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Just a few days out from the Budget, what can we expect?

All will be revealed on Tuesday.

WE ARE A couple of days out from this year’s Budget, and Finance Minister Paschal Donohoe has his work cut out for him. 

The government is now predicting a deficit of €21 billion or 6% of national income for this year. 

For last year’s Budget, the minister played down any expectations of giveaways, telling all around him that he will be “safe” and “cautious” due to the possibility of a no-deal Brexit on the 2020 horizon.

One year on, Donohoe has to contemplate that exact same scenario, but he also has the added pressure of a pandemic. 

In the days before the 2019 Budget, all the talk surrounded the deadlock over the Irish backstop. On Tuesday, when Budget 2021 will be announced, Donohoe has to get the balance right between the country’s long-term financial standing and providing the necessary supports for those out of work because of Covid-19 restrictions.

At the beginning of this month, Ireland recorded an exchequer deficit of almost €9.4 billion in the year to the end of September.

The total revealed by the Department of Finance compares with a €38 million surplus in the same period last year.

It is a “very, very big deficit”, Donohoe has said. 

So what can you expect?

The budget will include details of a major recovery fund to deal with the ongoing impact of Covid-19. The government is also working off the assumption that there will be a no-deal Brexit and that a vaccine for Covid-19 will not be available next year. 

In line with the programme for government, priorities in Budget 2021 – outside that of Brexit and Covid-19 – will be health, housing and climate change.

Government is expecting to spend up to €9 billion on expenditure related to Covid-19 next year.

Public Expenditure Minister Michael McGrath brought a memo on expenditure strategy to Cabinet ahead of Budget 2021 last week.

Around €900 million will be spent in order to meet existing services across all areas. This is in addition to €1 billion which is ear-marked in pre-committed current expenditure and an increase in €1 billion on capital expenditure next year.

The government also raided the Rainy Day Fund. It was designed to be used for emergencies. Using that framework, it was decided not to use it for Brexit or housing last year, so the fact it has been emptied this year says a lot about where we’re at.

Income tax

There will be no increase in income tax in the 2021 Budget, Donohoe has said.

“Our personal tax receipts are holding up quite well, and in terms of what that says about our economy, it does indicate to me that momentum is building in our economy,” he added.

“In terms of the budget 2021, September is always a significant month in terms of tax receipts and it’s the final piece in the jigsaw before we make a call about what our tax collection will be for the year and the following year’s budget,” the minister said last month.

The programme for government also commits to no increase in the Universal Social Charge (USC) – although there might be some tweaks to bands.

In terms of VAT, the hospitality sector has been calling for further cuts in light of the pandemic. The government steered away from it it in recent years, but significant pressure has been placed on representatives that it might just get get the green light. 

Social welfare

There has been unprecedented spending by Government on health and social welfare as a result of the pandemic, and there should be other big announcements made on Tuesday.

There have been calls to restore the Pandemic Unemployment Payment to its initial level of €350 per week – but government seems adamant that to do so would impede on the extended time period the payment is due to last for.

There are likely to be changes and tweaks to the scheme, perhaps on a sector-by-sector basis, with additional supports for those working in areas that have been impacted the most.

The Taoiseach told TheJournal.ie that some workers might be able to take up jobs, while also retaining their payment.

Pressure has been mounting on government to help a number of people in areas such as hospitality, tourism, entertainment and the arts.

Publicans, bar workers, DJs, comedians, actors, cinemas, event organisers, taxi drivers, and those in the gig economy have all be calling for additional supports after their businesses were mandated to shut up shop.

The Taoiseach said “creative” thinking has been going on behind the scenes to figure out how to support such workers, particularly through the welfare system.

However, a supports package worth millions for live gigs and the music industry is expected to form part of the Budget.

In terms of the State pension, a €5 increase has almost become customary, but this year it might not see the bump.

