‘Anticipation Builds Ahead of October Budget’
DUBLIN: Debates about the October Budget have been intensifying across Ireland following the publication of the Summer Economic Statement last week. This budget holds particular significance as it is the last for the current three-party government term and marks the first budget under the new Finance Minister.
In light of the upcoming elections, it is expected that the budget will include several measures aimed at garnering public support. Reports suggest that popular moves such as income tax relief, changes in inheritance tax, increased rent credit, and pension hikes are likely to be announced.
The budget is projected to feature €6.9 billion in additional public spending, €1.4 billion in taxation, and €1.8 billion in new spending.
Key highlights include plans to extend hot school meals to all primary school children and provide free textbooks to Leaving Cert students. The Finance Minister has also indicated that this budget will see the largest allocation in history for social protection, with expectations set at €1.2 billion. There is speculation that pensions could be increased by €12 a week and potential benefits in the child care sector.
Inheritance Tax Reform
Prime Minister Simon Harris recently stated that the inheritance tax system is flawed and in need of reform. Deputy Prime Minister Micheál Martin echoed this sentiment, describing the tax as punitive for some families. Currently, children can inherit up to €335,000 from their parents tax-free, but this limit may be raised to €400,000, costing an estimated €52 million, according to the Department of Finance.
Income Tax Adjustments
There is speculation that the income tax threshold could be raised, with government party leaders, including Fine Gael, advocating for an increase to €50,000.
Universal Social Charge (USC)
Discussions regarding the Universal Social Charge (USC) are also underway. Although no final decision has been made, the Deputy Prime Minister has indicated a potential cut. Similar to last year’s budget, a 0.5% decrease is anticipated.
Rent Tax Credit Increase
Housing Minister Darragh O’Brien has previously suggested that the rent tax credit will be increased from €750 to €1,000 this year.
Cost of Living Measures
It remains unclear whether an electricity credit will be included in the budget as a measure to reduce the cost of living, given the relatively low inflation. However, the Green Party is pushing for no increase in public transport fares to help manage living costs. There is also considerable pressure from the hospitality sector to reduce the VAT rate to 9%, though it is uncertain if the government will accommodate this request.
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