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Finance Minister Jack Chambers (left) and Minister for Public Expenditure Paschal Donohoe ahead of a press conference for the 2025 Budget Alamy Stock Photo

Watchdog warns €9.1bn bonanza Budget ‘repeats Ireland's past mistakes'

The Irish Fiscal Advisory Council also criticised the government for failing to target spending at those most in need.

IRELAND’S FISCAL WATCHDOG has slammed yesterday’s Budget and called for the Government to be “more serious” instead of “repeating past mistakes”.

“Ireland needs a more serious vision that delivers on the economy’s needs without repeating the boom-to-bust pattern of its past,” the Irish Fiscal Advisory Council said.

The Irish Fiscal Advisory Council (IFAC) was established to offer an independent view of how the Government manages its budget. 

It published its first read on Budget 2025 yesterday evening.

It criticised the government for failing to target cost-of-living supports such as energy credits and extra child benefit at those most in need, as opposed to the universal measures announced yesterday.

It also warned that the budget is inflationary meaning money that’s been put into people’s pocket in the budget will be taken back out by prices being pushed up.

It said the “very large” Budget will also “widen the underlying deficit”.

Yesterday’s Budget amounted to €9.1 billion, a substantial increase on Budgets seen in the pre-Covid era – in 2019 and 2020, the Budget package was €3.8b and €3.6b respectively.

Corporation tax

While the Government is running a surplus, IFAC said this is driven by an “extraordinary amount of corporation tax” and a well-performing economy.

IFAC warned that “if these were to reverse, a deficit of almost €9 billion could emerge”.

The Council also noted that while a surplus of €80 billion is projected between now and 2030, there is a deficit of €50 billion when corporation tax is excluded.

IFAC described the amounts of corporation tax being collected as “exceptional”.

And while the amounts collected have more than doubled in three years, IFAC cautioned that it is “incredibly concentrated”.

“Just three companies account for 43% of all corporation tax — €10 billion of the total €23 billion collected in 2022,” said IFAC in its flash release.

The Government is planning to save less than half of the excess corporation tax and IFAC said more should be set aside, “given how concentrated and risky these receipts are”.

Budget should have targeted most in need

IFAC also noted that only around half of the €2.1 billion of cost-of-living measures were targeted at those who are most at need.

Universal measures such as energy credits, child benefit payments, and extensions to VAT cuts on electricity and gas make up €1 billion of this.

IFAC said the same supports could have been provided to those most in need and at a much lower cost.

The Council also noted a net spending increase of 9.2% for this year and 5.8% for 2025.

The Government has set itself a rule to tie expenditure growth to the estimated sustainable nominal growth rate of the economy, at 5% per year.

IFAC said the breaches of this net spending rule since 2022 have been “substantial” and that the Government is likely to be at least €12.5 billion above what the rule would have allowed by 2025 in cumulative terms.

The Council also warned that while large Budget packages can put money back in people’s pockets, they can also take it away by pushing up prices.

“By breaching its rule,” said IFAC, “the Government is estimated to add €1,000 to the cost of a typical household’s yearly outgoings. This is probably an underestimate.”

It also said the tax package is “effectively neutral”.

The “€1.4 billion of tax cuts cancel out what would be raised by people drifting into higher tax bands plus the carryover impact of measures introduced previously”.

Tánaiste Micheál Martin today said he “takes some issue” with IFAC’s analysis.

Speaking on RTÉ’s Morning Ireland, he said: “Are they seriously suggesting that the Future Ireland fund is not a serious effort for the future?”

The Future Ireland Fund aism to deal with future recognised expenditure pressures including an ageing population and climate change.

A separate Infrastructure, Climate and Nature Fund seeks to assist with climate change objectives and nature, water quality and biodiversity issues.

Martin added that the investment in infrastructure “is quite significant”.

“There is an issue here in terms of the cost of living and the once off measures will help people, but I do take issue with the suggestion that there’s no funding at all put aside for the future or for trying to enhance the competitiveness of the economy to an infrastructural investment.”