No decision has been made at this point on the Christmas bonus, with McGrath saying that at this point in time the exchequer is in a very strained position. Its cancellation though would be a tricky manoeuvre for government.

The Employment Wage Subsidy Scheme (EWSS) will be extended beyond 31 March, 2021 – its current scheduled end date.

There will be no wealth tax, Donohoe has also said.

Green initiatives

Carbon tax increased by six euro per tonne last year, so there will be another increase again on Tuesday.

Donohoe said it will be ring-fenced to protect those at risk of fuel poverty. He also said that funds will go towards making progress on retrofitting homes for energy efficiency.

All eyes will be on petrol and diesel prices next week, with businesses likely to be unhappy with the additional costs while struggling to stay above water.

The Government will spend €1 million a day on improving cycling and walking infrastructure, and in terms of electric vehicles, there will be commitments to ramping up the roll out of charge points.

Keep an eye out for grants in renewable energy and retrofit schemes also.

Housing

Housing Minister Darragh O’Brien is keen to extend Ireland’s Help to Buy scheme, which gives a tax rebate of up to €30,000 to first-time buyers. Social housing will also be part of a key budget announcements next week.

An affordable housing scheme was meant to be launched last month, so there could well be news of this on Tuesday – perhaps the good news story of the day.

Brexit

Government also has to plan for the worst, so it is likely that there will be significant  resources allocated to those sectors set to be hit hardest by a no deal.

While the July Stimulus rolled out loan and grant schemes, it is likely that further announcements will be made on similar items.

Booze and Cigs

With government literally looking down the back of the couch for any spare pennies, it is almost a certainty cigarettes are set to rise next week. Some question marks however remain over whether there will be a hike in alcohol given the precarious position publicans have been put in over the last few months. 

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    Mute Pete mc pete
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    Oct 10th 2020, 12:12 AM

    I think we all know what to expect,the ordinary working joe soap will get hit hard

    743
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    Mute Mick Hyland
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    Oct 10th 2020, 12:25 AM

    @Pete mc pete: What part of the article above prompted your comment?

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    Mute Pete mc pete
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    Oct 10th 2020, 12:28 AM

    @Mick Hyland: the what can we expect from the budget part

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    Mute Michael Bodycoach
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    Oct 10th 2020, 7:20 AM

    @Pete mc pete: you do know how much wealthy people get taxed? Yes there are bad people out there that find loopholes etc, just like there are ordinary Joe soaps who give up their jobs to sell drugs or buy stolen gear off the back of vans. Every tries to get a little extra, but make no mistake. The rich pay a substantial amount of tax

    70
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    Mute Graham Manning
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    Oct 10th 2020, 8:10 AM

    @Michael Bodycoach: those two things aren’t equate able and one does decidedly more damage than the other

    17
    SB
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    Mute SB
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    Oct 10th 2020, 9:06 AM

    @Pete mc pete: yep always the same

    9
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    Mute Darren Sheridan
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    Oct 10th 2020, 4:25 PM

    @Mick Hyland: No wealth tax.

    1
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    Mute Kevin O'Brien
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    Oct 10th 2020, 1:05 AM

    1 million a day improving cycling and walking infrastructure, 365 million a year!!! Priorities are all wrong ffs, what’s going on.

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    Mute Nosmo King
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    Oct 10th 2020, 1:23 AM

    @Kevin O’Brien: That’s what happens when you elect people like Sleepy Ryan, Happy Varadkar and Dopey Martin. Along with Sneezy Donnelly , Grumpy Coveney and Bashful Mc Entee you couldn’t pick a more dysfunctional lot.

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    Mute Kevin O'Brien
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    Oct 10th 2020, 1:34 AM

    @Nosmo King: Where does Snow White come into all this?

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    Mute David Van-Standen
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    Oct 10th 2020, 4:46 AM

    @Kevin O’Brien: she doesn’t, she just gets shafted like the rest of us….
    :-)

    70
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    Mute Dave Harris
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    Oct 10th 2020, 6:29 AM

    @Kevin O’Brien: brilliant to see. Increased health of people will reduce spend in hospitals, additional tourism as shown by greenways, less traffic on roads, less emmisons etc etc.

