Obviously, the Spring Statement set out the overall economic parameters of the Budget which would be that there would be good news to the extent of up to €1.5 billion euros. The Spring Statement also set out that it would be divided 50/50 between tax cuts €750 million and a similar amount for extra increases in expenditure.

Now, that may seem like a lot of money but it actually isn't.

The first point therefore to be made; the HSE for 2016's running the health service is seeking an extra €1.8 billion. That would swallow up the entirety of all the tax and expenditure changes.

I think there's every chance that they will exceed this ceiling that they've put upon themselves because they have off-balance sheet extras. Number one, the Exchequer tax returns for the first nine months of this year are €1.7 billion, more than was previously indicated.

Secondly, you have dividends of profits from the Central Bank in very large sums, perhaps a billion more than anticipated. You have debt savings because of lower interest rates that the NTMA is able to secure savings on servicing the national debts.

And in all these areas then you have things as random as the sale of telephone masts from Coillte and then of course you have the proceeds from the sale of shares in PTSB and the sale of shares next year in AIB.

You have all this money raining down on the Department of Finance so they have all sorts of opportunities for a once-off set of creative accounting that will amount to a bonanza.

This is the context of this Budget, it is on the eve of the next General Election. It is the last chance for the government to change gear from multi-annual programmes of austerity to having good news.

What is the good news?

So what I see in terms of the good news is first of all on the tax side, the big ticket item will be cuts in the Universal Social Charge. People have predicted that it could be as high as a 2% cut for those earners under 70,000 a year. This would target the lower paid and would be quite costly, it would cost about €540 million in a full year. They think they will get a better bang out of cutting that 7% rate for those workers.

There is also the question of very high earners, self-employed people over €100,000, they pay a 3% surcharge on the Universal Social Charge. That might be looked at because Enda Kenny has consistently promised that those who are earning more than €33,500 a year, who are subject to a top rate of marginal tax and earnings over that level of 51%, need some relief.

He has said that to bring back emigrants and to bring in various incentives to reward work and to reduce payroll tax costs that he would specifically make a commitment in that regard.

I think those will be the two biggest changes. I think you're going to see some increase on the old reliables. In other words, 50 cent on a packet of 20 cigarettes would be something that would create sixty-odd million. The price of oil has come down very significantly, might they look at some increase on excise duties there?

I think they will roll over the tax relief of the 9% rate of hospitality and I think you are going to see on the tax side some particular changes in relation to inheritance tax and gift tax. The threshold at the moment, what a parent can give a child, is €225,000. Now, a lot of houses in this country, particularly in the capital city, are much nearer to €500,000, so I can see those thresholds, the amount that you will be able to transfer by way of family home to your next generation, will be raised significantly and as a general rule, the gift and death tax and inheritance tax rules will be changed to raise that by €300,000. That will have a particular benefit for family farm situations.

I see a number of incentives being brought in for entrepreneurs whereby the lower rate of capital gains tax from 33% will be lowered for entrepreneurs who maybe set up businesses. In the UK, they've introduced an exit tax for people to encourage innovation, to encourage start-ups. The capital gains tax would be as low as 10%/15%. 

On the spending side

On the spending side, I see a number of changes. First of all, they have to honour the commitments of the Landsdowne Road agreement which means that there will be a reversal of the FEMPI Emergency Legislation in terms of cutbacks. It has been approved by the majority of trade unions so therefore the terms of that, in terms of rolling back pay cuts, will be reversed.

I see some increase in public sector numbers, maybe up to 4,000 or 5,000 that would be compromised of extra teachers, extra gardaí and extra nurses and front line health care workers with perhaps up to 2,000 extra positions being improved in the health service.

Then we move on the spending side to welfare changes. There has been no increase since 2008 in the basic rates of jobseekers allowance, disability allowance and the old age pension. You will see the rate of child benefit increase by €5 a month and then I think you will see some individual measures like the restoration of the Christmas bonus, maybe up to 50% and I think one of the particular nastiest unpopular cuts was the cut in respite care grant. That affects some 77,000 people, I could see that being reversed.

All in all, there will be something for everyone in the audience.

It will be a very political budget but I think you may also see, because of the election and because this is the last budget of this administration, they may well do what they did on the Public Capital Programme which is that they rolled up up to five, ten years expenditure in some cases in terms of public transport projects, and they may say our objective over the next five budgets is to achieve certain targets in taking people out of the income tax net, of increasing various bands and allowances and so on.

I think the top headline figure in terms of good news will be the Universal Social Charge.

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