Supplementary Budget 2009

The Supplementary Budget 2009 was announced on the afternoon of Tuesday, 7 April 2009. This document contains a summary of the main changes.

For a full list of the changes in the Budget, please read the Department of Finance's Summary of Supplementary Budget Measures.

See also a summary of changes on the Department of Social and Family Affairs website.

Jobseeker’s Allowance

The personal rate of Jobseeker’s Allowance (JA) will be reduced to €100 per week for new claimants under 20 years of age (first week of May 2009).

The maximum Increase for a Qualified Adult payable to a Jobseeker’s Allowance claimant aged under 20 will also be reduced to €100 per week (first week of May 2009).

However, the reduced personal and qualified adult rate of Jobseeker’s Allowance for claimants under 20 years of age will not apply in the following cases:

• Claimants with dependent children
• Claimants with a qualified adult and dependent children
• People transferring to Jobseeker’s Allowance immediately after finishing their entitlement to Jobseeker’s Benefit
• People transferring from Disability Allowance to Jobseeker’s Allowance
• Where an existing Jobseeker’s Allowance claimant gets a job and stops claiming the allowance but loses that job an ends up back on Jobseeker’s Allowance within 12 months
• People aged 18 and 19 participating in a Youthreach course for young early school leavers or a full-time course in a Senior Traveller Training Centre
• Claimants who qualify for the Back to Education Allowance full-time second level course or post Leaving Cert course
• People aged 18 to 19 participating in a full-time FAS training course

When a person on reduced Jobseeker’s Allowance reaches the age of 20, if they still qualify, they will be entitled to the full adult rate.

There is no change to Jobseeker’s Benefit for claimants under 20 years of age.

Supplementary Welfare Allowance

The personal rate of Supplementary Welfare Allowance (SWA) will be reduced to €100 per week for new claimants under 20 years of age (first week of May 2009).

The maximum Increase for a Qualified Adult payable to a Supplementary Welfare Allowance claimant aged under 20 will also be reduced to €100 per week (first week of May 2009).

However, these reduced personal and qualified adult rates of payment will not apply where a claimant is entitled to an Increase for a Qualified Child.

Christmas bonus

The Christmas bonus paid in December to people getting certain social welfare payments will not be paid in 2009.

Rent Supplement

Entitlement to Rent Supplement will be restricted to people who are existing tenant for at least 6 months or who have been placed on a local authority housing list following a full housing assessment. (from 27 April 2009 or as soon as relevant legislation provisions allow)

The minimum household contribution is being increased from €18 to €24. (from the end of May 2009)

The maximum rent limits will be reduced between 6% and 10%, depending on geographical area and household size. (from the end of May 2009)

Rent Supplement payments currently being made to tenants are being reduced by 8%, in order, to encourage landlords of existing rent supplement tenants to reduce their rents. (from the end of May 2009)

Mortgage Interest Supplement

The minimum household contribution is being increased from €18 to €24.

Early Childcare Supplement

Early Childcare Supplement (ECS) monthly payment will be halved to €41.50 per child (1 May 2009).

The supplement will be abolished at the end of 2009 and will be replaced in January 2010 with a free pre-school year of Early Childhood, Care and Education (ECCE) for all children between the ages of 3 years 3 months and 4 years 6 months.

Back to Work Allowance

The Back to Work Allowance (BTWA) will be closed to new applicants.

Back to Education Allowance

The Back to Education Allowance (BTEA) will be changed to allow earlier eligibility to the scheme.

To qualify for the second level option, the length of time you must be getting a qualifying social welfare payment will be reduced from 6 months to 3 months. You must also be a jobseeker and out of the formal education system for at least 2 years.

To qualify for the third level option, the length of time you must be getting a qualifying social welfare payment will be reduced from 12 months to 9 months in line with the National Employment Action Plan when recommended by a Facilitator of the Department of Social and Family Affairs.

Back to Work Enterprise Allowance

A package of measures will be implemented to facilitate better access to the Back to Enterprise Allowance Scheme (BTWEA):

• The amount of time you can participate on the BTWEA will be reduced from 4 years to 2 years.
• The qualifying period required for BTWEA will be reduced from 2 years to 12 months provided you have an underlying entitlement to Jobseeker's Allowance.
• If you have previously participated in the BTWEA scheme and exhausted your entitlement, you can participate a second time after period of at least 5 years has elapsed.
• If you qualify for Jobseeker's Benefit (with 104 contributions paid in the past 2 years) or you have been awarded statutory redundancy you may get immediate access to a shorter BTWEA. In this case, the allowance will be payable for the duration of your Jobseeker’s Benefit entitlement (that is, either 9 or 12 months).