Elsewhere, Finance Minister Jack Chambers defended the Budget and said it has “the common good at its core”.

He added that it provides a “unique” opportunity to provide better public services, more housing and significant infrastructure projects.

Meanwhile, Public Expenditure Minister Paschal Donohoe said the Government “has tried to get the balance right” and that running large surpluses is the right thing to do given the dependence on “few taxpayers”.                                                                                                                         

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    Mute Mick O'K
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    Oct 2nd 2024, 8:18 AM

    “Yesterday’s Budget amounted to €9.1 billion, a substantial increase on Budgets seen in the pre-Covid era – in 2019 and 2020, the Budget package was €3.8b and €3.6b respectively.” In other words it’s FFGG trying to buy votes

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    Mute Argus Romsworth
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    Oct 2nd 2024, 9:29 AM

    @Mick O’K: are you the Red lad from Waterford?

    12
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    Mute Mick O'K
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    Oct 2nd 2024, 9:34 AM

    @Argus Romsworth: Im a Dub buddy

    32
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    Mute Argus Romsworth
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    Oct 2nd 2024, 8:29 AM

    Chambers was made to look like a schoolboy by Doherty on Primetime.

    179
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    Mute Ol Dirty Bstard
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    Oct 2nd 2024, 9:05 AM

    @Argus Romsworth: they are throwing these scraps for the silly Irish people what is wrong with you fools? Y’all heard of revolution??

    93
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    Mute Julio's Evil Twin
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    Oct 2nd 2024, 9:24 AM

    @Ol Dirty Bstard: …are you an Irish person?.
    If so, why are you referring to your fellow country citizens in the 3rd person as sìlly and foöls?
    Would that lame insult not referr to you too?
    I notice this a lot with the limited IQ Facebook warriors..

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    Mute Buster Lawless
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    Oct 2nd 2024, 9:40 AM

    @Argus Romsworth: that was ‘car crash ‘ kinda stuff…… He looked ‘zoned’ out

    17
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    Mute Eoin Jackson
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    Oct 2nd 2024, 9:54 AM

    @Julio’s Evil Twin: he used the word “Y’all”. That should answer the “are you Irish?” question pretty swiftly for you…

    15
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    Mute Gavin Smartr
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    Oct 2nd 2024, 10:14 AM

    @Julio’s Evil Twin: he’s right though.

    12
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    Mute Julio's Evil Twin
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    Oct 2nd 2024, 2:22 PM

    @Gavin Smartr: ..enlighten me about this ‘webolution’ that’s going to kick off..
    What will be the demands or the pitchfork cries..?.
    .

    I’m intrigued. Do tell..!

    1
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    Mute Bren
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    Oct 2nd 2024, 9:32 PM

    @Ol Dirty Bstard: that’s exactly what we need a proper revolution put them back into their boxes and realise who they’re working for
    Enough wasting taxpayers money on social welfare and over 2.2 billion allocated for Ukrainian housing win not even 2 billion allocated for Irish housing I don’t see why Why we bother Paying taxes or working in the first place when money is just squandered

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    Mute Spartacus Ireland
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    Oct 2nd 2024, 8:25 AM

    These economists never want to give back to people, in recession it’s cut cut cut even though they claim you need to stimulate spending in recession and when things are good don’t raise wages or reduce tax as things will overheat: when ever do we get a wage increase then?…

    108
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    Mute Paul C
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    Oct 2nd 2024, 8:29 AM

    @Spartacus Ireland: Wages in the Republic of Ireland grew by approximately 5.6 percent in the second quarter of 2024, when compared with a year earlier. During the provided time period, wages were growing fastest in the fourth quarter of 2020, when wages were growing by 7.7 percent. (Satista.com)

    19
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    Mute another one? what's going on is the semi state sec
    Favourite another one? what's going on is the semi state sec
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    Oct 2nd 2024, 10:52 AM

    @Spartacus Ireland: They never call out the govt spending which is growing at massive rate. Only tax breaks are the problem. Spending used to be around the 70 billion mark for the years 2014- 2018….. Around 100 billion last year, 110 billion this year, and 120 billion next year?!?!?!…… Is USC really needed or do these lads just need to get a grip of their spending. It’s going to be some scandal when something hits the economy and they have to try to reduce their spending. We won’t have much more taxes to give because we’re still paying austerity taxes from the last crash 16 years ago

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    Mute John Moylan
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    Oct 2nd 2024, 3:01 PM

    @Spartacus Ireland: and where were these economists pre-crash last time ? And when we got collared for German bank debt ? I don’t know who’s paying them, or why, but they serve no function here.

