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BUDGET DAY IS just over a week away, and the kites are already flying.
Finance Minister Paschal Donohoe indicated this week that the government is expecting to see a “very strong rebound” in the Irish economy.
But he also said he would not use the better-than-expected growth to further increase the amount of money available for spending hikes and tax cuts in Budget 2022.
The €4.7 billion package is still being finalised – with budget haggling between the Department of Finance and other departments expected to go down to the wire next week.
Not everyone will get the chunk they want from the €1 billion available for new spending, some of which has already been earmarked. There is around €500 million available for new tax cuts – or ‘tax measures’ as the government would seem to prefer us to call them, as they’ll mainly be used to offset inflation against people’s incomes.
So what can we expect to see and what are the non-runners?
Income tax
At the weekly Fine Gael parliamentary party meeting this week Tánaiste Leo Varadkar gave some details to his members about what to might expect on the tax side.
But the truth is, there will be minimal changes to income tax in Budget 2022.
Varadkar said there is a need to protect middle income earners from inflation and the rising cost of living, as inflation expected to peak above 4% in the final quarter of the year, before falling back below 2% in the third quarter of 2022.
The Tánaiste said that indexing tax credits and tax bands will instead help workers.
The programme for government states that from Budget 2022 onwards, as incomes begin to rise, credits and bands should be index linked to earnings.
The government says this needs to be done to “prevent an increase in the real burden of income tax, to prevent more low income workers being taken into the tax net because of no changes to the tax system and to ensure there is no increase in the number of people having to pay higher income tax and USC rates”.
Booze and Cigs
Due to the immense difficulties experienced by the pub and restaurant trade over the last year, it is not expected that the price of alcohol will rise this year.
Typically, the price of cigarettes has risen year-on-year, and this could be the case again.
Social welfare
Social Protection Minister Heather Humphreys said she will focus on the vulnerable, and hopes to improve the situation for those reliant on social welfare payments in this year’s Budget.
There have been indications that there could be an increase in Jobseekers Allowance, given the rise in the cost of living, and also due to the tapering off of the Pandemic Unemployment Payment (PUP) which was paid at a higher rate than Jobseekers over the last year.
Varadkar told the Dáil this week that an increase to the current minimum wage is needed as the cost of living rises.
It is currently €10.20 but there is no indication as to what it might rise to.
Pension
There has been no pension increase in the last two years.
Again due to the rise in the cost of living it is expected it will rise by at least €5, though there have been calls for it to increase by €10-€15, which would be an unprecedented move.
Fuel Allowance
There has been lots of talk about energy costs recently. The government aims to tackle the problem in the budget by increasing the fuel allowance.
The Taoiseach confirmed that “in the forthcoming budget we will seek to protect the lowest income groups and those most impacted by increasing fuel prices – so that will be an objective of ours.
“We are conscious of, on the welfare side, the fuel allowance and the whole area around energy costs rising across Europe.”
Remote working
Varadkar has said that within the €500 million tax package, there will be measures to promote remote working.
“What we’d like to do is to have a system whereby if someone is working from home and they incur costs, particularly utility costs, they’d be able to defray that in some way against the tax they pay. That exists already but it hasn’t been updated in many years,” he said.
Christmas Bonus
The government would be foolish to pull back on the Christmas bonus when they have paid it out consecutively over the last number of years.
The Christmas Bonus payment (an extra week’s payment) is normally made to people who are in receipt of long-term social welfare payments and who are entitled to a normal payment in respect of the week that the bonus is paid.
People who are unemployed for less than 12 months do not normally receive this payment. As an exceptional measure last year due to the pandemic, the bonus payment was made to people in receipt of PUP or a jobseeker’s payment for at least 4 months (17 weeks).
One to watch this year.
Help to Buy Scheme
Housing is the biggest issue for this government, so expect to hear lots of talk about the government’s Housing for All plan and how much money they are going to be spending on it this year.
One aspect of it that we know will be included in the Budget is the Help-to-Buy Scheme. Housing Minister Darragh O’Brien previously told The Journal that he wanted to see the scheme extended into next year. It is due to expire at the end of December.
Under the scheme, first-time home buyers are able to apply for a grant of up to €30,000.
The Tánaiste confirmed this week that it will be extended into next year. It’s not believed that the cap of €30,000 will be raised.
Tourism voucher
Remember the Stay and Spend Scheme? Well, a new voucher scheme – one that is hopefully less cumbersome – could be announced on Budget Day in a bid to boost domestic tourism in the off-peak season.
Pandemic bonus
Taoiseach Micheal Martin has confirmed that the expected pandemic bonus for frontline workers will not be announced on Budget Day, telling reporters it is “not a Budget Day issue”.
Due to the ongoing debate about the bonus and who should get it, the government is adamant it does not want that narrative overtaking other announcements made on Budget Day, and therefore the details are likely to emerge shortly after 12 October.
A tax-free voucher of up to €500 and an extra bank holiday are amongst measures under consideration.
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Nailed to a cross is all I’m expecting from the budget
@James Fox: ah get down off the cross will ya, we need the wood.
@James Fox: very true!!.. us the regular working people have been nailed to that cross a long time now ….. think we will get more nails though!
@Michael Burke: Why is that is it to heat the house when the power is cut LOL
@James Fox: FFG want you to supply your own nails The Green will gladly supply the hammer under a sustainable agreement .
