The Memorandum Of Understanding about the Recovery Package published yesterday seems to imply that there will be changes made to the revenue systems during 2011 (as opposed to at the start of the year). The document refers to a “yield €945m in 2011 and an extra €300m in a full year” when it discusses changes to personal tax bands and credits.

This would seem to indicate that the values will change after the first quarter of 2011 and that these changes will not be retrospective. In other words, we could have two (or more?) separate cumulative systems running during 2011, or that the existing bands and limts will run into the new tax year and the revised tax credits and bands only come into effect after Q1?


The following is from the text of the MOU as published yesterday which gives an outline of the next three budgets.

ACTIONS for the first review (actions to be completed by end Q1-2011)

The budget includes the following measures (in exceptional circumstances, measures yielding comparable savings could be considered in close consultation with European Commission, IMF and ECB staffs);
Revenue measures to raise at least €1,400m in 2011 and an extra €620m. in a full year will be introduced to the Houses of the Oireachtas, including:

  • A lowering of personal income tax bands and credits or equivalent measures to yield €945m in 2011 and an extra €300m in a full year.
  • A reduction in pension tax relief and pension related deductions to yield €155m in 2011, and an extra €105m in a full year.
  • A reduction in general tax expenditures to yield €220m in 2011, and an extra €185m in a full year.
  • Excise and miscellaneous tax measures to raise €80m in 2011 and a further €30m in a full year will be introduced.

The government will outline methods to raise at least €700m in one-off and other measures in 2011.

ACTIONS for the first review (actions to be completed by end Q4-2011)

The government will provide a draft budget for 2012 aiming to further reduce the general government deficit in line with the National Recovery Plan and the programme and including the detailed presentation of consolidation measures amount to at least €3.6bn.

Revenue measures to yield €1,500m in a full year will be adopted, including:

  • A lowering of persona income tax bands and credits.
  • A reduction in private pension tax reliefs.
  • A reduction in general tax expenditures.
  • A property tax.
  • A reform of capital gains tax and acquisitions tax.
  • An increase in carbon tax.

ACTIONS for the eight review (actions to be completed by end Q4-2012)

The government will provide a draft budget for 2013 aiming to further reduce the general government deficit in line with the 4-year plan and the programme and including the detailed presentation of consolidation measures amount to at least €3.100m.

Revenue measures to yield €1,100m in a full year will be introduced, including:

  • A lowering of persona income tax bands and credits.
  • A reduction in private pension tax reliefs.
  • A reduction in general tax expenditures.
  • A increase in property tax.