The Government has unveiled a giveaway €4.7 billion budget, increasing spending across a range of areas including social welfare, housing, health and education while also providing for an easing of the tax burden on workers.
An unexpectedly rapid recovery of the economy in recent months will cut public borrowing, but budget minsters Paschal Donohoe and Michael McGrath resisted pressures from within Government to expand their spending allocations and stuck to targets set down in the summer.
In a statement last night the Irish Fiscal Advisory Council (Ifac), the independent budgetary watchdog, said that by sticking to its spending plans despite increased revenues, "the Government has the economy on a more prudent path that will reduce borrowing and the debt ratio in the years ahead". Ifac had previously raised concerns about the Government's tax-and-spending plans.
The budget documents show that the public finances are now expected to recover more quickly, returning to near equilibrium by 2024, and with the debt ratio falling steadily.
Main points
- Boost for all income tax payers as bands and credits rise
- Winners and losers: Tax cut for earners on higher rate
- Universal childcare subsidy extended to children under 15
- Core social welfare rates to increase by €5 a week from January
- New zoned land tax to be delayed for two years
- Help-to-buy scheme set for review after extension
- Failure to extend 9% tourism VAT a 'disaster'
- Public transport fares set to be halved for 19- to 23-year-olds
- New car prices set to rise along with petrol and diesel
- Pandemic wage subsidy to be phased out by end of April 2022
- Free contraception to be provided to women aged 17 to 25
- €25m for live events in 2022
- Basic income scheme for artists, art workers to be piloted
- Opposition partiesand campaign groups react
- Grant for wigs is 'huge boost' for people with alopecia
- Pupil-teacher ratio to fall to lowest level on record
- Analysis: 'Natural optimist' Donohoe doesn't hold back
- Measures on climate complicated by unrelated price hikes
But the package was rejected by Opposition parties as insufficient to deal with many pressing social issues. And last night Government TDs fretted that the gains for people from welfare increases and tax changes would be swallowed up by increases in the cost of living in the coming months.
Some Sinn Féin and Independent TDs were especially critical of the increase in the carbon tax, which will add to the cost of petrol, diesel, domestic fuel and home heating oil. The Government insisted that those vulnerable to price increases would be compensated by increases in the winter fuel allowance, which came into operation at midnight and other welfare changes.
The budget drew a mixed reaction from lobby groups. Business and employers group Ibec praised the package, but the Irish Congress of Trade Unions was critical of several aspects, with general secretary Patricia King citing concern for low-paid workers and criticising the Government for devoting €500 million to tax reductions.
Sinn Féin finance spokesman Pearse Doherty savaged the budget in his Dáil contribution, saying that "never has so much been spent to achieve so little – no answers, no urgency and no leadership".
Labour’s Ged Nash said it was “anaemic” and “directionless”. Instead of a “new deal for a fairer Ireland”, he said, the Government is “tinkering around the edges” with a “few euro thinly spread here and there”.
Social Democrats co-leader Róisín Shortall said it was a “a budget that is full of smoke and mirrors, which tinkers around the edges, making minor changes, but no substantive differences”.
“Where is the ambition? Where is the vision? Where are the bold ideas?” she asked.
What about the national debt?
Ministers defended the budget measures. At their press conference in Government Buildings last night Minister for Finance Paschal Donohoe and Minister for Public Expenditure Michael McGrath defended their decision to stick to the previously announced spending ceilings.
“To go beyond €4.7 billion would be too risky,” said Mr Donohoe.
“If we can close the deficit faster and stop adding to the national debt, that’s a good thing for our country,” said Mr McGrath. He stressed the need for spending discipline but noted investments in public services, including more gardaí, teachers and resources for the health service. “These are the changes that make a real difference to people’s lives,” he said.
Tánaiste Leo Varadkar said the introduction of a zoned land tax would lead to more land being available for housing.
“The message is very clear to anyone who has zoned land, who is hoarding it, whether it’s an individual land owner or company – we’re coming to tax you and you need to start developing that land,” he said.
“You need to apply for planning permission if you haven’t. If you have applied for planning permission you need to start building on it. And that’s the way you’ll avoid this tax because if you don’t do that you will face a tax.”
Last night the Government won the only budget vote of the night – to approve a price rise of 50 cent per pack of cigarettes – comfortably by 87 votes to 47.
