Noonan defends PRSI allowance axe

Finance Minister Michael Noonan has defended a hike in PRSI contributions introduced as part of a crippling budget, insisting people will benefit in the long run.

As Taoiseach Enda Kenny said the Government had ensured the richest would contribute the most, Mr Noonan claimed low earners would still be hit.

Most workers will be forced to pay an extra five euro a week after the scrapping of the standard PRSI allowance, which was one of the headline cuts and tax increases unveiled among €3.5bn worth of austerity measures.

“For somebody on low pay on €25,000, an extra five euro a week to replenish the social welfare fund will guarantee their benefits, but particularly their contributory pension,” Mr Noonan said.

“It’s about the best value for five euro that anybody can get.”

He also stood by the introduction of a value-based property tax, saying it was preferable to hiking income tax and would ultimately protect workers.

Mr Noonan and Public Expenditure Minister Brendan Howlin were forced to defend the scatter-gun budget, which targeted everyone from the elderly and sick to the poor.

The new property tax was among the headline cuts and hikes in what was the sixth austerity budget since the onset of the economic crisis.

Homeowners will pay 0.18% of the value of their home when the new charge comes into force in July. That rises to 0.25% on properties worth more than one million euros.

Those eligible for different benefits and who earn below a certain threshold will also be entitled to defer their payments, Mr Noonan said.

The amount owed could be paid following the eventual sale of a home.

Meanwhile, Mr Howlin was forced to defend his decision to slash the respite care grant, which will be cut by €325 a year – from €1,700 to €1,375.

He said the Government was anxious to protect the core payments of social welfare, but had to make savings somewhere.

“The respite care grant was the only carers change we have made,” Mr Howlin said on RTE Radio.

“It is down, but it is down to a level that was paid in 2006 at the height of the boom.”

Later, the Taoiseach said the cuts had been as fair and equitable as possible.

Although he recognised it had been a difficult budget that would impact on families across the country.

“We have ensured that those who can afford to contribute most will do so,” Mr Kenny said.

“Primarily, we are supporting hard working families struggling to make ends meet by not increasing income taxes.”

He too defended the new property tax, saying the Government had ensured that everyone would make a contribution to the national effort by widening the tax base.

The main features of Budget 2013 included:

:: 10 euro wiped off child benefit every month.

:: A 0.18% value-based property tax – rising to 0.25% only on the value over one million euro – starting next July.

:: Motor tax increases between €10 and €126 in the new year.

:: One euro added to a bottle of wine, and 10 cent on beer, spirits and cider.

:: Cigarettes up 10 cent per 20 pack.

:: A three-fold jump in prescription charges for medical card holders from 50 cent to €1.50.

:: Third level fees increase by 250 euro for each of the next three years.

:: €50 cut from back-to-school allowance, down from €250 to €200.

Among the few positive measures were a freeze on petrol and diesel excise duties along with a three-year exemption for property tax for first-time buyers and the purchase of new or unoccupied homes.

There will also be a voluntary deferral scheme on the property tax for those hardest hit by the recession.

And in a bid to demonstrate politicians are not immune from the pain, TDs will now have to vouch for their expenses, while party leaders will have their special allowance cut by 10%.

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