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LAST UPDATE | 3 Oct 2023
WE’RE JUST ONE week out from Budget 2024, with €6.5bn worth of new measures set to be announced next Tuesday.
Fianna Fáil is trying to put its stamp on things this year, given that it’s Michael McGrath’s first time in the driving seat as Finance Minister.
While then-Minister for Finance Paschal Donohoe made it clear last year that billions would be spent on addressing the cost-of-living crisis being felt by people across the country, there is some pressure on McGrath to dampen expectations.
However, Taoiseach Leo Varadkar and Government ministers have already confirmed that this year’s package is set to be supplemented by a number of one-off measures, some of which will kick in before Christmas.
With a series of ministers due to meet the Finance Minister this week with their final wish list for their departments, senior sources have said “this week will be tough”, with not everyone getting what they have asked for.
Coalition leaders will meet with McGrath and Donohoe on Wednesday to come up with the final draft for the Budget by next week.
However, like many other years, the big Budget Day reveal of years gone by has ended, with much of the measures already leaked to the media. “There will be no surprises at this stage,” said one source.
So what can we expect to hear next week?
Income Tax Package: The standard rate band – which currently stands at €40,000 – will continue to rise in this year’s budget, with some indicating it could increase by up to €1,500. However this is yet to be finalised.
Fine Gael want it to gradually reach €50,000 over the coming years, so people on higher incomes get to keep more of their earnings.
All eyes will be on the controversial Universal Social Charge (USC) changes, which are being seen as a measure Fianna Fáil want to take credit for.
Last year the ceiling of the second USC rate band increased from €21,295 to €22,920 to “support those on minimum wage” but this year it could be the case of widening out the 2% band to move in line with an expected increase in the minimum wage next year.
There will be no introduction of a third rate of tax, as was proposed by Varadkar last year, but the measure may not be off the table for next year.
The Government’s plan to introduce pay-related benefit, which links a person’s previous PRSI contributions to their social welfare supports if they lose their job, is also at an “advanced stage”, with discussions ongoing this week about whether the new system could form part of the budget.
Social welfare package: Social Protection Minister Heather Humphreys already confirmed this summer that she would be ambitious about the budget’s social welfare measures, indicating she would like to match the €12 pension increase from last year.
How much the increase this year will amount to is still being decided upon, with government sources saying that the increases are likely to be closer to last year’s increase.
The minister is also understood to be setting her sights on social welfare increases for people with disabilities and carers. There is likely to be a repeat of the top-up one-off payments, like a double welfare and child benefit payment before Christmas.
Humphreys is also pushing for the expansion of the hot school meals programme.
A question mark hangs over the number of electricity credits the government will announce. The Taoiseach has said that households will need additional help to pay their bills this winter.
However, the government has been waiting to see where inflation stands and how far energy companies have reduced their prices before signing off on another three universal €200 electricity credits.
It is understood there will be at least one this time around – but the debate is still ongoing as to whether it might be two €150 payments this year.
Government ministers have continually stated that supports should be targeted as much as possible to those that need them, making it likely that another lump sum payment for Fuel Allowance recipients will be paid before Christmas.
The Taoiseach has already said that the one-off measures – many of which will be paid out before Christmas – will not be as big as last year, particularly due to the Department of Health’s budget overrun of €1 billion for this year, as was first reported in The Journal back in August.
An extension of the Help-to-Buy scheme until 31 December 2025 is on the cards, but the question is whether it will be modified to include second hand homes or if the loan-to-value measure will be tinkered with.
The renters’ tax credit of €500 for tenants who are paying rent in respect of their principal private residence is also set to increase, though perhaps not to the €1,000 which was first mooted. The credit is likely to increase to around €800.
As reported by The Journal over the summer, targeted mortgage interest relief for homeowners is being worked on between the finance minister and social protection minister.
Varadkar has also indicated that this year’s budget will help small landlords and encourage more of them to enter and stay in the market.
The tax concession is likely to be linked to the rights and security of tenants, it is understood.
The final restoration of the excise duty on fuel is meant to kick in this month by 8c for petrol and 6c for diesel; however it has all been but confirmed by ministers that this will now be pushed out to a later date as prices at the pump are steadily getting close to the €2 per litre mark.
One promise that is being rolled back on this year is the promised 25% reduction in weekly childcare fees.
Last year’s announcement was worth up to €175 per month or €2,106 per year for parents, but it’s understood it might not be worth as much this year.
It has also been confirmed that State-funded parents’ leave will increase by another two weeks, meaning parents will be able to take up to nine weeks off after their children are born. This can be taken any time up to the child turning two, and is paid by the State. Employers do not have to top up the benefit.
Extending the free school books scheme to secondary school students is under consideration in this year’s budget, Education Minister Norma Foley has said. The scheme was rolled out for primary school pupils in September.
It’s understood the Higher Education Minister Simon Harris wants to make big strides in the reduction of student fees this year, which could see the €1,000 reduction introduced last year doubled. A 25% increase in student grants is also on the table for consideration.
In terms of public transport fares and whether there will be further price reduction, Transport Minister Eamon Ryan told The Journal last month that he would prefer to pause any further fare reductions, instead using the funds to invest in further expansion of public transport.
Minister for Enterprise Simon Coveney said on RTÉ’s The Week in Politics over the weekend that there will be once-off supports before the end of the year for small and medium businesses.
While workers saw a tax-free bonus amount an employer can give an employee increase from €500 to €1,000 annually in last year’s budget, Varadkar has confirmed that there will be no increase this year.
Excise on a pack of 20 cigarettes is mooted to increase by 50 cent, but repeating last year’s move, an increase on alcohol is unlikely.
As confirmed by Tánaiste Micheál Martin to The Journal, there could be a budget announcement regarding tax on vaping products, though the measure would not be rolled out immediately.
As talks intensify over these final days and with the cost-of-living still a key concern for most, the pressure is on government to strike the balance right next Tuesday.
The Taoiseach wasn’t giving much away at a press conference today at Government Buildings, though he told reporters that the budget will contain a “significant” cost-of-living package as he summarised what people could expect in the Budget.
Varadkar said the Budget is not likely to be finalised before Sunday night and is then subject to Cabinet approval on Tuesday.
While warning against speculating on budgetary measures, the Taoiseach added: “What I can say is that it will contain an income tax and USC package which will reward work and put money back into people’s pockets.
“The amount you gain will depend on how much you earn and your circumstances, that’s always the case.
“There will be a significant cost-of-living package which people will feel the effect of before Christmas because petrol/diesel prices are high, energy prices are still high, gas prices are still high.
“There will be help for business and farms because of the high costs they’re facing.
“There will be a focus on children and you’ll see that in the social protection area, education and childcare.
“And of course, there’ll be additional resources for law and order.”
Varadkar has previously said one-off measures in the Budget will be smaller in scale than last year.
He said this was because inflation has moderated and wage increases across the economy have outpaced rising prices since last year.
With reporting by Press Association
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Thoughts to all those who’ll be affected
The Chinese, a great bunch of lads.
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