Last year, Paschal Donohoe and Michael McGrath produced a massive € 17.75 billion budget, where tough decisions could be put aside as money was spent in a crisis.
Barring a “bunny out of a hat” on Tuesday, however, this year’s package is $ 4.7 billion. Of this amount, € 1 billion would be available for new spending and € 500 million for tax measures.
Taoiseach Micheál Martin warned that there would not be “something for everyone in the audience”. With families under pressure from inflation and rising energy costs, senior government officials have been signaling for weeks that the budget will be focused on tackling the cost of living. So what do we know? What’s in and what’s in budget 2022?
Income and labor taxes
Tax breaks are generally expected to be given in the form of indexed tax credits and brackets to help offset the impact of inflation on people’s take-home pay. The Fine Gael has been promising such measures for months. Most of the 500 million euros of fiscal measures in the budget should be swallowed up by this measure. Tánaiste Leo Varadkar also said there would be efforts to promote remote working. Currently, employers can give their employees € 3.20 per day tax-free. Alternatively, workers can claim part of the household expenses themselves. The proposal is to update this system with workers able to defray the cost of utilities against the tax they pay.
The latest Irish Times / Ipsos MRBI poll shows that higher fuel taxes are not popular – with 82% opposition. But in the absence of a major deviation from one of the key Government commitments of the Program, the carbon tax will increase by € 7.50 per tonne as part of efforts to reduce greenhouse gas emissions by 7% per year. This means an estimated supplement of € 1.28 on a 60-liter petrol tank and € 1.48 more for a full tank of diesel from midnight next Tuesday. Increases in the cost of other fuels such as kerosene (900 liter tank up to € 19.40), natural gas (average annual consumption up by € 16.95), coal (40 kg bag up to € 19.40) to 89c) and peat briquettes (12.5 kg bale up to 20c) would not occur until May. Profits will be spent to better insulate houses, but also to increase fuel allowances for those most at risk of fuel poverty.
Social protection and pensions
Almost half of the billion euros available for new spending could be absorbed by increases in welfare. As mentioned, the fuel allowance for vulnerable households – amounting to € 28 per week between the end of September and April – is expected to increase. It was increased by € 3.50 in last year’s budget. With high energy costs expected this winter, don’t be surprised if the increase is larger this year. A key question is whether state pension payments will increase for the first time since 2019. Government backbenchers are calling for increases of € 10 per week. When asked, Social Protection Minister Heather Humphreys said, “We have said that if the cost of living has gone up, and the cost of fuel, that’s something we’re definitely taking into consideration. Some increases are therefore a safe bet.
A full Christmas bonus for people receiving social benefits was paid last year, including people receiving unemployment benefits in the event of a pandemic. The government will want to announce this if possible, but the arguments are still on the table.
There was no assistance with childcare costs last year. Varadkar issued the strongest signal yet on Friday that help with costs could be on the way as he confirmed the matter was under consideration while the budget was being finalized.
Earlier this week, Minister for Children Roderic O’Gorman said he hoped to make changes to the National Child Care Program (NCS) next year. examined upstream of the budget, as well as the low salaries of staff and the sustainability of the activity of childcare providers. An additional two-week parental leave should be introduced from next August. This will bring the number of weeks a parent of a newborn baby can be absent from work to seven – funded by state payments of € 245.
The Coalition launched its historic Housing for All plan last month. He pledged the “biggest housing budget ever in the history of the state” with “more than 20 billion euros” to provide – through public funds, the Land Development Agency (LDA) and the Housing Finance Agency – over the next five years. . Expect some of that to be blocked on Tuesday. While applications for the new affordable housing program are not expected to be open until early next year, the existing purchase assistance program for first-time buyers buying new construction will be extended beyond the end of this year.
Varadkar pledged earlier this year that up to € 4 billion in additional health spending to fight the Covid-19 pandemic would be sustained next year. It must have been music to the ears of Health Minister Stephen Donnelly as he entered budget discussions and it would be surprising if the 22 billion euros allocated last year were not up to par, at all. the least. With warnings that 500,000 people will be added to waiting lists for health care before the end of the year and the murky Sláintecare reforms, the government will not want to appear to be giving up on its support for the health system.
Cigarettes and alcohol
Any increase in the cost of cigarettes will likely be minimal, if any. Finance ministry officials have suggested that a further hike may be counterproductive and may simply encourage smokers to source cigarettes from overseas. The government is reluctant to increase excise duties on drinks given the pressure on pubs and restaurants during the pandemic.
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