The Government has announced the first welfare hikes, income tax reductions and major public recruitment drive since the recession took firm hold in 2009.

Announcing the tax measures for Budget 2015, Minister for Finance Michael Noonan said he was revising upwards GDP growth to 3.9% next year and he is targeting a 2.7% deficit in 2015.

While Minister for Public Expenditure and Reform Brendan Howlin said it was a significant day and "marks the end of an era of budgetary austerity".

As expected, Mr Noonan announced an increase in the point that people hit the top rate of income tax by €1,000 to €33,800.

The minster also cut the top rate of tax from 41% to 40%.

Mr Noonan also announced extensive changes to the Universal Social Charge in terms of the bands and rates.

The threshold at which people will begin to pay the tax has gone up from just over €10,000 to just over €12,000. This will remove 80,000 workers from the charge.

He also introduced a fourth USC rate of 8% on income over €70,000.

Another new rate was outlined - an 11% USC rate for self-employed income of over €100,000 which he said would limit the benefits to the highest earners.

The exemptions from the top rate of USC for medical card holders earning less than €60,000 will be kept.

First-time buyers will get a refund for DIRT on savings used to purchase their home, which will apply from tonight and run until 2017.

It will apply to savings up to a maximum of 20% of the purchase price.

A tax relief in respect to water charges and a €100 payment under the household benefits package is being extended to help more social welfare recipients.

A series of tax measures for the agriculture sector to promote long-term leasing of land was also announced.

In terms of the so-called 'double-Irish' tax scheme, Minister Noonan said he was abolishing the ability of companies to use it, with effect for new companies from January.

The 'double-Irish' for existing companies will be phased out by the end of 2020.

The price of a packet of 20 cigarettes will increase by 40 cents to €10 a pack.

On the spending measures, Minister Howlin announced an increase of €429 million in current spending and €210 million in capital spending.

On the key issue of social housing he announced €2.2 billion in capital investment over the next three years through Exchequer and other funding.

This, he said, would deliver 2,500 housing units next year and 6,700 units by 2017.

Mr Howlin also told the Dáil that next year will be the first year he will not be announcing new cuts to social welfare since 2009.

He announced a €5 increase in child benefit per month, and another €5 increase in 2016.

He also said they were increasing the living alone allowance to €9 a week.

Other announcements include paying the Christmas Bonus at a 25% rate this year, a €30 a week per child payment for those returning to work and 1,700 new teachers to be recruited.

Minister Noonan said the tax changes announced were drawn up, mostly to benefit families with an income of between €30,000 and €70,000.

Speaking on RTÉ's Six One news, he also said that he targeted the universal social charge so as to help the lower paid.

'People have made major sacrifices'

Earlier, Minister Noonan said in his opening remarks: "The road we have travelled to get to this point has been very difficult and the Irish people have made major sacrifices".

He said Budget 2015 was about securing the recovery building for the future and broadening it to families across the country.

Taoiseach Enda Kenny has said he is very optimistic about the future of the country.

Speaking on RTÉ’s Nine News, Mr Kenny said the Government had asked the public to come on a very difficult journey three years ago, and was now on track to secure its objectives.

The Taoiseach said today's Budget was "economically pragmatic", and that Ministers Noonan and Howlin had "sound economic reasons" for each of the decisions they made.

Mr Kenny described the Budget as another step in the Government's plan to fulfill its mandate to fix the public finances and get the country back to work.

He said it represented the start of a tax reform programme, adding that he intended to "transfer hope into optimism".

Mr Kenny also denied that measures concerning water charges were a response to Saturday’s protest march or the election of Paul Murphy in the Dublin South West by-election.

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