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More than €1 billion in tax cuts and €5.6 billion in new spending as the 2023 budget is brought forward to September 27

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More than €1 billion in tax cuts and €5.6 billion in new government spending will be announced in the Sept. 27 budget.

The government will also unveil a separate set of cost-of-living measures on Budget Day, which will be implemented immediately.

This could include the extension of the €200 electricity credit and a double benefit for people on benefits such as unemployment benefits, state pensions or disability benefits.

The budget takes place on September 27, two weeks earlier than usual.

The government has been pressured by the opposition to set up an emergency budget to address the cost of living crisis sparked by the war in Ukraine.

However, the Taoiseach had resisted calls to introduce new measures to ease the financial burden of rising fuel, energy and food prices.

But leaders have now agreed to honor the budget two weeks earlier than expected.

The budget was originally scheduled to take place on Tuesday 11th October but it will now be announced by Treasury Secretary Paschal Donohoe on 27th September.

Mr Donohoe and Public Expenditure Secretary Michael McGrath will today outline their budget spending capacity.

Better-than-expected tax returns mean this year’s budget will be in surplus and the proceeds will be used to fund immediate living expenses.

However, the government will also loosen purse strings to ease inflationary pressures on the most vulnerable and the crowded middle.

The summer economic statement provides 6.7 billion euros for tax cuts and new spending for the budget.

That includes a record €1.05 billion tax package focused on raising the entry point where workers pay the highest tax rate. The remaining €5.65 billion will be used to fund new spending proposals, including a collective agreement for the public sector.

However, there are concerns at the Treasury over the country’s reliance on corporate tax revenue.

The department’s economic statement describes the economy as “resilient” but warns that “evidence is mounting that economic momentum is slowing”.

It said that the strong recovery in the economy following the Covid-19 pandemic “has paid off in the labor market, where employment levels are now at their highest ever”.

“By maintaining the link between workers and employers during the pandemic, the employment wage subsidy system is one of the key factors in labor market resilience,” it said.

However, it adds that the exit from the pandemic was “not entirely” smooth.

“The rapid recovery in demand has met supply (capacity) constraints and pushed prices higher. The jump in energy prices due to the Russian invasion of Ukraine has worsened the inflation situation,” it said.

She warns: “Irish public debt is already very high and significant fiscal challenges are now firmly on the horizon.

“Higher financing costs combined with increased debt mean that tax and spending policies cannot be used to solve all problems. Difficult decisions must be made and the government will not avoid them.”

Meanwhile, a separate package of one-off cost-of-living measures will be announced alongside the budget as the government comes under increasing pressure to tackle the rising cost of living.

The state will spend 400 million euros by Christmas on cost-cutting measures and salary increases in the public sector.

Mr Donohoe and Mr McGrath have decided to break spending rules this year to help households grappling with extraordinary rates of inflation.

However, they insisted they will not chase inflation.

Some of the one-off measures are due to a corporate tax surplus, but half of the revenue comes from just 10 companies, with Mr Donohoe warning that those revenues are “very volatile”.

“The best way to manage that risk is to balance our books and, over time, get to a position where we’re not using that corporate tax revenue for ongoing expenses,” he said.

The minister said the government was “ready to act” to help households in difficulty.

“A significant part of the challenges facing households and businesses across our country, and Secretary McGrath and I are fully aware of the challenges they have posed for so many, is what we have seen with rising prices , and what that means for our standard of living,” he added.

“Regarding our latest Covid pandemic crisis, the government has shown time and again that we stand ready to act when appropriate.”

However, he said tackling rising inflation and supporting the cost of living will not be the same thing supporting Covid as inflation could be pushed further.

Although Taoiseach Micheál Martin told his TDs and Senators last week that the retirement age should not rise above 66, the government has yet to make a formal decision on the Pensions Commission’s recommendation to gradually raise the age to 67 over several years.

Mr Martin said last week that he would instead favor a small increase in PRSI.

Mr McGrath said the newly announced figures do not take into account changes in retirement ages.

https://www.independent.ie/irish-news/news/more-than-1bn-in-tax-cuts-and-56bn-in-new-spending-as-budget-2023-brought-forward-to-september-27-41812464.html More than €1 billion in tax cuts and €5.6 billion in new spending as the 2023 budget is brought forward to September 27

Fry Electronics Team

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