Up to 100,000 more people will be eligible for free GP care after Tuesday’s budget, while a range of tax and spending measures to combat the housing crisis will also be unveiled.
The minority coalition's third budget, to be delivered by Minister for Finance Paschal Donohoe in the Dáil at 1pm, will be dominated by significant spending increases in health and housing.
However, there will also be a range of welfare increases and modest cuts to income tax for middle earners, paid for by strong economic growth but also by a package of tax increases.
The main revenue-raising measure will be the abolition of the 9 per cent special VAT rate for the hospitality sector, which will return to 13.5 per cent for all categories within the sector, apart from some areas such as newspapers and sporting facilities.
There is not expected to be an increase in carbon tax or in excise on diesel. Excise on tobacco will increase by 50 cent, but there will be no increases in excise on alcohol.
It's not that they don't know what their principles are... It's that they don't even know their price
In what Government sources are describing as a “housing budget”, there will be an additional €300 million for affordable housing and €60 million in capital spending will be specifically targeted at tackling homelessness.
Capital spending
In addition, an extra €150 million will be allocated for the housing assistance payment and there will also be moves to allow local authorities to build more social homes without going through lengthy approval processes.
Capital spending on all housing measures, including social housing, will increase by €482 million to total €2.1 billion. While some moves on capital gains tax for landlords will not be announced, some sources said they could be introduced in the Finance Bill.
The overall health budget is set to be €17.2 billion, an increase of 6.6 per cent, with new and existing measures grouped under the Sláintecare heading.
The Cabinet will meet at 10am to formally approve the package of measures.
Independent Alliance Ministers held talks with Mr Donohoe in Government Buildings last night as wrangling continued over the final details, which will include a small increase in the tax-free threshold for inheritance tax, reducing marginally the amount of tax paid on inheritances over €310,000. This was insisted on by Minister for Transport and Tourism Shane Ross, sources on both sides agreed.
Strained relations
Relations between the alliance and Fine Gael have become strained in recent days, with senior Fine Gael figures privately critical of the Independents' approach. Three senior Government figures expressed deep frustration with the Independents to The Irish Times.
“It’s not that they don’t know what their principles are,” said one. “It’s that they don’t even know their price.”
Tuesday's budget is expected to be followed later this week by a renewed request from Taoiseach Leo Varadkar to Fianna Fáil leader Micheál Martin for discussions on an extension of the confidence-and-supply agreement.
Mr Varadkar is expected to issue an urgent request to Mr Martin for talks on an extension of the agreement, making clear he believes a refusal to engage by Fianna Fáil would mean the agreement is over and would raise the prospect of a pre-Christmas general election.
Ministers say they expect Mr Varadkar’s approach to be more robust than previously, while Fianna Fáil sources confirm they are anticipating a new initiative from the Taoiseach once the budget is presented.
It is expected the party will signal its willingness to begin a process but will warn that no decisions can be made on an extension until the fate of the Brexit talks is clear. One source said Fianna Fáil would not operate to Fine Gael’s “timetable or agenda”.
