Countdown to #Budget19: Not an election budget, insist Varadkar and Donohoe

Countdown to #Budget19: Not an election budget, insist Varadkar and Donohoe

By Fiachra Ó Cionnaith, Political Correspondent

Taoiseach Leo Varadkar and a host of Government ministers may publicly insist it isn't an election budget, but it sure does look like one.

With just under an hour to go before Finance Minister Paschal Donohoe reveals his Budget 2019 plan in a detailed Dáil speech at 1pm today, a series of budget details have already been revealed.

Mr Varadkar, Mr Donohoe and others are at pains to stress they are being prudent with the country's finances, putting €500m into a future rainy day fund and refusing to spend all of the suddenly found €1.1bn in extra corporation tax in order to produce a "balanced" budget.

However, with one - and some may suggest two - eye on a seemingly imminent general election in the near future, that has not stopped them from making sure Budget 2019 produces a series of giveaways that just happen to be focussed on voter group's key to Fine Gael's re-election bid.

More money for health, medium term housing plans, tax cuts and childcare service improvements will be the high-profile sweeteners emphasised over the coming day.

However, a failure to hike carbon and petrol tax needed to address the environmental crisis facing the planet, landlord tax breaks and ongoing questions over where exactly the €1.1bn extra corporation tax windfall came from are likely to gain just as much attention.

With an hour to go before Mr Donohoe's budget speech, here is what the Irish Examiner has been told about the Government's budget plans:

HEALTH: €2bn #budget19 rise to €17.2bn, 100 more free GP cards due to €25 increase in means test limit, 50c prescription charge cut, €50m for mental health, €12m for intellectual disabilities, drug payment scheme bill cut by €10, up to €75m for NTPF, multi-mill GPs deal.

TAXES: Highest income tax rate entry point up €750 to €35,300, USC 4.75% rate cut by 0.25%, 2% USC rate cut, no carbon tax change (controversial), cigarettes up 50c, home carers tax credit up €300, 2% DIRT cut, 2% gambling tax rise, self-employed dole payments #budget19

EDUCATION AND JUSTICE: €700m #budget19 schools rise, increase in capitation fees (payments to school per pupil), changes to pupil teacher ratio, plans to employ 800 more gardai to cope with hundreds of retirements next year.

SOCIAL PROTECTION: €5 across the board welfare rise, €5 pension rise, 100% Xmas bonus return, back to school allowance up €25, one week extension of the fuel allowance, two weeks extra paid parental leave (but it will not begin until Nov 2019), 20c min wage rise. #Budget19

HOUSING: €300m affordable housing scheme, 4% capital gains tax cut for landlords, 100% mortgage interest relief for loans used by landlords for rentals, €60m homeless budget rise, €10,000 rise to inheritance tax limit (€310k to €320k), help to buy scheme retained #budget19

CHILDREN: Means test limits to be extended for supports for children aged 3 to 15 costing €90m, €130m total budget rise for department, * a €2.20 a week rise of the qualified child allowance for those under the age of 11 and a €3 rise for those over the age of 12 #budget19

OTHERS: €154m Housing Assistance Payment rise, €5m more for RTE, €150m more for road repairs. #Budget19

Earlier: Here's what you can expect in today's budget speech

By Daniel McConnell,Elaine Loughlin,and Fiachra Ó Cionnaith

Finance Minister Paschal Donohoe will today deliver his election budget and announce up to €1.5bn in new spending, almost double what he previously said he would spend.

The Government, now on borrowed time, was nearly torn apart yesterday amid bitter internal disputes over the giveaway budget.

The additional spending will be divided up on a 4:1 basis between €1.2bn in new spending measures and €300m in tax cuts, as opposed to the 2:1 split agreed with Fianna Fáil.

A hospitality Vat hike, a 50c rise in the price of a pack of cigarettes, and a doubling of the betting tax have allowed Mr Donohoe to significantly increase the scope for spending measures.

Countdown to #Budget19: Not an election budget, insist Varadkar and Donohoe

An 11th-hour backlash from Fine Gael backbenchers forced Finance Minister Paschal Donohoe to abandon planned hikes in excise on diesel and alcohol.

Fine Gael ministers have lost patience with the Independent Alliance, especially Transport Minister Shane Ross, for bringing forward “endless” last-minute demands. They are now prepared to go to the polls as early as November if it comes to it.

“This budget process has been very, very difficult, not from Fianna Fáil but from the Independent Alliance,” said one minister.

Mr Donohoe will today deliver the final of three budgets under the ‘confidence and supply’ agreement with Fianna Fáil.

Taoiseach Leo Varadkar is set to reach out to Fianna Fáil leader Micheal Martin within days to seek an extension of the deal.

“Leo will be knocking on their door before the end of the week,” said one senior minister.

A spokesman for the Taoiseach said the invitation to talks issued to Mr Martin over the summer still stands.

Asked whether Fianna Fáil had put forward any timeframe for entering such talks, the spokesman said: “There is no indication at the moment.”

Mr Donohoe will begin his budget speech at 1pm today and will announce:

  • A full return to the 13.5% Vat rate for the hospitality sector;
  • The back-to-school allowance will increase by €25 while the qualified child allowance payment will rise by €2.20 a week for under-11s and €3 for over-12s;
  • The budget for Housing Assistance Payment will increase by €120, largely to meet growing demand;
  • The health budget will increase from €15.2bn to €17.2bn next year;
  • An extra 100,000 free GP cards through a €25 increase in the access threshold, €55m for mental health funding, and €75m for the National Treatment Purchase Fund waiting list reform system;
  • A review of the local property tax which will be limited to vulnerable and older people, a situation that means the squeezed middle will lose out on any reforms;
  • An increase in homelessness funding;
  • A €25 increase of the back to school allowance;
  • A €2.20 a week rise of the qualified child allowance for those under the age of 11 and a €3 rise for those over the age of 12;
  • A 20c increase of the minimum wage, to €9.80;
  • And a “loosening” of means test subsidised support rules for families with children aged between three and 15 in need of financial help, a move that will cost €90m and will take up most of the €130m department’s budget rise.

Last night, Mr Donohoe finalised meetings with both the Independent Alliance and Fianna Fáil.

Alliance sources expressed anger and frustration at Fine Gael attacks on them, saying they were “unhappy with the carry on” of the party.

The Irish Examiner understands that Mr Ross has been at odds with Fine Gael colleagues over the Vat reversal.

Mr Ross is said to be most unhappy that his sector, tourism, will be hit for a significant tax increase, worth in excess of €500m, when, as he sees it, no other sector is being hit as hard.

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