Budget to give more money in pockets - but cigs going up 50 cent

Under-pressure middle-income earners are to have more money in their purses and pockets following today's Budget, it has emerged.

Among the measures is a €5 increase in social welfare payments and a reduction in the 4.75% rate of the USC.

The point at which people hit the higher rate of income tax will also rise by €750, RTE reports.

There will be an increase of 50 cent in a packet of cigarettes.

Minister for Finance Paschal Donohoe will announce the annual financial package to the Dail this afternoon.

It is understood that the Minister has between €1.4bn and €1.5bn at his disposal in drawing up the Budget.

The Cabinet will meet this morning ahead of the announcement.

Two weeks' paid parental leave will also be introduced late next year.

Other tax measures include a €10,000 increase in the threshold for inheritance tax, which applies to children inheriting from their parents.

RTE reports that the main spending increases include a €300m affordable housing scheme over three years, €55m in additional funding for mental health and an extra €20m for the National Treatment Purchase Fund.

Free GP care is expected to be extended to 100,000 people as a result of a €25 increase in the income threshold for the GP card.

Turning to childcare, 16,000 children are set to qualify for the highest levels of childcare subsidy due to almost €90m in additional funding.

To help pay for all this, the 9% VAT rate for hotels, restaurants and hairdressing will be increased to 13.5%.