People on low incomes who will not benefit from the income tax reduction will be awarded a bonus of €35 as a top-up to the cost-of-living increase, which this year works out at 58 cents per week.
Separately, the Budget will introduce a so-called in-work benefit paid to low and middle-income earners. Couples where both spouses work and earn up to €20,000, and single parents who earn €15,000 or less, will receive a benefit of up to €1,200 per dependent child up to 23 years of age.
This measure is aimed at strengthening the concept of “making work pay”.
The Finance Minister made it clear that the €35 bonus will be a one-time pay-out and not a wage increase.
The bonus will also be paid pro-rata to students and part-timers and it will come from the government (unlike the COLA which is paid by companies) so as not to place a new burden on the private sector.
The income tax reduction to 25 per cent, down from 29 per cent, is being awarded to those who earn between €20,000 and €60,000 a year. It is the last part of a three-year income tax revision announced in the last Budget of the previous Nationalist administration.
The measure will leave an additional €19 million in people’s pockets. At the same time, the lower rate of income tax will be adjusted to make sure people who earn less than €9,150 a year remain untaxed. The same will apply for pensioners on less than the minimum wage.