Friday 20 April 2018

'It was important we had something for everyone', says Leo as Budget 2018 looks set to bring about minimal gains for most

  • Budget had many authors - Leo Varadkar
  • Changes are "small and sustainable" Taoiseach says
  • Two rates of USC to be dropped
  • Social Welfare to increase by €5
  • Social housing delivery to be increased
  • Budget is a "standstill budget" says Labour
  • Commercial stamp duty to rise to 6pc
  • Funding for homeless services will increase by €18m to over €116m
Taoiseach Leo Varadkar
Taoiseach Leo Varadkar

Laura Larkin and Sean Nolan

Taoiseach Leo Varadkar has said the Budget is a "Budget with many authors" and one he is happy to stand behind.

Finance Minister Paschal Donohoe delivered Budget 2018 to the Dáil chamber this afternoon, and the €1.2bn package is the first in a decade to balance the books.

Mr Varadkar said he the Budget includes a series of "small and sustainable" changes.

His involvement in the process has been much commented on and it is believed he has had much more involvement in the process than his predecessors.

"I was certainly very involved I would have met with Paschal every other day. It was a budget of the government and one that was influenced by Fianna Fail so it had many authors. It is a budget that is very important, the first balanced budget in 10 years," he said.

"It is a budget I am happy to be associated with."

Speaking on RTE News the Taoiseach said he met with the Minister for Finance regularly and said it was appropriate for him to be kept updated, but added that it was his colleague who handled the negotiations.

When asked if Budget 2018 was one where resources have been spread too thin to satisfy anyone fully Mr Varadkar said: "If you put everything into one area, you then have to leave others out.

"We believe we are all one society, all part of a broad community and we are very connected in Ireland, it was important we had something for everyone.

"Bear in mind, we are building steps. The reduction in USC and increase in standard rate cut off point, they come on top of reductions last year and ahead of further reductions in the year ahead so any tax cuts are modest and sustainable," he said.

"We are going to make sure that any increases you get and any improvements that happen to your living standards are there for good."

The Budget is set to deliver modest increases to the average worker, with middle income earners expected to gain in the region of €250 annually thanks to a tax band tweak and changes to the USC.

For PAYE workers threshold for the higher rate of income tax is to be raised by €750 from €33,800 to €34,550.

Mr Donohoe also announced that the 2.5pc USC rate is being reduced to 2pc and the 5pc USC rate is being dropped to 4.75pc.

However for families who bought a home between 2004 and 2012 the Mortgage Interest Relief scheme is being wound down on a phased basis.

Families with stay at home parents will benefit by around €100 per year due to an increase in carers allowance.

The Budget has been met with a mixed reaction, with Sinn Féin and Labour hitting out at the Government for introducing only minimal improvements for people, while not introducing enough substantial measures to tackle the housing crisis.

A raft of measures have been introduced to tackle Ireland's escalating housing and homelessness problems, mainly aimed at increasing supply.

The Government has emphasised the fact that housing is a priority for them in their narrative surrounding today's Budget.

One new measure introduced in this year's Budget is €750m finance funding which is to be made available for commercial investment in housing.

In a significant move stamp duty is to rise to 6pc with effect from midnight tonight. For land used for residential developments the Government is introducing a stamp duty refund scheme subject to certain conditions.

The planned vacant site levy for 2019 will now be 7pc – not the 3pc previously announced.

“The message to vacant site owners… you need to get on with developing your lands urgently," Minister Donohoe said.

Funding for homeless services will increase by €18m to over €116m.

€1.83bn is also being made available for additional housing delivery in 2018 - 3,800 new social homes next year 2018.

Housing Assistance Payment funding is to be increased by €149m in 2018, allowing an additional 17,000 household to be supported next year.

Social Welfare payments will also increase by €5 weekly, but not until the last week in March 2018.

Revenue raising measures apart from the increase in commercial stamp duty include an increase to excise duty on cigarettes and sunbed services.

When asked this evening if the cost to the State of tax changes could have been better spent in investing in public services, Mr Varadkar insisted that spending is increasing and that there are other ways to secure improvement in public services.

"One thing we will do in future years is get away from the idea that increased spending necessarily means better services. We have seen many examples of increases in staff and increases in spending not improving services. The focus of the government now and into the future is ensuring the taxpayer gets value for money

"What we are doing is keeping the tax base very broad. What we are doing with Stamp Duty is just reversing tax cut during recession, the best way to avoid risks is to balance the books and pay down the debt," he added.

Online Editors

Business Newsletter

Read the leading stories from the world of Business.

Also in Business