4 December 2002

Budgetary Objectives 

This Budget has three key objectives:

To protect the weaker sections of society

To invest in the future, to position ourselves for a return to better growth levels, and

To secure stable public finances to safeguard the gains we have already made 

Summary of Economic Outlook 

  Economic growth (GDP) at 3½% next year

  Employment up by about 11,000

     Unemployment at 5¼% on average

  Inflation stable at 4.8% and falling significantly by 2005

  Increase in gross spending of 5.7%, to €38 billion in 2003

  Exchequer Borrowing of €1.87 billion in 2003

  A Debt Ratio of 34%of GDP, second lowest in the EU

Personal Taxation Measures

- Full year €186 million in personal tax reductions.

- Employee (PAYE) tax credit increased by €140 to €800 per annum

- Entry point to tax system raisedfrom €209   to €223 per week (90% of the minimum wage)

- Income Tax exemption limits for those aged 65 years and over increased by more than 15% to €15,000 single and to €30,000 married per annum

- First Time Buyers Mortgage Interest Relief upped by 25% to €4,000 p.a. single and €8,000 p.a. married/widowed. Relief period increased from five to seven years. 45,000 first time buyers will benefit 

- 37,400 taxpayers will be removed from the tax net in 2003, over a third of these are 65 years and over 

Indirect Taxation

From midnight 4 December:

- Excise duty on 20 cigarettes up by 50c (incl. VAT)

- Excise duty on spirits up by 20c per standard measure (incl. VAT)

- Excise duty on spirit- based ‘alcopops’ up by 35c per bottle (incl. VAT)

- Excise duty on auto diesel up by 3c per litre (incl. of VAT) 

From 1 January 2003

- 12½% rate of VAT up by 1% to 13½%

- Vehicle Registration Tax increased on certain larger cars 

Business Taxation Measures

- Standard rate of corporation tax on trading profits will fall to 12½% from 1 January 2003

- Levy on Financial Institutions to raise €100 million per annum in period 2003-2005

- Final termination date of 31 December 2004 set for a range of tax incentive schemes

- Write-off for capital allowances on plant, machinery & vehicles to be spread over 8 years instead of 5

- Restriction of capital allowances for hotels and abolition for holiday cottages

- Tax shelters and loopholes closed saving up to €10 million per year over 5-8 years 

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Stamp Duties

- Increased stamp duty rates on non-residential property depending on value

- Increase in stamp duties:

- on cheques from 8 to 15 cent per cheque

- on credit cards from €19 to €40 per annum

- on ATM cards from €6.25 to €10 per  annum

New stamp duty on Laser cards of  €10 per annum

Stamp duty exemption for young trained farmers extended for 3 years

 Capital Gains Tax

Earlier payment of Capital Gains Tax to bring in €250 million in 2003

Elimination of roll-over relief and curtailment of indexation relief for capital gainstax to bring in an estimated  €100 million in a full year

Closure of CGT loophole to protect the revenue base 

Capital Expenditure

Extra €209 million in 2003 for National Roads construction with total spending on roads next year of €1.25 billion 

Social Welfare

- Maximum rates for old age and related pensions increased by €10 per week from January 2003

- Over 66 rate of Widow(er)’s (Contributory) Pension and Deserted Wives Benefit increased by €11 per week

- Maximum weekly personal rate for recipients under 66 years increased by €7 per week

- All other personal rates increased by €6 per week

- Qualified Adult Allowance payments increased by at least €4 per week

- Family Income Supplement income thresholds increased by €17 per week

- Means test disregard for Carers Allowance  increased from April 2003

- An increase in the annual Respite Care Grant to €735, from June 2003

- Hearing Aid Grant doubled to €700 


- Child Benefit to increase by €8 (1st and 2nd children) to €125.60 per month and by €10 (3rd and subsequent children) to €157.30 from April 2003

- Back to School Clothing and Footwear Allowance for children aged 12 and over increased by €30 to €150, from June 2003

- Additional funding for current School Meals Programme