IN THREE DAYS time, Budget 2023 is set to be unveiled by both the Finance and Public Expenditure Ministers after a long summer of kite flying.
Paschal Donohoe and Michael McGrath will both step up in the Dáil at 1pm and detail not only their spending plans for the year ahead, but also unveil a separate cost-of-living package that will aim to reduce the burden rising costs are having on the public.
This is potentially Donohoe’s last time presenting the Budget as Finance Minister, with McGrath slated to take up the role in the December reshuffle when Leo Varadkar is set to take up the office of Taoiseach.
The two money ministers have about €6.7 billion to play with in the main budget, while the Government is yet to announce a final figure on the latest cost-of-living package.
Ahead of the big announcements on Tuesday, what exactly can we expect from Budget 2023?
Cost-of-living
It has been widely flagged in advance that there will be a cost-of-living package alongside the traditional budgetary measures.
One key measure that will be within the package is a series of universal energy credits, similar to those that were provided in the previous cost-of-living package in May.
It’s expected that there will be three €200 credits overall, with one slated to land before Christmas.
The remaining two will be applied to household accounts in the new year.
It’s also expected that there will an increase to in the Fuel Allowance, with changes to the threshold that a person must reach to receive the payment also on the cards.
A significant social welfare package has also been flagged, with increases mooted on a number of payments, including a pension increase.
In August, Tax Strategy papers that were published had floated the idea of increasing social welfare payments to keep in line with inflation.
While there was initially some movement towards a €15 increase, in more recent days it has been suggested that a €10 increase would be more realistic.
Alongside any increase, there has been some speculation that there could be a bonus social welfare payment made before December, which would be separate to the typical Christmas bonus.
Childcare costs
Another key focus in the budget is likely to be around childcare costs, with fees set to be cut by 50% over the next two years, with a €200 a month reduction expected this year.
Previously, The Journal reported that subsidies on childcare would be increased to help reduce the cost on parents. Additionally, overall price caps are expected.
This follows on from core funding increases on childcare being announced and some changes to pay agreements for childcare workers.
A senior source has also told The Journal that a double payment of the €140-a-month child benefit payment is being considered by the Government.
This would see parents with one child receiving €280 before Christmas including the one-off payment.
Tax changes
Some of the key measures within this year’s budget are likely to be tax-based changes.
These changes likely won’t be as transformative as massive changes that were made in the UK yesterday, including the scrapping of the top rate of income tax for the highest earners.
While the Tánaiste has fought for his proposed 30% income tax rate, he did tell RTÉ last week that he was not planning to “go to war” over the measure.
Minister McGrath had previously poured cold water on the proposal, saying in mid-August that implementing a 30% tax rate in such a short period of time would be “challenging”.
A wider indexation of existing tax bands is within the current Programme for Government, with support within Fianna Fáil for these measures.
Fianna Fáil Minister for State Sean Fleming had previously argued that indexing tax bands and indexing tax credits would be a more straightforward way of putting money into people’s pockets.
It’s also likely that there may be changes to tax bands alongside some tweaks to the USC threshold.
Alongside changes to income tax, there are some proposals for tax breaks for both landlords and renters as part of efforts to slow the exodus of small landlords from the private rental market.
Varadkar has signalled however that if there are any concessions for landlords, there must be concessions for renters.
“It wouldn’t be fair to say that we’re going to give tax concessions to landlords, in order to keep them renting, which would be a good thing, but then to say to renters ‘well there’s nothing in it for you’ – that wouldn’t be fair,” Varadkar said.
The Tánaiste has also previously confirmed to The Journal that workers could be in line for an increase to the tax-free bonus, with Donohoe working on a proposal to allow employers to give an employee up to €1,000 annually, up from €500.
Currently, employees can only receive a benefit valued at €500, tax free, each year from their employer.
This bonus can not be provided in cash but can be in the form of vouchers or cards that can buy goods and services.
A Vacant Property Tax is also set to be a part of Budget 2023, with the Finance Minister announcing the measure in July as part of efforts to reduce long-term vacancy.
Public transport
It is likely that the 20% reduction in public transport fees will be extended, with some sources stating that the fees could be cut further.
This measure was initially introduced in the initial cost-of-living package last May.
Fine Gael in particular are pushing for the short hop zone, which caps fares, to be extended into commuter counties outside Dublin, including Kildare, Meath and Wicklow.
When asked by The Journal whether or not further reductions were considered, the Taoiseach said that while there were “huge cost implications”, he said cutting costs went along with Ireland’s efforts to combat climate change.
“What I like about that proposal is, and there are huge cost implications, but it dovetails with our climate change agenda. So you have a cost-of-living measure, which in medium-term policy terms makes sense for climate change, it would get people out of cars and into public transport. And so that’s something we would be examining in a positive light,” said the Taoiseach.
Other measures
It had also previously been flagged that students should expect a decrease in college fees.
There will also have to be money set aside by the Government to pay for the recently agreed public sector pay deal, which was agreed last month.
A 6.5% increase in public sector wages was agreed upon in late August, with ICTU unions set to ballot their members on the proposed increase.
With reporting from Christina Finn in New York
To embed this post, copy the code below on your site
have your say