There has been a number of very small improvements to the income tax regime which will help everyone, albeit in a minimal way. The USC rate on earnings between €19,874 to €70,044 has gone from 4.75% to 4.5%. A saving of €125 per year or €2.40 a week. The standard income tax band has increased by €750 to €35,300. This has a saving of €150 per year for those earning above €35,300. This is the equivalent of €2.88 per week. Therefore total income tax savings per week is at €5.28 per week which is effectively the price of a pint in Cork City centre. While these increases don’t appear to be much, the government are trying to gradually increase the standard income tax band as currently we are far from competitive in this space if you compare us to other European countries.

From March 2019 those in receipt of social welfare benefits will also see a €5 increase in their weekly income. Of course those who smoke 20 cigarettes a day won’t feel the benefit as their extra monies will go on a packet of 20 cigarettes which has risen by 50 cent. This price increase has already come into law as of last night.

Other tax reliefs include an increase of €300 for the home carers credit which is where one of the spouses stay at home to mind the children. This now amounts to €1,500. Also for the self-employed, the earned income tax credit has risen to €1,350, still €300 short of the PAYE tax credit available to employees.

The question that we need to ask this government is whether this extra €5 per person is worth it? Are they getting value from this payment?  Will the average worker change their spending habits based on the €5 a week? Last night I went to a seminar where a well-known economist was speaking. He made some great points but the main one I took away from the session was that if the government did nothing we would have had a surplus of €640m. Instead we have a deficit of over €300 million. His point being that as the economy is doing well the government should be taking money out of the economy and literally saving it. One punter at the session made the reasonable point that we are putting €500m into a “rainy day fund”. The economist laughed at this suggestion. He made the point that we are borrowing money to put into the rainy day fund. This he concluded was a laughable policy. In his considered opinion a rainy day fund should be generated by a surplus and borrowing for a rainy day fund makes no sense. The overall point he was making was that the government should be saving more and spending less, especially as the economy is growing considerably. Will we ever learn?