Income tax changes, cigarette hikes and benefits for low income earners introduced in the Budget will have a direct impact on people’s available cash. Kurt Sansone looks at the pluses and minuses for four hypothetical families that were used in a similar exercise to show last year’s measures.
The single mother: Rose
Rose is an unmarried single parent who took vocational training last year and found a part-time job.
However, since the job is unstable, not to lose her single mother benefit she only works for a meagre €56.91 per week.
She lives in a rented apartment with her young son and is benefitting from free childcare for working mothers introduced this year.
Her son will start attending kindergarten at the State school this year. She smokes a packet of cigarettes a week and does not own a car. She spends €15 per month on mobile telephony.
Budget 2014 had left Rose with more than €600 in her pocket since she took the benefit associated with vocational training.
How things will change
Rose does not pay tax so any changes are immaterial to her, but she will benefit from the new tapering system that will let her work as much as she wants without losing all her single parent benefit.
For the first year, she will retain 65 per cent of her benefit irrespective of her earnings. She is likely to more than double her work income from €3,000 a year to €7,000. This will make her eligible for the supplementary child bonus of €400 linked to school attendance and an in-work benefit of an extra €900.
This is on top of the children’s allowance she receives. Rose will also get the €35 bonus to make up for the reduced cost-of-living-allowance.
| 2014 | 2015 | Difference to pocket | |
| Single parent benefit | €3,919 | €2,547* | -€1,372 |
| Bonus | NA | €35 | €35 |
| Child bonus | NA | €400 | €400 |
| In-work benefit | NA | €900 | €900 |
| Cigarettes | €260 | €265 | -€5 |
| Mobile excise tax | €5 | €7 | -€2 |
| -€44 | |||
| * Although Rose’s single parent benefit will drop, she will see her income increase because the tapering system allows her to work as many hours as she wants. | |||
Parents with disabled child: David and Therese
David is the family’s sole breadwinner earning €19,181 from his job. Therese is a stay-at-home mum. Their daughter Shakira, five, attends a State primary school and is disabled.
Shakira’s parents receive a disabled child allowance of €20 per week apart from children’s allowance.
They do not smoke, they own a car that runs on petrol, for which they pay comprehensive insurance at €150, and spend an average of €30 per month each on mobile telephony. They also pay house insurance at €150 to cover the home loan requirements.
Budget 2014 had left this family with €200 more in their pocket after the disability allowance was increased and electricity tariffs reduced by an average of 25 per cent.
They will continue to benefit from these measures.
How things will change
The tax reduction will have no impact on David’s income since he pays tax at 15 per cent. His wage will go up by 58c per week but he will receive a one-off bonus of €35 as will his wife.
David will not be eligible for the in-work benefit because Therese is not employed. The family is not eligible for the child supplement bonus of €400 linked to school attendance because their income is above the threshold.
The annual car licence will go up by €10 for the second year running.
The family will also pay more on mobile telephony excise tax and duty on the car and house insurance policies.
| 2014 | 2015 | Difference to pocket | |
| Income tax* | €1,092 | €1,097 | -€5 |
| Social security | €1,918 | €1,921 | -€3 |
| Bonus | NA | €70 | €70 |
| Road licence | €235 | €245 | -€10 |
| Mobile excise tax | €22 | €29 | -€7 |
| Insurance duty ** | €30 | €33 | -€3 |
| €42 | |||
| * David pays tax at the married rate ** Insurance duty for car and house assumes premiums will remain unchanged | |||
The working couple: John and Amber
Both John and Amber are employed. John earns €33,181 while Amber earns €30,181. They do not have children.
Both own new cars for which they pay €700 in premiums. The couple also pay €350 in house insurance.
Amber smokes a packet of cigarettes a week. The couple pay €120 in mobile telephony usage per month.
Over the past 12 months, Budget 2014 had left this family with an extra €778 in their pockets because they had benefitted from the income tax reduction to 29 per cent and the utility rate cuts.
How things will change
John and Amber will both benefit from the reduction in the tax rate to 25 per cent for those earning less than €60,000. They will also take the COLA increase. Amber’s smoking habit will leave her 10c more per packet out of pocket while road licences, insurance premium duties and mobile excise tax will increase.
| 2014 | 2015 | Difference to pocket | |
| Income tax* | €11,366 | €10,406 | €960 |
| Social security | €4,286 | €4,286 | No change |
| Cigarettes | €260 | €265 | -€5 |
| Road licences | €353 | €373 | -€20 |
| Mobile excise tax | €43 | €58 | -€15 |
| Insurance duty** | €105 | €115 | -€10 |
| €910 | |||
| * Single tax rates apply (married separate computation) ** Insurance duty for car and house assumes premiums will remain unchanged | |||
The working parents: Joseph and Maria
Both are employed. Joseph earns €35,181 while Maria earns €18,181. They have two children, Ben, 10, who attends a private school and Justyne, three, who attends a private childcare centre.
Joseph smokes on average two packets of cigarettes a week and the family has two cars for which they pay €450 in insurance premiums. The couple also spend an average of €40 each on mobile telephony per month and pay a house insurance premium of €265 a year.
Budget 2014 had left this family with €737 more in their pocket. They benefited from the income tax drop to 29 per cent, a reduction in the utility bill and higher tax rebate for Justyne’s childcare.
How things will change
Joseph will benefit from the tax cut to 25 per cent. They will both receive the weekly 58c COLA increase but Maria alone will receive the €35 bonus since she will not benefit from the tax cut.
The couple will also get a tax rebate of €150 on school transport costs for Ben. Cigarettes will cost Joseph more and the two annual road licences will increase by another €10 each. They will also pay more on mobile phone telephony excise tax and insurance premium duty.
| 2014 | 2015 | Difference to pocket | |
| Income tax* | €6,756 | €6,318 | €438 |
| Social security | €3,961 | €3,965 | -€4 |
| Bonus | NA | €35 | €35 |
| Cigarettes | €520 | €530 | -€10 |
| Road licences | €314 | €334 | -€20 |
| Mobile excise tax | €29 | €38 | -€9 |
| Insurance duty** | €71 | €79 | -€8 |
| €422 | |||
| * Family pays parent tax rates (separate computation) ** Insurance duty for car and house assumes premiums will remain unchanged |
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Note: Fuel prices were not taken into consideration since these may fluctuate throughout the year although the government has reached an agreement with suppliers to keep prices static for the first three months. Social security contributions rose slightly due to the increased COLA.