Taoiseach Leo Varadkar said the budget will contain a “significant” cost-of-living package as he summarised what people could expect from next week’s announcement.Speaking at a press conference in Dublin, Mr Varadkar said the budget is not likely to be finalised before Sunday night and is then subject to Cabinet approval on Tuesday.
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.
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.