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    Mute michael powell
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    Oct 2nd 2024, 9:04 AM

    In short, a pre-election budget.

    88
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    Mute Nick Bowie
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    Oct 2nd 2024, 10:21 AM

    Worked all my life paid tax prsi and usc, now in receipt of contributory OAP .
    Got the same €12 in the budget as someone who has never worked, never will and contributes nothing, where is the respect and maybe a little thanks?

    87
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    Mute Ken Jordan
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    Oct 2nd 2024, 9:24 AM

    The economists who make up the Fiscal Advisory Council undoubtedly earn six figure salaries (at least), have gold plated pensions, share options etc. They then dare criticise the small concessions made to the working classes. They are happy for the wealthy to stay wealthy and the less well off to remain so. Ireland just never changes…

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    Mute Niall English
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    Oct 2nd 2024, 9:40 AM

    @Ken Jordan: share options? well thats not true.

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    Mute Eoin Jackson
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    Oct 2nd 2024, 9:57 AM

    @Ken Jordan: share options in what? The fiscal advisory council? Hahahaha. Aww man come on. Pretty much agree with a lot of what you are saying but don’t just throw out stuff you heard on compensation packages without either understanding what they are or understanding they are not relevant.

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    Mute John Moylan
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    Oct 2nd 2024, 3:06 PM

    @Ken Jordan: from the 2021 OECD Review of the performance of IFAC: “Staffing: The Council does not have a large staff budget and relies on being able to attract young and highly-skilled staff in order to function effectively.”. So, young & inexperienced. Interns, basically. And they’re advising those of us on the planet for 5+ decades, how, exactly……… ?

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    Mute Hector turtlehead
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    Oct 2nd 2024, 8:22 AM

    It’s like a father training his son. BADLY.

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    Mute Nick Vasilakis
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    Oct 2nd 2024, 9:31 AM

    What is the point of the IFAC if the government doesn’t listen to their advice? Inflationary budgets have wrecked the economy in the past.

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    Mute HisMastersAlibi
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    Oct 2nd 2024, 8:44 AM

    Go and Stick them thumbs up yer a33 !

    32
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    Mute Ronan Mc
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    Oct 2nd 2024, 9:02 AM

    Yeah but that year before ‘08 was effing brilliant though…

    19
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    Mute 087 bed
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    Oct 2nd 2024, 10:52 AM

    Paschal’s owners in Davos will be delighted with this non event.

    18
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    Mute Anthony Harte
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    Oct 2nd 2024, 1:39 PM

    We’re swimming with cash but the place is a kip. Go figure

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    Mute Gavin Smartr
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    Oct 2nd 2024, 10:13 AM

    Fizzing the economy down the drain yet again. Will we ever learn. We won’t be so lucky next time. Dark room and a shot gun Springs to mind. The higher the climb the bigger the fall.

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    Mute sakk sa
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    Oct 2nd 2024, 9:58 AM

    Fingers drifting away from the thumb is a unique sign of rheumatoid arthritis

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    Mute Colette Byrne
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    Oct 2nd 2024, 4:09 PM

    It’s a pity the fiscal council don’t over see the government on over spends on the children’s hospital, services, and bike shed and huts.you only hear from them at budget time.
    When ordinary people get pittance,never complain about the larger payments to civil servants.

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    Mute Robert Halvey
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    Oct 2nd 2024, 10:44 AM

    What the f do they expect there is a general election comming up and this is ffg

    12
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