Proposals to increase social allowances and extend paid parental leave

The increase in social benefits and pensions, as well as the increase in paid parental leave are part of a series of measures proposed by the finance ministry for next month’s budget.

Increases in fuel costs and improved supports for working from home have also been recommended in the ministry’s tax strategy papers, released ahead of the budget, which is due to be released on Tuesday, October 12.

A € 5 increase in both the state pension and basic social benefits is recommended, while new parents will also be able to benefit from seven weeks of paid leave from next August, compared to five weeks currently, at a cost of 14.6 million euros. . The entitlement will increase to nine weeks from August 2024.

Beneficiaries of the leave can also claim a parental allowance of 245 € per week, provided they have sufficient social contributions (PRSI).

Department officials have recommended that the cost of fueling your car and heating your home be increased, and that higher stamp duties for large homes also be included in the budget.

File photo: Larry Cummins

In terms of social assistance, if the measures proposed by the authorities were adopted, a widower receiving social assistance could earn € 13.50 more per week when various measures are taken into account.

In addition to a € 5 increase in the state pension, the document also proposes an increase of € 2.50 per week in the life-only allowance, which costs the state an additional € 23.5 million. every year. In addition, the telephone assistance allowance could be doubled to € 5 per week in recognition of the need for broadband access, costing the State € 17.8 million per year.

The cost of increasing the state pension would cost an additional 160 to 175 million euros, the report said.

The document provides for an increase in weekly rates of € 5 for social assistance recipients of working age, noting that these payments have not been increased since March 2019. The estimated cost of this measure would be between 203 and 217 million euros per year.

An increase in the fuel allowance of € 3.50 per week to offset the planned increase in the carbon tax is also mentioned. This would bring the annual value of the allowance to just under € 882 per household and cost around € 36.8 million in a full year.

In a report on personal income tax rates, it was stated that increasing the income tax, PRSI and USC income brackets by 1% in the next budget would cost 183 million euros, while warning that inflation is between 1.5% and 3%.

The authorities also recommended reorganizing the homework allowance in light of the greater shift to remote work. The new system would be a rate per day, replacing the current system that requires claimants to track and submit their utility bills and claim tax refunds.

The pandemic has seen a huge increase in working from home, much of which is expected to remain in one form or another.  File image: iStock
The pandemic has seen a huge increase in working from home, much of which is expected to remain in one form or another. File image: iStock

There is a proposal to increase the percentage of utility bills that can be claimed as an expense to 20 or 30%, and there is also an option for a work-from-home tax credit.

However, reports indicate that there are also equity issues from the perspective of the personal income tax system, as well as broader policy questions regarding the potential for shifting traditional costs of employment. from the employer to the state.

According to the proposals, the cost of refueling the car is expected to increase from next month, as part of measures to be announced in the budget, with a full tank of diesel likely to rise by almost € 1.50, while the cost of gasoline will increase by € 1.28 for a full tank from October 13. A 12.5 kg bale of peat briquettes will cost 20 cents more from May.

The carbon tax rate currently stands at € 33.50 per tonne, but is expected to rise to € 41 per tonne on budget day as part of its commitment to reach € 100 per tonne by 2030.

The reports also recommend that the government consider imposing a higher stamp duty rate on foreign buyers.

He also says ministers Paschal Donohoe and Michael McGrath should consider applying the higher 2% rate that currently applies to homes sold for more than $ 1 million at full property value.

Comments are closed.