Noonan: Cigarette hike was only tax increase in Budget 2015

Minister for Finance Michael Noonan has said the increase in the price of cigarettes was the only tax increase in the Budget.

The cost of a packet of 20 cigarettes went up by 40 cent in yesterday’s budget.

Speaking at Montrose after his traditional post-budget radio interview with RTÉ, Mr Noonan denied that the move was a revenue raising measure and said it had been advocated by the Irish Cancer Society and the Department of Health.

“Cigarettes, the tax, it was the only tax increase in the budget, and it wasn’t brought in to raise revenue. We could have done the budget without the need of the cigarettes,” he said.

“So it’s not a revenue raising measure, it’s a measure to improve the health of the population by discouraging people from smoking,” he added.

Turning to water charges, Mr Noonan said Sinn Féin had “miscalculated” its policy. He said Fianna Fáil argued water charges did not take inability to pay into account, but budget measures were “precisely in that space”.

He added: “The Opposition have no credibility on this issue.”

Mr Noonan said there was always “tweaking” in the Finance Bill.

Minister for Public Expenditure and Reform Brendan Howlin said the intention was that every household would benefit in some shape or form.

If there were households that were not “captured” by measures designed to alleviate financial pressure, that would be addressed. “If there are anomalies...we intend to address that.”

He added: “We can’t undo all of the difficult decisions that we have been required to make in recent times but I think objectively it’s been a fair and decent attempt to begin a different type of a budgetary system.

“For most of the three years we have been involved in budgets up to now we have been putting out the fire and now we’re rebuilding the house.”

Mr Howlin said he hoped better services would result from the ’modest but robust’ increase in expenditure across all Departments.

“Ireland is emerging from the worst economic crisis we’ve ever experienced.”

Earlier, Minister for Social Protection Joan Burton has said Budget 2015 contains a "recipe to grow the economy".

She emphasised measures such as the €5 increase in child benefit and the partial return of the Christmas bonus.

“Yes these are small, but its a budget to create jobs,” Ms Burton said.

Asked on RTÉ's Morning Ireland about warnings from various bodies such as the European Commission and the Fiscal Council to pursue a prudent economic path, Ms Burton said: "We've got the deficit down below the target they gave us, so we have a cushion of safety, and we've put money back into economy right around the country so we can get people back to work.

“We want this virtual growth cycle. Not a recessionary cycle.”

She said while the top rate of tax had been lowered, reliefs were heavily concentrated on those who earn between €30 and €70,000.

Ms Burton said average water costs would be somewhere between €240 and €280 per year and reliefs would bring charges down to a more affordable level.

Water charges not levied at individuals but households, she added.

Asked if the introduction of water charge reliefs were a panic measure, Ms Burton said a week after she became Labour Party leader, a commitment on creating a water support payment was agreed with Taoiseach Enda Kenny. Not a huge amount of attention was paid to it at the time, she added.

Ms Burton said many young people who had been working for 10 years wanted to buy homes and the budget emphasised getting houses built for those people.

Getting some construction workers back to work would help create a “virtuous economic cycle”, she said.

Ms Burton stressed that new rules on mortgage lending by the Central Bank that would mean that most house buyers would have to have a 20 per cent deposit when applying for a home loan, were not yet set in stone.

The bank is proposing that no more than 15 per cent of all new mortgages for private dwelling homes should have a loan to value (LTV) ratio above 80 per cent. In addition, it has also decided that just one-fifth of new mortgages should be issued above a level of three and a half times income (LTI).

The regulations are due to come into force on January 1st however, Ms Burton said that a consultation process on the proposals was underway. She recommended that house buyers interested in the outcome of the consultations should let their views be known.

She said that the Central Bank would likely take into consideration all the different factors put to it.

Ms Burton said 80,000 people had been taken out of the USC while the two lower rates had been reduced by half a point. “Everyone I know in the trade union movement has been asking me to do that for an age now.”

Ms Burton described yesterday’s announcement as a “small - scale expansionary budget”.

She added: “While top rate of tax goes down...the gains for people earning over €70 000 are capped at same rate as people on €70,000.”

Ms Burton said social welfare should be for retired people, those who were disabled and careers.

As Labour leader, she was focused on getting people back to work, she said.