More than €1bn in tax cuts and €5.6bn new State spending as Budget 2023 brought forward to September 27
More than €1bn of tax cuts and €5.6bn in new State spending will be announced in the Budget on September 27
he Government will also unveil a separate series of cost of living measures on Budget Day which will be introduced immediately.
This could include the renewal of €200 electricity credit and a double welfare payment for people in receipt of benefits such as the jobseeker allowance, State pension or disability payments.
The Budget will be held on September 27, two weeks earlier than usual.
The Government has been under pressure from the Opposition to hold an emergency budget to address the cost-of-living crisis sparked by the war in Ukraine.
However, the Taoiseach had resisted demands to introduce new measures to ease the financial burden caused by rising fuel, energy and food prices.
But the Government leaders has now agreed two weeks earlier than anticipated.
It was originally planned that the Budget would be held on Tuesday, October 11, but it will now be announced by Finance Minister Paschal Donohoe on September 27.
Mr Donohoe and Public Expenditure Minister Michael McGrath will today outline their spending capacity in the Budget.
Better-than-expected tax returns mean this year’s Budget will run a surplus and the revenue will be used to fund the immediate cost of living measures.
However, the Government will also loosen the purse strings for next year’s Budget with the aim of alleviating the pressure of inflation on the most vulnerable in society and the squeezed middle.
The Summer Economic Statement earmarked €6.7bn for tax cuts and new spending for next year’s Budget.
This will include a record tax package of €1.05bn which will focus on increasing the entry point at which workers pay the top rate of tax. The remaining €5.65bn will be used to pay for new spending proposals, including a public sector pay deal.
There are concerns in the Department of Finance over the country’s reliance on corporation tax revenues, however.
The Department of Finance’s economic statement describes the economy as “resilient” but warns there “evidence is mounting that economic momentum is slowing”.
It says the strong rebound in the economy after the Covid-19 pandemic “paid dividends in the labour market, where the level of employment is now at its highest level ever”.
“By maintaining the employee-employer link during the pandemic, the Employment Wage Subsidy Scheme is one of the key factors behind the resilience of the labour market,” it added.
However, it adds that exiting the pandemic has “not been entirely” smooth.
“The rapid recovery in demand has run up against supply (capacity) constraints, putting upward pressure on prices. The step-change in energy prices on foot of the Russian invasion of Ukraine has worsened the inflation situation,” it adds.
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