IT’S SEPTEMBER, WHICH means the political system in Ireland is fizzing with pre-Budget demands, requests, speculation and warnings.
Budget 2025 will be delivered by Finance Minister Jack Chambers in little over a week, setting out Government spending for the year ahead.
It will see a total of €105.4 billion in expenditure being made available, an additional €6.9 billion compared to last year.
As has come to be the norm in recent years, many of the requests from government ministers have already made their way into the public domain and government leaders have made their priorities public.
Taoiseach Simon Harris has already said the Budget will contain a pro-business package as well as a cost-of-living package for households.
Given that inflation has come down though, we have already been warned that the cost-of-living package won’t be as big as previous years.
However, ministers have indicated that we can still expect one-off energy payments and a double child benefit payment before Christmas this year.
Workers
Workers are set to be, on average, €1,000 better off after this Budget, according to the Finance Minister.
Taoiseach Simon Harris has confirmed that workers will see a “significant” income tax and USC reduction package this year.
Last year, USC was cut from 4.5% to 4%, and while it is expected that it will be cut by a further half point this year, no specifics have yet been given.
On Income Tax, it is expected that the higher-rate tax band will be further raised.
At the moment, a single person pays 20% tax on earnings up to €42,000. This was increased from €40,000 in last year’s Budget.
Social Protection Minister Heather Humphreys indicated last month that there will be no increase to the Jobseeker’s Allowance, which currently stands at €232, given that Ireland is at full employment.
The minister has said pensioners, carers and people with disabilities should be prioritised as part of this Budget.
It’s expected that the pension will increase by €12 a week, the same as in the last two years, but Humphreys is under pressure from her own Fine Gael party colleagues to raise it further to €20 a week.
For now it’s unclear if she will go that far.
Humphreys has been explicit in saying she wants to expand the qualification for the Fuel Allowance so that those who are retired and over the age of 66 can avail of it.
At the moment it is only available to people over the age of 70.
No guarantees have been given, but the Taoiseach himself has said the USC surcharge on self-employed income is “unfinished business”, so watch this space.
There’s also been huge pressure from the hospitality sector for the 13.5% vat rate to be cut to 9% as was the case during the pandemic, but it’s understood that this is unlikely.
While Enterprise Minister Peter Burke and many of his Fine Gael colleagues are in favour of such a move, Finance Minister Jack Chambers is less so and looks likely to put his foot down.
Green Party leader and Minister for Children Roderic O’Gorman has confirmed that the childcare budget for 2025 will be over €1.2 billion – almost double what it was four years ago when he entered the role. But don’t expect to see the cost of childcare to reduce any further as a result.
With a 25% cut in the average cost of childcare kicking in last month, further changes aren’t expected as part of this year’s Budget.
There have been strong indications that the double child benefit payment ahead of Christmas will go ahead again this year, with Humphreys hailing it “extremely popular”.
It’s also expected that Child Benefit will be increased by €10 to €150 a month.
We’ve also seen O’Gorman float the idea of a one-off €560 ‘baby boost’ payment for parents with new children, a proposal Humphreys has also backed as a “good idea”.
Whether this will be approved by Minister for Public Expenditure Paschal Donohoe remains to be seen.
Last year’s Budget saw the student contribution fee paid by college students cut by €1,000, bringing the cost of one year in university to €2,000. However, this was only as a once-off.
It’s expected that the contribution fee will be cut by €500 this year by Higher Education Minister Patrick O’Donovan on a permanent basis, bringing the cost of one year in university to €2,500 for those who don’t qualify for a grant.
It’s understood that an increase to the household threshold for the SUSI grant is also on the table alongside an increase to the maximum grant on offer.
O’Donovan is understood to also be pushing for changes that would allow students to earn an extra €10,000 outside of term time, without this impacting their eligibility for the SUSI grant.
In terms of housing for students, sources have indicated that O’Donovan is pushing to get access to some of the Housing for All budget for student accommodation.
As one government source put it: “Students are 5% of the population and yet there is zero consideration of their housing needs in the Housing for All budget.”
The Help to Buy scheme, which gives first-time buyers up to €30,000 of their tax back towards a deposit for a new-build home, is currently set to end next year. It’s understood that Housing Minister Darragh O’Brien is pushing for it to be extended as one of his key Budget priorities.
It’s also understood that he is looking for the €500,000 cap on home prices to be extended to expand eligibility for the scheme.
Meanwhile, for renters, it’s expected that the rent tax credit will be increased from €750 to at least €1,000.
Plans proposed by the Green Party are currently being considered to extend free public transport to all children under the age of nine.
Currently, children under five years of age go free.
Health Minister Stephen Donnelly has stated that he would like to extend the free contraception scheme for women to include 16-year-old girls. At the moment, women and girls aged 17-35 are included in the scheme.
Vapers can expect to see an increase in the cost of their vapes, with a “domestic tax” on e-cigarettes that was announced as part of last year’s Budget likely to take effect in this year’s Budget.
Smokers can expect the cost of cigarettes to increase too. Last year the price of a box of 20 cigarettes was put up by 75c, following increases of 50c every year for the previous seven years.
With the average price of a box of cigarettes now €16.75, expect to see it pass the €17 mark this October.
There’s been much debate surrounding inheritance tax in recent months, with many calling for an overhaul of the current system given the high value of houses at the moment.
Currently, children can inherit €335,000 from their parents without paying tax. Anything above this is taxed at a rate of 33%.
The Finance Minister has ruled out abolishing the tax altogether but there have been signals from the leaders of both Fianna Fáil and Fine Gael that they want change of some sort.
It is expected that the tax-free threshold will rise to €400,000.
The Finance Minister has explicitly said that money will be set aside in this Budget for improving infrastructure like housing, water and energy services.
This will be paid for using the €3bn proceeds from the sale of the government’s AIB shares.
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