks,” he said.
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