IT’S LESS THAN a month away from this year’s Budget, and we already know some of the details of what to expect.
Kite-flying before Budget day has become a lot more frequent in recent years, but so has the flat-out revealing of what is to come.
While there used to be a “big reveal” during the boom years, during the recession carefully considered kites were flown and leaks made to the media, which would be used to gauge public support for a certain measure.
Some of that has stuck. At last year’s Fine Gael think-in, the then Finance Minister Michael Noonan told the media there would be no surprises on Budget day (and for the most part, there weren’t) confirming that there would be a cut in the USC, but not the 1% the party previously committed to.
Fast forward to this year, and the current Finance Minister Paschal Donohoe is also showing his cards when it comes to taxation.
So what can you expect?
It won’t be a giveaway budget. The government will have just €300 million available for new tax cuts and spending increases next year.
Money in your pocket
Another thing we know – low and middle-income earners will receive a tax boost in Budget 2018.
Donohoe says he will do this through tax band changes rather than rate cuts. One thing you definitely shouldn’t count on is a big tax cut, however.
“We went through a period of shock and awe in relation to personal taxation here in Ireland. Awe about a tax cut in a particular year that led to massive increase in take home pay. Shock a few years later when that tax cut was undone. The approach that I will be taking, and this is particularly important for next year, is to adopt a steady approach to change in terms of personal taxation and every other area,” he told reporters yesterday.
“I want to make sure if I make a change in relation to personal taxation, if I make a reduction – which I am committed to doing – that it is affordable, not only in 2018 but beyond; that it also takes into account what is happening in our economy, and also takes into account what is happening in 2018; that I have to balance the books,” he added.
I want to have a broadly-balanced budget for next year. Within that, the particular priorities I have called out are the self-employed and the contribution that they make to our country, over a number of budgets, amalgamating PRSI and USC and using that as a system to try and expand the benefits that are available to our citizens and in relation to personal taxation, I believe the issues relating to the standard cut-off point and levels of USC for those with low or middle incomes, are areas we have to make steady progress on.
Pensions
An increase in the State pension has been well flagged.
The Taoiseach previously said he favours an increase in the State pension, though he wouldn’t be specific about how much. The figure of €5 a week has been floated, which would bring the contributory pension up to €240 a week.
It looks like politicians have learned from the past that there is one thing you don’t mess with, and that’s pensioners.
Housing and homelessness
If there is one thing that needs urgent attention, it’s housing – and those in government know that it is the one issue that the public won’t accept anymore. There should be some drastic announcements in this year’s Budget, if the government has learned anything from the last 12 months.
Housing Minister Eoghan Murphy has a big task on his hands and it won’t be cheaply fixed. He made some announcements last week and it’s expected there should be a big announcement around government spending on the ramping-up of social housing builds.
One to watch is what is to become of the Help-to-Buy Scheme and whether there will be any changes to it. While originally it was flagged that it would be scrapped, this has been rowed back on in recent weeks.
First-time buyers will be eagerly awaiting news on this front. A vacant site or property tax has also been well-mooted, as have possible incentives for landlords to utilise their properties and get them back on the market.
Health spending
The health budget has been rising in recent years after it was decimated during the recession. However, a €300 million deficit in the health service budget is projected for this year.
“My message to the HSE is very clear,” said Minister Donohoe yesterday.
He said the deficit had to be “managed and dealt with” from within existing resources, ruling out any supplementary budget for this year.
Donohoe said the annual health budget was now €14.1 billion, €1 billion more than when he became minister of public expenditure.
“I expect the HSE service action plan to be delivered,” he said.
“The health services in our country have never had more resources available to them as they do now,” he said, adding that the government expects a commensurate level of services coming out of that.
Corporation Tax
One you can bet on – there will be no change from the current 12.5%.
There has been a lot of talk in other countries about the phasing out of diesel vehicles.
It’s likely there could be an increase in excise, to bring the price a lot closer to petrol.
Some new items on the agenda could be a gambling tax and a sugar tax (which Michael Noonan mentioned in last year’s budget). We held off on it last year as the UK delayed its introduction of it until 2018, so some announcement on this is expected, either way.
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