Ireland set for budget without tax hikes

Dublin - The Irish government is set Tuesday to present its first budget without tax hikes or spending cuts in seven years.

Income tax relief measures as well as increased expenditures are expected as a white paper released last week showed the governing coalition can meet its EU deficit target of less than 3% of gross domestic product without further cuts.

Joan Burton, leader of the junior coalition partner Labour, said Monday that the budget for 2015 will mainly benefit low- and middle-income earners, working families and vulnerable groups.

They were most affected by the austerity measures imposed as part of the conditions of a three-year bailout programme from the European Union and International Monetary Fund that Ireland exited successfully in November.

The government is expected to raise the threshold at which the unpopular universal social charge, an income tax introduced in 2011, is paid by low- and middle-income earners. The changes are part of a three-year tax package to be unveiled by Minister for Finance Michael Noonan.

The package will also embrace a cut in the higher rate of income tax to 40% from 41% next year. The threshold at which people enter the higher rate will rise to €33 800 from €32 800 euros.

Five years after a social welfare Christmas bonus was dropped, the coalition is also said to be looking at the partial restoration of the double payment at Christmas.

A welfare package is also expected to help the less well-off pay a newly introduced water charge.

An additional €200m in funding is also expected to be announced for social housing.