#Budget18: Families up to €600 a year better off

Hard-working families are set to be up to €600 a year better off on foot of tax breaks and spending increases announced in Budget 2018 by Finance Minister Paschal Donohoe.

Róisín Smyth and her daughter Lainie-Grace, aged 2, in Trinity College Dublin. Picture: Moya Nolan

Mr Donohoe announced new spending totalling €1.2bn for next year which included cuts to the universal social charge (USC), as well as an increase to the entry point at which the higher rate of income tax is paid.

Despite the increase, the Opposition was critical of his decision to cut taxes as opposed to spending more money on dealing with the homelessness crisis.

As well as a significant €685m increase in health spending, the minister also announced an increase of €5 to all main social welfare benefits including jobseekers, carers allowance as well as the old age pension from March.

These new spending commitments will be paid for by almost €600m in new tax increases.

The most controversial aspect of Mr Donohoe’s budget package was a decision to triple stamp duty on commercial property from 2% to 6%, which he said would raise €376m next year.

He rejected opposition claims that this was a return to the boom and bust tax policies of former Fianna Fáil finance minister Charlie McCreevy, as suggested by Labour leader Brendan Howlin.

“Using property based revenues to reduce income taxes is incredibly unwise. Echoes of McCreevy economics,” said Mr Howlin.

Speaking to the Irish Examiner, Mr Donohoe strongly rejected this, saying that he was broadening the tax base and that he was confident the move would deliver the estimated amount.

“What we are doing is broadening the tax base, which is the very opposite of what was done in recent years,” he said. “I am increasing stamp duty on commercial property back to where it was before. The overall gain from that is just under €400m.

“We are looking to expand the tax base. I am confident, if you look at the pipeline of projects, I am confident that it will yield a revenue stream that is stable into the future.”

A sugar tax on sweetened drinks, to come into effect April, with 30 cent a litre put on those with more than eight grams of sugar per 100ml and 20 cent a litre on drinks with between five and eight grams per 100ml. This is set to raise €40m.

Mr Donohoe also announced that 50c will be added to the price of cigarettes, taking the price of a standard packet of 20 to about €12 — one of the highest in Europe.

In a bid to slash skin cancer rates in Ireland — which are among the highest in the world — Vat on sunbed services is to soar from 13.5% to 23%.

Mr Donohoe said that a “rainy day” fund is being created to protect against future downturns with an initial €1.5bn deposit and €500m a year from 2019.

He also confirmed a freeze on the reduced tourism and hospitality Vat rate of 9%. There had been speculation of an increase in the rate.

Meanwhile, there was stinging criticism from the Opposition at the revelation that Mr Varadkar’s much-criticised Strategic Communications Unit will cost €5m next year.

This is despite statements in the Dáil that the unit would not lead to any additional cost.

Mr Howlin said the revelation was “extraordinary”.

“This is extraordinary. Taoiseach told the Dáil this would be cost-neutral. €5m could have increased book rental funding by a third,” he said.

In response to the criticism, a spokesman for the Taoiseach said the unit will become cost-neutral.


  • All weekly social welfare payments to be increased by €5;
  • An 85% Christmas bonus will be paid this year;
  • Excise duty on a packet of 20 cigarettes will rise by 50 cents;
  • No change in price of alcohol;
  • No changes in price of diesel or petrol;
  • A reduction in prescription charges for all medical card holders under 70 from €2.50 to €2;
  • Sugar tax from April 2018 will see an extra 30 cent (26p) per litre of tax on drinks with over 8g of sugar per 100ml;
  • A new agency, Home Building Finance Ireland, to use Nama’s experience and provide cheap loans to developers announced;
  • An extra 800 gardaí and 500 civilians will be recruited next year;
  • VAT rate on sunbeds to increase from 13.5% to 23%;
  • Brexit loan scheme of up to €300m is being made available to SMEs;
  • VAT rate for tourism and services sector is being left unchanged at 9%.

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