PRSI

The PRSI ceiling will increase from €52,000 to €75,036 (1 May 2009).

Income levy

The income levy rates will be doubled to 2%, 4% and 6% (1 May 2009).

The exemption threshold will be €15,028. The 4% rate will apply to income in excess of €75,036 and the 6% rate to income in excess of €174,980.

Health levy

The health levy rates will double to 4% and 5%. The entry point to the higher rate will be €75,036. (1 May 2009)

PRSI

The PRSI ceiling will be increased from €52,000 to €75,036. (1 May 2009)

Other income tax provisions

Mortgage Interest Relief

Mortgage interest relief will be discontinued for any mortgage over 7 years from 1 May 2009.

Restriction in interest relief rented residential property

The level at which interest re-payments can be claimed against tax for residential rental properties is being reduced from the existing 100% to 75%. This measure will apply to both new and existing mortgages. Commercial properties are not affected.

Taxation on savings

Deposit Interest Retention Tax and taxes on life assurance policies and investment funds

Deposit Interest Retention Tax (DIRT) increases from 23% to 25% from midnight on 7 April 2009.

The rate of tax on life assurance policies and investment funds increases from 26% to 28% from midnight on 7 April 2009.

Stamp duty

Life assurance policies

A new levy on life assurance is being introduced at the rate of 1% on premiums. This new levy will apply to premiums received by an insurer on or after 1 June 2009.

Non-life insurance policies - change in rate of tax

The current non-life insurance levy of 2% is being increased by 1%. The new rate of 3% will apply to renewals and offers of insurance issued by an insurer on and from midnight on 7 April 2009 where premiums are received by the insurer on or after 1 June 2009.

Stamp duty “trade-in” scheme

Establishment of a Stamp Duty “trade-in” scheme, under which no stamp duty is payable by a person who accepts a traded-in property in exchange or part exchange for a new house/apartment. Stamp Duty will apply when the person subsequently sells on the ‘swapped’/traded-in house. Full details will appear in the Finance Bill.

Capital Gains Tax

The Capital Gains Tax rate is being increased from 22% to 25% in respect of disposals made from midnight on 7 April 2009.

Capital Acquisitions Tax

The Capital Acquisitions Tax rate is being increased from 22% to 25% in respect of gifts or inheritances made from midnight on 7 April 2009.

Threshold

The current thresholds of €542,544 (Group A: parents to child), €54,254 (Group B: between related persons), and €27,127 (Group C: between non-related persons) are being reduced by 20% to €434,000, €43,400 and €21,700 respectively. This reduction applies in respect of gifts or inheritances taken from midnight on 7 April 2009.

Excise duties

Increase in mineral oil tax on auto-diesel

The mineral oil tax on auto-diesel will be increased by 5 cent per litre (including VAT) with effect from midnight on 7 April 2009.

Tobacco excise

The excise duty on a packet of 20 cigarettes will be increased by 25 cent (including VAT) with a pro-rata increase on other tobacco products, with effect from midnight on 7 April 2009.

Pension related deduction for public servants

Changes to ameliorate impact of deduction on lower paid public servants, partly offset by increase on higher earnings, this will cost €100 million in 2009 and €150 million in a full year.

Existing arrangements:

• first €15,000 of earnings – 3%
• €15,000 to €20,000 of earnings – 6%
• earnings over €20,000 – 10%

New arrangements:

• first €15,000 of earnings is exempt
• 5% on next €5,000 of earnings
• 10% on earnings between €20,000 and €60,000
• 10.5% on earnings above €60,000

Employment and Education

The Department of Enterprise, Trade and Employment (DETE) and the Department of Education and Science (DES) proposals will provide from within existing resources an additional 23,435 places on training schemes and education programmes as follows:

Training schemes

16,525 additional places in various programmes which will be funded through savings of €61.4 million.

Community Employment Scheme: 400 additional places on Community Employment schemes at a gross cost of €6.6 million.

Training Initiatives Strategy: 12,015 additional short training course places at a total gross cost of €37.3 million. These are typically 10-week courses for the development of occupation- specific skills courses with accreditation at either Levels 4, 5 and 6 on the National Framework of Qualifications or with recognised industry accreditation bodies.