The government put a set percentage of tax on diesel/petrol so with the fuel rising so much in the last year they are getting a lot extra but they still want to raise carbon tax .. absolute day light robbery
@Gerrard: and we don’t have enough electricity for electric cars
@Gerrard: And that carbon tax along with the excise duty is also subject to VAT. Win-win-win for the Govt.
You get an Xmas bonus on the dole? In Spain, you get a kick up the ar se, you get nothing if you haven’t paid into to it for a year minimum. You realise how generous it is in Ireland, for low income workers/unemployed when you look at how social welfare is around the EU.
@Jj: IV paid taxes all my life and I’m entitled to nothing, yet someone I no never worked for 30 years gets free money every week, free doctors, dental, eye test, etc
@Heisen berg1: Why not go on the dole then? I’ve worked all my life and never would I feel it’s better being on the dole than having to get up for work every morning. We had near full employment at one stage and it didn’t improve my salary by much, hard work did. So people being on the dole isn’t going to decrease my salary a whole lot either. The onus is on me to improve my lifestyle, not the effects of someone being on the dole or not.
@Jj: it’s not that great. I pay half my dole in rent to my parents. Plus any foods I want that are extra to the bill… so my milk, my bread, etc. And they’re not cheap. I paid €4 yesterday for 2 litres of milk, for example.
Then there’s my phone. And a contribution to the household internet. And I pay for our Netflix sub, which no one uses, but I’m not allowed to cancel “just in case” and the disney+ sub, which I’m currently using, admittedly. And I’ve recently had to shell out a couple of hundred on clothes in case I get interviews for jobs I’m applying to (which is a joke… 99% of the places I apply to don’t look at my applications. In saying that, when my application IS looked at, I get an interview. But that happens about once in every couple of hundred CVs sent out). OH, and I’m trying to save towards moving out, should I ever manage to get a job. And there are prescriptions. And GP visits that need to be paid for on occasion. And the flu jab will be costing about €30 this year.. that ain’t free..
So… lets see. I get €812 per month. €400 is rent. €25 is phone. €50 is internet ~€30 on subscriptions. about €50 per month gets spent on food. In September I had to buy new shoes, which were €100. And give contribute €200 towards my parents trip to England, and drop €50 on presents for people I hardly know, that they are visiting.. And another €150 on clothes. And none of these were choices. These were payments my parents required me to make, in order to be able to live here for the months of September/October. OH! And another €90 to get my hair done.. which was the cheapest price I could find for what they wanted me to have done – wash cut and colour (cover the greys).
I’ve already been told that my Christmas bonus will be going towards paying for Christmas dinner and stuff like that.
Oh… and both my parents are employed. They’re not poor. They also get on my case constantly for not saving €400 every single month, and for sometimes having to dip into my savings because of the costs I have to pay for. And yes, work it out.. by the time I’ve paid for my food and phone, there’s no way I can save €400 per month.. so they are constantly on my case for not saving enough. Claiming I’m bad with money, and spend too much.
That €150 I spent on clothes? My mother picked them out. Wouldn’t let me look for anything cheaper. Then afterwards, she gave me grief for wasting so much money on clothes I’ll likely never use, because I struggle to get interviews.
We can expect to be leaked every bit of information
I’d say the nervousness and worry is palpable among many TD’s in FFG about the rising tide they know is coming in the next election.
No doubt the arguments are many between them over a giveaway budget to try stop what is coming and the polls are showing.
@RogerRamjet: will be interesting to see the opposition alternative budgets and costings. I think if their numbers actually add up, never have before, it will give people food for additional thought.
Does the idea of a bonus for frontline workers sit uneasy with anyone else ? They did their job, and no doubt we’re under extreme pressure but is that new for front line workers ? They are either getting paid enough to do their job or they aren’t .
Get rid of the carbon tax! Then the cost of fuel gose down, and a knock on effect happens, everything starts to come down in price, heating, food etc etc, or am I been a bit naive?
Bye bye pension.
@ianglen: €5 euro an insult
Strangely enough there’s no mention of this: https://www.irishexaminer.com/sport/othersport/arid-40711562.html
Am I to understand that higher taxes, tolls and congestion charges have nothing to do with the budget?
If they do, one wonders why this isn’t being flagged.
Could it be perhaps because it might cause an uproar (as it rightly should) or it will emphasize how unrealistic and impractical the new climate “plan” is?
@Stan Papusa: The page I meant to link was this: https://www.independent.ie/irish-news/news/the-war-on-cars-plan-for-new-tolls-congestion-charges-and-tougher-parking-40909505.html LOL
Big Question???? When will our Pensioners get full restoration of 2008 entitlements?
Please Minister, remedy this scandal now!!..
I am hedging against the euro and buying into inflation protected etfs. buckle up buckaroos $TIPS
How about a scheme that can be announced with great fanfare and spin but nobody is really eligible for it for one reason or another and it can be quietly shelved in two years time? We’ve had plenty of them.
Family carers working 24/7 ignored, not entitked to fuel allowance abd means tested. Caring for a disabled person requires ongoing heating.
Genuinely wondering why I bother working. Other than living in a nice area there’s no benefit to me. Guaranteed bonuses for those on the dole, help to buy, increase in welfare, fuel allowances and no increase for booze and cigs absolutely nothing relevant for the the already squeezed middle.
have your say