Donohoe pledges budget support to central Ireland amid cost of living crisis but says available money is limited

The 2023 budget will include “comprehensive” cost-of-living support for all households, including workers who are not entitled to welfare or other allowances.

Finance Minister Paschal Donohoe said middle-income people face “real fear and concern” because of rising energy bills.

“They don’t earn enough to be insulated from the big changes that are happening in electricity and gas prices right now. This is a really important group in our economy and in our society.”

However, he said there were “constraints” on the budget amid rising interest rates and the economic slowdown in Ireland’s main trading partners in the US, UK and EU.

Expected record tax receipts this year will not change the size of the €6.7 billion package announced in the summer, he said, but it could affect the mix of measures.

“I am fully committed to delivering our budget within the parameters announced earlier in the year,” he told reporters on Thursday.

“Do I have any parameters in mind as to the scope of action that we can bring forward later in the year? I do. But there are limitations to how much we can help.”

The budget will “focus on measures that can help, that can help with the rising cost of living,” Mr Donohoe said.

He said he was “confident” the EU would soon approve a fund to help companies deal with rising energy costs.

However, he threw coldly into the water the idea of ​​an energy price cap currently being discussed in the EU. And he questioned the impact of a windfall tax on energy companies that the government is discussing.

He said any measures should create “no additional risk” to public finances or the economy in the wake of forthcoming interest rate hikes and rising borrowing costs.

Alongside the budget, the government is considering how to “build resilience in our national finances” given the state’s reliance on corporate and income taxes from high-earning multinational workers.

That could jeopardize future tax revenues, the Treasury Department warned in its annual tax report on Thursday.

A surge in personal income tax receipts last year — taking was 3.7 billion euros, or 16 percent more than before the pandemic — was largely due to wage increases rather than job creation, the report said.

Corporate tax revenue increased last year by 41 percent or €4.4 billion compared to 2019, reaching a record €15.3 billion this year.

It helped fuel a €48 billion Covid support package for 2020 and 2021, the report said.

Pandemic-proof sectors like IT and pharmaceuticals have fueled record tax revenues over the past year that will continue into 2022.

But last year’s OECD deal – taxing large companies at 15 per cent of their global income and shifting taxing rights to the countries where they do their sales – could result in Ireland paying around €2 billion annually once implemented corporate tax revenue, which is unlikely before 2024.

If that – or an economic slowdown – forces a reduction in multinational investment in Ireland, it could herald a “very significant loss of income tax (and PRSI) revenue,” the tax report says. Donohoe pledges budget support to central Ireland amid cost of living crisis but says available money is limited

Fry Electronics Team

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