Training Initiatives Strategy: 1,833 additional longer training course places at a total gross cost of €11m.These are typically 20- week courses for the development of occupation- specific skills courses with accreditation at either Levels 4, 5 and 6 on the National Framework of Qualifications or with recognised industry accreditation bodies.

Work experience scheme: 2,000 places on a new 6-month work experience scheme will be provided on a cost neutral basis where the State’s payment will be equivalent to social welfare jobseeker’s payments weekly rates. The scheme is for individuals who are unemployed and it will include the placement of graduates. The details of this scheme will be finalised between the Department of Enterprise, Trade and Employment, and the Department of Social and Family Affairs with a view to early implementation.

Pilot training programme for workers on short time: 277 places on this programme will provide training and income support to workers considered to be in vulnerable employment. Under this pilot programme workers who have been put on a 3-day week and who are receiving social welfare payments for the days they are not working, will receive 2 days’ training a week for a period of 52 weeks. The cost of the training element of this scheme is approximately €1 million. The details of this scheme will be finalised between the Department of Enterprise, Trade and Employment, and the Department of Social and Family Affairs (DSFA) with a view to early implementation.

Further and higher education

These measures will provide 6,910 additional places for unemployed people in the further and higher education sectors. The cost of these initiatives (and the training costs of the redundant apprentice programme being implemented in conjunction with D/ETE) will amount to €18.85 million in 2009 and will be funded through reallocation of resources within the D/ES budget.

Extra third-level places

• 930 places on short part-time transition courses to facilitate entry to courses starting in September 2009
• 280 places on accelerated certificate programmes beginning immediately
• 2,000 full-time third-level places starting in September 2009 will be available for unemployed people.

Post Leaving Certificate courses: 1,500 additional places in September 2009.

Redundant apprentice institute of technology (IoT) scheme: a new 11-week certified IoT training programme for up to 700 redundant apprentices a year will be introduced in conjunction with DETE. Completion of the programme will facilitate participants progressing to other higher education training programmes or to complete their apprenticeship at a later stage if on the job placements can be found for them. DES will fund the training cost of the programme which will amount to €1 million. DETE will fund the income support costs for participants on the programme, which will amount to €1.5 million.

Part-time 3rd level places: 1,500 third level places will be provided in conjunction with DETE, to allow people who are unemployed or who are on short-time working, to pursue third-level certificate or degree programmes at levels 6, 7, and 8 on a part-time basis. The estimated cost is €4 million. Arrangements for the operation of the scheme will be agreed jointly by DETE and DES with a view to early implementation.

Back to Education Allowance

The Back to Education Allowance (BTEA) will be changed to allow earlier eligibility to the scheme.

To qualify for the second level option, the length of time you must be getting a qualifying social welfare payment will be reduced from 6 months to 3 months.

To qualify for the third level option, the length of time you must be getting a qualifying social welfare payment will be reduced from 12 months to 9 months in line with the National Employment Action Plan when recommended by a DSFA Facilitator.

Back to Work Enterprise Allowance

A package of measures will be implemented to facilitate better access to the Back to Enterprise Allowance Scheme (BTWEA):

• The amount of time you can participate on the BTWEA will be reduced from 4 years to 2 years
• The qualifying period required for BTWEA will be reduced from 2 years to 12 months provided you have an underlying entitlement to Jobseeker's Allowance.
• If you have previously participated in the BTWEA scheme and exhausted your entitlement, you can participate a second time after period of at least 5 years has elapsed.
• If you qualify for Jobseeker's Benefit (with 104 contributions paid in the past 2 years) or have been awarded statutory redundancy you may get immediate access to a shorter BTWEA

Back to Work Allowance

The Back to Work Allowance will be closed to new applicants.

Early Childhood Care and Education Scheme

A free pre-school year of Early Childhood Care and Education (ECCE) for all children between the ages of 3 years 3 months and 4 years 6 months is being introduced. The provision will amount to 3 hours per day, 5 days a week over a 38-week year for children enrolled in playschools. Children enrolled in other childcare services will receive 2 hours and 15 minutes per day over a 50-week period. Around 70,000 children will benefit. All community and private pre-school services will be invited to enter the scheme. A capitation grant will be payable to service providers. (January 2010)

Health

No increases in statutory charges this year for A& E, private beds in public hospitals, in-patient beds in public hospitals, other payments made by service users or in the Drugs Payment Scheme threshold.

