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Your Money: The good, the bad and the ugly for your wallet in the New Year

The new year will be a mixed bag of financial fortunes for Irish consumers. Ireland is almost at full employment and its booming economy is set to keep growing next year – albeit at a slower rate than in 2019. With this booming economy comes higher prices in many areas, though – and not everyone can afford them.

Furthermore, with Britain set to exit the EU at the end of January, Brexit will cast a shadow over many of us as we ring in the new year.

So, as we head into a year which is likely to see Brexit become a reality, what reasons have you to be upbeat – or downbeat – about your personal finances?

The good

Cheaper 1850 and 1890 calls

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The days of paying through the nose when calling a 1850 or 1890 number should now be gone.

Since the start of this month, new rules mean it should not cost any more to call a phone number beginning with 1850, 1890, 0818 or 076 than it does to call a regular landline number.

Gift voucher protections

There is less chance of you throwing your money away when you buy a gift voucher for someone, thanks to new rules which kicked in at the start of this month.

Under those rules, a business cannot prevent you from using a gift voucher because it is not in your name – or charge you to change or amend the name on a voucher.

This will be particularly useful for those who buy airline gift vouchers, as consumers have often run into problems using them to book flights if the voucher was in the wrong name – or if the name on the voucher was misspelt slightly.

Under the new rules, gift vouchers must also be valid for at least five years after they are sold. The rules only apply to gift vouchers bought on or after December 2, 2019. Some gift vouchers are not covered by the rules, including An Post’s One-4-All gift cards.

Cheaper GP and dentist trips for kids

Taking a young child to the dentist should become more affordable from this September, while more children will be able to be seen by their GP for free – if the Government lives up to its Budget 2020 promises.

Under the latest Budget, free GP care is set to be expanded to children under the age of eight from this September.

Currently, free GP care is available to the under-sixes. The Government has also promised to phase in the introduction of free dental treatment for under-sixes from September 2020.

Concessions for carers

The number of hours which carers can work or attend a training course outside the home – without losing their entitlement to the carer’s benefit (worth €220 a week) or carer’s allowance (worth up to €257 a week) – will increase from 15 to 18 and a half hours per week from this January.

Many carers have found the current 15-hour limit to be too restrictive. Although the increase is small, it is a step in the right direction.

Less tax for stay-at-home parents

Stay-at-home parents will be able to pay €100 less tax in 2020, thanks to an increase in the home carer tax credit – which is given to married couples or civil partners where one spouse or civil partner works in the home caring for a dependent person. Tax credits reduce the amount of tax that you must pay on your income. The home carer tax credit will increase to €1,600 from €1,500 in 2020. The tax credit for self-employed people will also increase in the new year.

The bad

More expensive Luas and Dublin bus

Since the start of December, the price of an annual Luas ticket has jumped to €1,300 from €1,210, while the price of a monthly ticket rose to €130 from €121. This price hike follows a number of years of successive 10pc increases for annual and monthly Luas tickets.

So much so that the cost of an annual Luas ticket has increased by almost €400 over the past four years – from €910 in December 2015 to €1,300 today. The cost of a monthly ticket has increased to €130 from €91.

Meanwhile, since the start of December, the cost of Dublin city bus-only tickets – with Dublin Bus and Go-Ahead Ireland – has increased to €1,450 from €1,400 for the annual ticket, and to €145 from €140 for the monthly ticket.

By contrast, there has been no increase in the cost of most Irish Rail annual and monthly tickets.

The cost of public bus annual tickets in eastern commuter areas and in regional cities (such as Cork, Limerick and Galway) has fallen.

Pricier plumbers and hairdressers

It is likely to cost more to go for a meal in a restaurant, and to hire a plumber, electrician or hairdresser in the new year, according to Alan Ahearne, director of the Whitaker Institute at NUI Galway and a former special adviser to the late finance minister Brian Lenihan.

“The price of services – such as plumbers, electricians, hairdressers and restaurants – tends to be related to the state of the economy and of the labour market,” said Ahearne.

“We are close to full employment in the economy – and this puts upward pressure on wages. Services are very labour-intensive and so upward wage pressure will push up the cost of services. We’ll see even more upward pressure on services in 2020 as wage growth accelerates.”

Tax hike on vitamins

Vitamins and other food supplements are likely to become more expensive in the new year due to a VAT hike on these products.

Vitamins and food supplements are currently exempt from VAT, but from January, these products will become liable to 13.5pc VAT.

More expensive parking

It is likely to become more expensive to park in Dublin city from July, as Dublin City Council recently voted to increase on-street car parking charges in the main parking zones by an average of 10pc. Furthermore, commuters who use the Luas park-and-ride in Carrickmines are now paying 50pc more to park their car, since the daily parking charge increased from €2 to €3 earlier this month. This will cost a commuter using that car park an extra €230 a year – assuming they work for 46 weeks a year.

Higher heating bills

It will cost about €15 more to fill up a 900-litre tank of kerosene home heating oil from May, due to Budget 2020’s carbon tax increase. May 2020 is the date that the carbon tax hike will apply to home heating oil, natural gas bills and other fuels (such as coal, briquettes and peat).

More expensive to buy old diesel cars

From this January, buyers will be hit with a tax on new cars and used imports – based on nitrogen oxide emissions. This tax will replace the diesel surcharge introduced in Budget 2019. The new tax will mean that some car buyers will face higher vehicle registration tax bills when buying a new car or used import than they would have, had they bought the car in 2019. This will be particularly the case if buying an old diesel car.

Furthermore, more cars will be liable for the nitrogen oxide surcharge than the outgoing diesel surcharge. The diesel surcharge only applied to diesel or diesel hybrids, but the new surcharge will also apply to petrol and petrol hybrids.

How high the new surcharge will be will depend on the level of nitrogen oxide emissions from a car – so the surcharge should be low for petrol hybrids.

Drivers will continue to be hit with Budget 2020’s carbon tax increase in the new year. The carbon tax hike – which kicked in on petrol and diesel in early October – has added about €1 to a 50-litre tank fill.

The ugly

Higher property tax bills

Many homeowners could be facing much higher property tax bills this time next year, as changes to the way the property tax system operates are set to kick in from November 2020.

“For many, especially in areas where property values have rebounded strongly in recent years, the property tax bill will increase substantially,” said Michael Gaffney, tax expert with KPMG.

“It won’t actually hit taxpayers’ pockets until the tax is payable in early 2021, but could put a dampener on Christmas 2020.”

Brexit and your weekly shop

Brexit could push up the cost of your weekly shop in the new year, depending on how it unfolds throughout 2020 and how sterling performs.

“The biggest risk [to the pockets of Irish consumers] is what happens to sterling in the new year,” said independent economist Alan McQuaid.

“The stronger sterling is, the more expensive it will be to import goods from the UK to Ireland and consumers will feel this.

“I think sterling will be stronger next year so, overall, Ireland is likely to be paying more for UK imports in 2020.”

Ireland imports a lot of cereals, soft drinks, bread, tea, coffee, detergents and washing-up liquids from the UK. A stronger pound will make it more expensive to buy such UK products when doing your weekly shop.

A ‘hard’ Brexit would also be likely to push up the cost of your weekly shop – even if sterling weakens. “There would be substantial increases in the price of a lot of UK imports in the event of a no-deal Brexit,” said Alan Ahearne.

“Under a hard Brexit, there would likely be tariffs on the goods being imported to Ireland from the UK. This would hit dairy and meat, and other imported goods very hard. New customs regulations and border controls would push up costs for businesses – and businesses would likely pass those costs on to consumers. The big unknown for the new year is Brexit.”

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