Ireland unveils post-austerity budget, ends tax loophole

14th October 2014, Comments 0 comments

Ireland moved beyond the cycle of tax hikes and spending cuts on Tuesday with a new budget that also tightened the country's corporate tax rules.

"The road we have travelled to get to this point has been very difficult," Finance Minister Michael Noonan said.

"Budget 2015 is about securing the recovery".

Spending minister Brendan Howlin said the budget "marks the end of budget austerity."

Since 2008, Ireland has taken almost 30 billion euros ($38 billion) in spending cuts and tax hikes as the eurozone country battled an enormous economic collapse.

Last December, Ireland became the first of the bailed-out eurozone countries to exit a rescue programme, three years after needing an 85-billion-euro European Union and International Monetary Fund bailout.

Noonan said the budget measures would reduce the deficit next year to 2.7 percent of GDP, well within the EU's 3.0 percent target.

Noonan announced changes to income tax rates and thresholds, targeting low and middle income earners, who bore the brunt of the years of austerity.

"As we enter a new phase in the recovery, the government can focus on reforming the income tax system in a manner that positively contributes to and strengthens that recovery," Noonan said.

Howlin also announced over 2 billion euros in funding to tackle Ireland's social housing waiting lists.

He also announced an increase in child benefit and the partial return of the Christmas bonus, the first social welfare increases since 2009.

Dublin will phase out a controversial tax loophole known as the Double Irish, that allows multinationals to transfer profits to tax havens, Noonan also announced.

"I am abolishing the ability of companies to use the Double Irish by changing our residency rules. All companies in Ireland must be tax resident in Ireland."

It will be closed for new companies from 2015 and phased out by 2020 for existing users of the scheme.

Ireland's tax strategy is under increased scrutiny in the wake of a European Commission probe into Apple's tax arrangements in Ireland.

© 2014 AFP

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