    63
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    Mute Michael Bodycoach
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    Oct 10th 2020, 7:21 AM

    @Kevin O’Brien: short sighted thinking

    31
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    Mute Mickety Dee
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    Oct 10th 2020, 7:40 AM

    @Kevin O’Brien: You mean their priorities don’t match yours. Thank goodness for that

    39
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    Mute Barry
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    Oct 10th 2020, 8:32 AM

    @Kevin O’Brien: the spend makes sense.

    More people walking and cycling to work means less use of public transport. 8t also means less traffic on the road which upsets many think skin motorists.

    More people walking and cycling means better fitness, which means less HSE spend.

    Long term its good use of money!

    25
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    Mute Peter donnelly
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    Oct 10th 2020, 10:48 AM

    @Kevin O’Brien. but they can’t afford to give pensioners a 5 euro increase, that 365 million could be better spent I
    on public transport there by encouraging more people to leave their cars at home….

    16
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    Mute Peter donnelly
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    Oct 10th 2020, 10:55 AM

    @Barry: more people walking and cycling to and from work etc equals more people catching cold etc, Ireland is a cold damp country not warm and sunny as the greens seem to think, in the city’s you will see a lot of cycling and walking mainly because the public transport is so bad but you will only get that in summer when it’s not raining

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    Mute Peter donnelly
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    Oct 10th 2020, 11:14 AM

    @Dave Harris: a point of interest how do you get to these greenways do you drive to the nearest car park and then start your leisurely stroll through the countryside and then walk back to your car and drive 10 20 etc kilometres home again ? very few people live anywhere near the greenways so in this utopian world the greens live in how does the average joe/jane get to the greenway lugging all his wet gear and hiking boots with him/her….

    24
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    Mute Dav Nagle
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    Oct 10th 2020, 11:20 AM

    @Nosmo King: Amen to that

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    Mute Shane Cormican
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    Oct 10th 2020, 3:44 PM

    @Kevin O’Brien: well it taking about a year SO FAR to upgrade the UCD cycle lane and cut off the left merge off fosters ave – so that is what your million a day is going toward

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    Mute Jim O Brien Tech
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    Oct 10th 2020, 7:13 AM

    If they increase petrol and diesel cause of the greens they are finished.

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    Mute Barry
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    Oct 10th 2020, 8:33 AM

    @Jim O Brien Tech: with or without the greens it was going to increase.

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    Mute Quentin Moriarty
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    Oct 10th 2020, 10:53 AM

    @Barry: at 40 dollars a barrel an all time low the increase is merely a money making exercise
    The biggest swindle of all followed by motor tax tariff when paid by the quarter

    52
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    Mute Paul Mc
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    Oct 10th 2020, 2:48 AM

    Just give the politicians a rise and dont worry about the peasants, we have got used to eating cake from Lidl.

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    Mute Paul Cunningham
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    Oct 10th 2020, 8:28 AM

    @Paul Mc: That obscure Lidl brand beer isn’t going to drink itself!

    16
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    Mute Daniel Dunne
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    Oct 10th 2020, 1:20 AM

    No detail on carbon taxes…? What is to be expected….? Come on Journal, you’ve been paid well enough for this kite flying exercise at the late hours of a Friday night before the budget to at least afford the late on-lookers a glimpse of their impending doom.

