With a little over a month to go before Budget Day on September 27, speculation is spreading like wildfire about what might be announced.
The Budget will be two-pronged this year. There will be the usual State expenditure and tax cuts announcements for next year. But secondary to that will be a special cost-of-living package.
How big is the Budget?
The overall 2023 Budget is €6.7bn (but keep any eye out for this figure inflating on Budget Day) and it will consist of a tax package of around €1bn, and spending measures of around €2.7bn, including a public sector pay deal.
Meanwhile, €2.2bn will go towards keeping up with changing demographics and €800m will be spent on capital investment.
What about the cost-of-living package?
There has been no final agreement on how much will be spent on a series of one-off measures but informed estimates suggest between €1bn and €1.5bn is on the table. This will be paid for using a record tax take which brought in a surplus of €5bn in the first six months of the year.
The rest of the money is likely to be put into a “rainy day fund” to prepare for future financial shocks.
What are the most likely one-off cost-of-living measures?
There’s quite a bit. There is talk of one-off double weekly payments of all welfare rates after the Budget and then a further double payment in December, aka the Christmas bonus. It is also likely that child benefit recipients will receive a double payment some time soon after Budget Day.
The fuel allowance could also be increased or extended for a longer period and the Household Benefits Package, which gives 484,000 people €35 a month towards gas and electricity, could also be doubled for one month.
Welfare aside, the Government is looking at a second instalment of the €200 electricity credit which will be taken off bills before the end of the year.
But back to the Budget, will welfare rates be increased in the new year?
Yes, it certainly looks that way.
All welfare rates are likely to go up by at least €10, if not €15 in the new year.
The Government is also anxious for increases to come into effect sooner rather than later so it could be as early as January when the rates go up.
What is happening with tax cuts?
Tánaiste Leo Varadkar has been pushing for the introduction of a new 30pc tax rate which would allow low- and middle-income earners to keep more of their hard-earned salaries. However, Minister McGrath raised concerns about the proposal’s impact on tax credits and pensions tax relief.
The Green Party also favour changing tax credits, rather than introducing a new rate.
Minister Donohoe is also less than enthusiastic about the measures. It is far more likely that there will be changes to income tax bands to take into account wage increases.
Are they going to finally fix the housing crisis in this Budget?
Highly unlikely. Mr Varadkar has promised something for landlords and tenants in the Budget but stopped short of saying what exactly.
There are suggestions taxes paid by landlords could be reduced and a tax credit could be introduced for renters which was in place before the financial crash.
What about the health system?
That’s another work in progress. The significant levels of investment in the Department of Health since the pandemic are likely to remain and there is discussion around reducing hospital fees and medical costs.
Are student fees going to be cut?
Higher Education Minister Simon Harris certainly hopes so, and Fine Gael has made this one of its key objectives for the Budget.
However, Taoiseach Micheál Martin isn’t overly keen on this, as it would reduce third-level funding.
There is some talk about introducing a one-off cut of around €250 in this year’s fees as part of the cost-of-living package. A similar move was done during the pandemic.
What’s the latest on climate action measures?
Well, carbon taxes are going up which won’t be popular in the middle of an energy crisis but the Government will most likely delay the hike until May so as to avoid adding further costs to bills during the colder months.
The tax is due to increase €7.50 in every Budget and will go from €41 to €48.50 per tonne of carbon dioxide emitted. This will have a knock-on cost on petrol, diesel and home-heating oil.
To counter this tax hike, all three Coalition parties seem to be happy to make reductions in public transport fees permanent. Meanwhile, the Green Party reportedly wants Vat on retrofitting material scrapped and reduced for bicycles.