NEW measures to tackle unemployment and reductions for PAYE taxpayers will form a central part of next Tuesday's Budget.
Official figures published today show that the Government has scope for general income tax reductions, while holding Exchequer borrowing to around 2.2 per cent of Gross National Product. A tax boost for small business is also planned.
Cabinet Ministers agreed the package yesterday as the pre Budget White Paper of Receipts and Expenditure indicated that there is more scope for tax reductions than had been anticipated.
Mr Quinn should have more than £150 million and possibly close to £200 million to spend on income tax, PRSI and corporation tax reductions.
The Government has agreed a package of measures to tackle long term unemployment, with the extra cost accommodated within the spending ceiling set in December of just over £12.087 billion.
The unemployment package is understood to include
. A pilot scheme to give 1,000 long term unemployed state funded employment on community work.
. New rules to oblige 18 and 19 year olds to train and be available for work.
. A revamp of the Community Employment Programme to include more long term unemployed and offer more training.
. Tax measures to remove more of the lowest paid from the tax and PRSI net. The PRSI allowance which now exempts the first £50 earned from PRSI is expected to rise to £80 or £85. The exemption limit below which no PAYE income tax is payable rises from £71 to around £73.
. A new job subsidy scheme offering employers around £80 a week to take on a long term unemployed person.
. An extension of the Back to Work allowance scheme which allows the long term unemployed to retain cash benefits after returning to work and to retain secondary benefits.
Mr Quinn will have around £100 million for general increases in social welfare payments of around 3 per cent, a rise in child benefit of £2 to £3 a month and a new early retirement scheme for the Defence Forces.
The Budget will include measures to boost business, particularly small firms. Small businesses which now pay corporation profit tax at 38 per cent will benefit from a lower rate of 25 to 30 per cent, based on a turnover limit. Relief to employers' PRSI will also feature.
Mr Quinn is expected to announce increases in the main income tax allowance, benefiting all taxpayers. The main measure aimed at higher earners will be a widening of the standard rate income tax band considerably ahead of inflation, meaning less income taxed at 48 per cent.
The cash benefits to most taxpayers will be modest and somewhat offset by higher duties on petrol and tobacco, which will raise around £40 million. All private sector workers will also gain from the increase in the PRSI allowance.