The ban on public service recruitment does not apply to consultant posts, emergency medical technicians (in ambulance services) and a range of therapist and other posts (speech and language therapists, occupational therapists, physiotherapists, clinical psychologists, behavioural therapists, counselors and social workers).

Housing

Mortgage Interest Relief

Mortgage interest relief for private residences will only be available for the first 7 years of the mortgage. Anyone who has been receiving interest relief for the past 7 years will no longer be eligible after 1 May 2009. However interest relief will be allowed on a pro-rata basis for the first 4 months of 2009. This means a maximum relief amount for 2009 of €1,000 for single people /€2,000 for married couples for people who have over 7 years on their mortgage (1 May 2009).

Stamp duty “trade-in” scheme

A new stamp duty “trade-in” scheme has been announced. Under the scheme no stamp duty is payable by a person who accepts a traded-in property in exchange or part exchange for a new house or apartment. Stamp duty will apply when the person subsequently sells on the ‘swapped’ or traded-in house. Full details will be outlined in the Finance Bill.

Rent Supplement

Rent Supplement will be reduced to reflect the fall in rents. There will also be other changes to the Rent Supplement eligibility and payment regime.

Home Energy Saving Scheme

€50 million will be provided for the Home Energy Saving Scheme, which provides grants for insulation and efficiency works in private homes.

The Scheme of Community Support for Older People

The Scheme of Community Support for Older People, which provided funds to local community and voluntary organisations to install personal monitored alarms and items of home security to enable older people live independently, is suspended with immediate effect.

Driving test fees

The driving test fee for a Car (category ‘B’), Car and trailer (EB), Moped (M), Motorcycle (A, A1) and Works Vehicle (W) has increased from €38 to €75. The fee for all other categories has increased to €110. Effective from 7 April 2009.

Banking regulation

The Central Bank of Ireland will have a central role in financial supervision. It will in future be headed by a Commission, chaired by the Governor.

A National Asset Management Agency will be established on a statutory basis, under the aegis of the National Treasury Management Agency. ‘Risky’ assets will be transferred from relevant financial institutions to the new National Asset Management Agency.

Civil and public service

A ban on recruitment and promotion in the civil and public service was announced on 27 March 2009. Numbers will further be reduced by measures which include:

• An early retirement scheme for civil and public servants aged 50 or over (from 1 May 2009)
• Civil servants taking a 3-year career break before 1 September 2009 will receive payment of one-third of a year’s salary (up to €12,500) per year over the 3 years.
• A new Shorter Working Year Scheme will replace the Term Time Leave Scheme for civil servants

The Government is to consider extending the new career break and shorter working week schemes to the wider public service.

Staff in the civil service will also be allocated and redeployed to areas of highest priority.

TDs and Senators

The Government has decided to introduce a number of additional changes to the remuneration of Deputies and Senators.

• 10% reduction in all expenses other than mileage rates, which have already been reduced by 25%.
• Deputies will no longer receive long service payments or increments.
• Former Ministers will no longer be paid Ministerial pensions while they are still members of the Oireachtas
• Oireachtas members who are on paid leave of absence as teachers may no longer keep the difference between their teacher's salary and the cost of employing a replacement.
• The allowances paid to Oireachtas Committee chairs will be halved and the payments to whips and vice-chairs are to be abolished.

The Oireachtas Commission has also put forward proposals for a reduction in the number of Oireachtas Committees

The Taoiseach announced on 7 April 2009 that the number of Ministers of State will be reduced from 20 to 15.

Public sector pay review

The Review Body on Higher Remuneration in the Public Sector is undertaking a new review of top level pay, to be completed by July 2009. It is expected that salary rates will be benchmarked against those in other EU states.

Indications of further tax measures

Options for future measures may include the taxation of Child Benefit, the introduction of a carbon tax, a form of property tax, elimination of unnecessary reliefs and a review of all areas of tax-exempt incomes. The Government intends to broaden the tax base in future budgets.

The Commission on Taxation is examining various aspects of pension tax treatment including the treatment of lump sums.

Indications of further social welfare measures

Child Benefit may be means-tested or taxed.

While social welfare rates will not be reduced this year, they may be reviewed in future years if there are reductions in the cost of living.

The campaign against welfare fraud will be intensified by allocating increased staff to the Department of Social and Family Affairs. It will target, in particular, fraudulent claims for Child Benefit and other payments by people who are no longer resident in Ireland.

Capital revenue

The Government will look at introducing a national infrastructure bond to raise money for capital projects.