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    Mute Charliegrl80
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    Oct 10th 2020, 9:40 AM

    As a full time family carer on €219 per week having no way of earning extra cash to make up the shortfall of over €400 a month to care for my special need s son. We are not entitled to the fuel allowance, even though we have to keep the heat on all day to keep the person warm, my oil bill is over €2,000 per year. I have to go without food, no new clothes, no cups of coffee out, no out at all really so we don’t have a problem keeping social distance. We live in the middle of nowhere that’s where the council has us living we need a car as there is no public transport and my son cannot walk more than a couple of yards. So much for inclusion its a constant exclusion and we’ve been abandoned by the state for years and especially this year in 2020. If they don’t give the christmas bonus it’ll be another slap in the face as I use the money toward a few bit for my son and oil to heat the house during January, February and march. I live in fear of having to give my son over to the state to care for as I can see myself being able to continue. It cost the state over €2,000 per week to keep a person in residential care doesn’t make any sense.

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    Mute Teresa O'Halloran
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    Oct 10th 2020, 8:37 AM

    As a full time carer of a family member I am dreading this budget. Already services for carers are non existent since March. No visit from a public health nurse since January. Carers of vulnerable people have been abandoned. The Euthanasia bill was no surprise.

    64
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    Mute Asio_Otus
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    Oct 10th 2020, 10:10 AM

    @Teresa O’Halloran: Why did the Dying with Dignity bill not surprise you exactly?

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    Mute Carol Oates
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    Oct 10th 2020, 10:53 AM

    @Teresa O’Halloran: Likewise. I’m one of the fortunate carers with a nice home and family around me. However, no service support since March. I’ve been on duty 24/7 for 7 months. Family carers save the economy billions and prop up failing health services, even before the pandemic. Now more than ever. It’s time to recognise that contribution to society, not belittle family carers as glorified unemployed or just ignore them altogether.

    29
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    Mute Jack Inman
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    Oct 10th 2020, 10:02 AM

    Been here 6 years. Always believe that paying taxes is important but, having lived in four countries in my life i can honestly state Ireland is by far the worst for squeezing middle income earners. By some way.
    The blinkered brigade will no doubt chastise me but, the reality here in Ireland the middle income earners (especially non Irish passport holders) pay a boatload of taxes and in return get literally zero. No health(can’t even get the dental polish!), chronically underfunded police, shocking public transport outside of Dublin City, terrible housing scenario not rental and ownership.

    67
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    Mute Thomas Linehan
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    Oct 10th 2020, 8:10 AM

    Pensioners got no 5e increase last year

    58
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    Mute Mary Garry
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    Oct 10th 2020, 8:29 AM

    @Thomas Linehan: Correct, do they think, loss of memory is kicking in

    48
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    Mute Paul Power
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    Oct 10th 2020, 9:25 AM

    @Thomas Linehan: looks like the same again.

    13
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    Mute sean de paore
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    Oct 10th 2020, 8:42 AM

    I don’t see any mention of the pension age?
    With less jobs out there, it might be the time to look at allowing the option of people retiring at 65, but only if they want to.
    Also both FF and FG lost tens of thousands of votes to SF on this issue.
    Were an election to occur in the morning the same would happen again.

    56
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    Mute Kerry Evans
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    Oct 10th 2020, 9:59 AM

    @sean de paore:
    People in France retire at 62 on full state pension to free up jobs
    Return the Pension to 65 please
    Or face the wrath of the grey vote….

    61
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    Mute FlopFlipU
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    Oct 10th 2020, 6:30 AM

    The money will come from whoever is working ,where else can it come from or a increase in profits from companies cigs and fuel

    43
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    Mute Thomas Quinn
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    Oct 10th 2020, 6:11 AM

    There won’t be many shocks. The next will be rough and the next one after that. Mehole Martin and creative thinking to close the massive deficit while not shafting people…… Hmmmm….. Is he about to legalise and tax Marajuana? I can just see him and Leo discussing it down the garden shed having a smoke. Lol

    43
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    Mute Richie Corrigan
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    Oct 10th 2020, 8:20 AM

    Raising the minimum wage by 10c and here I read they will be tweaking the USC bands. I only suggested to a colleague in work the other day that this would happen, they really must believe people are I-diots . I wonder which tax band will be tweaked?
    Please let this pandemic end, so that there can be another election and these shiesters and charlatans can be shown the door.
    My suggestion,,, give the job of running this country to the likes of the Goodmans and O’Learys etc sure they seem far more qualified and fit for purpose than the gaumbiens trying to do it now,,,,,, rant over

    53
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    Mute trebloc01
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    Oct 10th 2020, 8:37 AM

    Who voted for this government…….you get what you wish for

    37
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    Mute Niall
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    Oct 10th 2020, 8:49 AM

    Pension age increase quietly buried . . .

