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Tuesday 3 October 2023 Dublin: 12°C
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# budget 2023
Budget 2023: What can we expect in next week's package?
Next week’s budget is set to be split in two, with one-off cost-of-living measures expected to be included.

WE’RE JUST ONE week out from Budget 2023, with billions set to be spent on addressing the cost-of-living crisis being felt by people across the country.

The package, which was moved forward by two weeks due to the rising cost of living, is set to be supplemented by a separate package of once-off measures.

While the two money ministers, Paschal Donohoe and Michael McGrath, have been tight-lipped about where the €6.7 billion allocated earlier this year will be spent, budget kites have continued to be flown.

One of the key measures that have been floated by multiple ministers in recent weeks is additional energy credits for households to combat rising bills.

A total of three €200 energy credits have been proposed, with Green Party leader Eamon Ryan indicating that one will be applied before Christmas.

The remaining two credits are expected to be applied before next spring and will be universal rather than targeted.

Fuel Allowance is set to be increased with changes also set for the threshold someone has to reach in order to qualify for the payment. 

Government is also set to extend the reduction in excise duty on petrol and diesel, with some stating further reductions could also be introduced. 

There is also expected to be a focus on childcare costs in the budget package, with fees to be cut by 50% over two years, which is expected to be a reduction of €200 for this year.

The Journal reported in April that subsidies on childcare would increase to help reduce costs for parents, alongside overall price caps.

This follows on from a new core funding for childcare being announced and changes to the pay agreements with workers. 

A senior source previously told The Journal that the Government is considering a double payment of the €140-a-month child benefit payment.

This would see parents with one child receiving €280 before Christmas including the one-off payment.

Tax breaks for landlords and renters are also being examined, as part of measures to prevent the exodus of small landlords from the rental market.

Tánaiste Leo Varadkar said that if there are concessions for landlords, there must be concessions for renters in the budget.

“It wouldn’t be fair to say that we’re going to give tax concessions to landlords, in order to keep them renting, which would be a good thing, but then to say to renters ‘well there’s nothing in it for you’ – that wouldn’t be fair,” Varadkar said.

Taxation changes are also expected to make up a portion of the budget.

While Tánaiste Leo Varadkar had previously called for a new 30% tax bracket, he told RTÉ’s This Week that he would not “go to war” if the measure was not implemented.

However, indexation of tax bands is within the Programme For Government, with support for the measure within Fianna Fáil.

Minister for State Sean Fleming previously said that indexing tax bands and indexing tax brackets would be a more straightforward way of putting money in people’s pockets. It is likely there could be changes in tax bands alongside tweaks to the USC threshold. 

Alongside taxation, there will also be a substantial social welfare package in this year’s budget with social welfare increases on the cards for a number of payments, including the pension.

Recently published Tax Strategy papers floated the idea of increasing social welfare levels to keep pace with the rate of inflation.

While an increase of €15 had been mooted, in recent days there has been chatter that a €10 increase would be more realistic. 

Alongside the increase, there has been speculation that there could be a bonus social welfare payment made before December, which would be separate from the Christmas bonus.

In terms of workers that might be in line for a bonus, Varadkar previously confirmed to The Journal that Finance Minister Paschal Donohoe is also working on the proposal to increase a tax-free bonus amount an employer can give an employee from €500 to €1,000 annually.

Under current rules, employees can only receive a benefit of €500 in value, tax free, each year from their employer.

This benefit must not be in cash but can be in the form of vouchers or cards that can be used to purchase goods or services.  

The fee reduction on public transport fares of 20% is to be extended, with sources stating that fares could be reduced further. Fine Gael TDs are pushing for the short hop zone, which caps fares, to be extended to commuter zones outside the capital, including Kildare, Meath and Wicklow.

A Vacant Property Tax is also set to be part of Budget 2023, having been announced by the Finance Minister in early July and will target long-term vacancy.

It had previously been flagged that students should expect a reduction in college fees.

The Government will also have to take into account the latest public sector pay deal, which was agreed last month.

A 6.5% increase in public sector wages was agreed upon in late August, with ICTU unions set to ballot their members on the proposed increase.

 

Author
Tadgh McNally & Christina Finn
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