Mortgage payers whose repayments have soared with European Central Bank rate rises will receive tax relief of up to €1,250 as part of Tuesday’s multibillion euro giveaway budget.
There will also be a €12 a week increase in basic welfare rates – far less than that sought by campaigners – tax cuts targeted at middle-income earners, big spending increases across all Government departments, a package of once-off payments including a double month of child benefit before Christmas, a double welfare payment in the new year and three energy credits worth €450, help for small businesses and further cuts to the cost of childcare next year.
New funds for climate action, infrastructure and long-term savings will also be part of a huge spend and save budget to be unveiled by the Government. A proposal was also being considered that would see landlords get tax breaks worth €600, rising to €1,000 over time if they stay in the market.
All told the Coalition will announce a pre-election budget with spending increases and tax cuts worth over €9 billion that gives almost €2.5 billion in cash back to voters in the coming months.
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There will also be an additional €4 billion in “non-core” spending which has already been largely signalled. Most of this is to pay for housing Ukraine refugees, but there is also an amount for the Brexit adjustment fund and for post-Covid spending in health. This brings the total size of the commitments in the budget to around €13 billion, though the non-core elements are expected to be temporary.
But budget Ministers Michael McGrath and Paschal Donohoe will also announce that they will put away billions of euro every year into new infrastructure, savings and climate funds.
The Green Party will hail a new €3 billion “war chest” to invest in climate and nature restoration projects over the remainder of the decade, which will be in addition to funding already earmarked for climate and nature in the National Development Plan. It is understood the money will be used for a large number of projects in the Government’s climate plan, notably retrofitting; district heating; supports for farmers who undertake nature protection; and supports for decarbonisation of businesses.
A new savings fund will benefit from the rest of the windfall corporation tax receipts, and will be in addition to the existing €6 billion “rainy day” fund previously established by the Government.
Following weeks of intense negotiation in Government final agreement was reached on Monday night between the budget Ministers and the Coalition party leaders on a budget that will be smaller than last year’s big giveaway – when the cost-of-living crisis was at its height – but will still put cash back in voters’ pockets.
Spending increases will be spread across the various departments, with funding for more gardaí, higher student grants and an extension of the free schoolbooks scheme to those in early secondary school years.
Businesses will be in line to benefit from a €250 million package to help them deal with increased costs, with at least 130,000 small and medium firms likely to receive a once-off grant worth up to 50 per cent of their annual rates.
Elsewhere, Government leaders were closing in on a package that would see a €100 increase in personal, PAYE and earned income tax credits, an increase in the ceiling for the 2 per cent USC rate to €25,760, and the 4.5 per USC rate cut to 4 per cent. The threshold for paying the higher rate of tax is set to be raised by €2,000 to €42,000.