    29
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    Mute Joan Featherstone
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    Oct 10th 2020, 8:32 AM

    We can expect more misery/bad news/doom and gloom…is there no end to it ffs.

    30
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    Mute Paul Power
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    Oct 10th 2020, 9:05 AM

    You will find that most of the promises that were made will not be honoured.

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    Mute Ciaran Farrelly
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    Oct 10th 2020, 8:03 AM

    Better get the lube ready. This is going to be sore lol.

    40
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    Mute Thomas Quinn
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    Oct 10th 2020, 8:23 AM

    @Ciaran Farrelly: Tax is going up on that. No fun allowed

    25
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    Mute Carol Oates
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    Oct 10th 2020, 10:35 AM

    No mention of family carers there. One group that has been absolutely neglected during the pandemic worse than any other. Expected to pick up the pieces of absent support services and prop up the health service. Over 300,000 family carers in Ireland. Many of them underage or unpaid. 55% were working before becoming family carers and 23% are on reduced hours while also caring. 70% of family carers are struggling to make ends meet. I wonder if people on pup would accept a clap instead of actual support.

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    Mute Tom Bombdadil
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    Oct 10th 2020, 7:39 AM

    To be s@&wed that’s you can expect. True story.

    14
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    Mute Wendy Willard
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    Oct 10th 2020, 9:41 AM

    Comedian’s calling for ‘additional support’, they’re having a laugh, aren’t they.

    11
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    Mute SteveBuzzard
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    Oct 10th 2020, 4:31 PM

    The State are losing millions if not billions to the black economy. The amount of trades persons & personal services who expect to be paid in cash is widespread. ie avoiding Income Tax, VAT, and USC. (no fan of these, but system has to be equitable)
    The State has done nothing to curb this like setting up some kind of registration system?. Its the same as it was 20 years ago…. Meanwhile PAYE workers are hammered for all the usual deductions at source.

    9
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    Mute El Poblo Escobar
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    Oct 10th 2020, 1:34 PM

    No increase to USC charges but they will charge the bands which actually means we are all going to be paying more USC next year so there will be an increase in USC creative thinking alright try to pull the wool hijos de putas

    8
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    Mute Edel Quinn
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    Oct 10th 2020, 11:12 AM

    The PUP should be re-instated to €350 per week.

    8
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    Mute Nuala Mc Namara
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    Oct 10th 2020, 10:24 AM

    What is the alternative Budget plans for Level 4& Level 5?
    What is the alternative Budget plans for a hard Brexit?
    What is the alternative Budget plans for either Level 4 or Level 5 + a hard Brexit?

    7
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    Mute Margaret Kane
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    Oct 10th 2020, 4:17 PM

    No 5 euro for pensioners not living alone

    4
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    Mute SteveBuzzard
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    Oct 10th 2020, 4:22 PM

    They are losing millions if not billions to the black economy. The amount of tradespeople who expect to be paid in cash is widespread. ie avoiding Income Tax, VAT, and USC. The State has done nothing to curb this like setting up some registration system. Meanwhile PAYE workers are hammered for all the usual deductions at source.

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    Mute Soeren Kuehling
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    Oct 11th 2020, 6:36 PM

    Retrofitting homes for energy efficiency…good kuck with that. I called a company who does that and they said they don’t do apartments but houses only. So if you live in a apartment which was substandard 25 years ago you have to live with higher heating costs or buy some warm clothes

    1
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