We will have Budget 2021 within six weeks or so, as Ireland battles two headwinds of Covid-19 and a potential Brexit fallout if no free trade deal can be hammered out.
The economic outlook is muted at best, and having carried an extra estimated €30bn of debt to fund Covid measures in 2020 and 2021, the Government will be quick to arrest expenditure, and enhance exchequer takings over the coming 12 months.
No one other than the Minister for Finance Paschal Donohoe and his advisers knows what exactly will be in the budget.
If I were to do some crystal ball-gazing, I would expect that measures one might have hoped for will probably not be put forward — such as the enhancement of the self-employed tax credit up to a level to match the PAYE credit.
Equally, the hope that the tax-free transfer threshold from parent to child (currently €335,000) would be increased upwards is looking less likely to be fulfilled.
Tax reliefs which are due to expire may not be renewed.
For instance, the blood-relative stamp duty rate on agricultural property, which reduces the liability from 7.5% to 2% for lifetime transfers of farmland, may not be extended beyond its expected expiry date of December 31, 2020.
Tax relief for certain employees under the flat rate employee expense scheme may be pulled, effective from January 1, 2021.
Employers are likely to be hit with increased employers’ PRSI, as has been the case over recent years, and a review of the local property tax system is likely to go ahead, leading to an overall increase in the tax take under that measure, given that house values nationally are a good deal higher than the 2013 levels.
Carbon taxes on fuel are likely to increase.
Whether the cuts to USC over recent years will be reversed or not is questionable, the tax was introduced under the guise of being a solidarity tax, and might be re-inflated once again under that basis.
Motor tax rates will also probably face a major overhaul.
Over the past decade or so, the motor tax take has fallen significantly, as more and more drivers replaced old cars with newer ones which had lower carbon emissions.
Now the drive (excuse the pun) is to push for electric vehicles.
Stamp Duty rates on houses could be overhauled, with rates linked to BER rating of houses, or a reduced stamp duty rate on new houses.
The stamp duty rate of 1% on residential property with a value of up to €1m is by historical standards very low.
Latest statistics showing a fall-off in residential property prices might enable the excuse than increased stamp duty rates will not adversely affect the market.
There may be a scattering of incentives and benefits within the budget too, although I expect these will be targeted at niche sectors rather than across the board.
Examples might include a reduced VAT rate of 9% for the hospitality sector.
An increased tax free allowances available to employees working from home might help support such employees, and create a longer-term environment for such working arrangements, reducing pressures on road infrastructure and public transport, as well as helping meet Ireland’s emissions targets.
Perhaps accelerated capital allowances might be available for emission-reducing equipment on farms such as trailing shoe/dribble bar technology.
Budget day might bring some relief for employees in receipt of the wage subsidy over recent months, who are likely to face income tax bills arising from that payment, and the liability could be substantial.
For self-employed persons, the tax owing for any one year must be paid by October or early November (in the case of online filing) of the following year.
But, for employees who are not usually registered for income tax, there will undoubtedly be a shock to the system, as they come to terms with owing a liability to Revenue as a result of the receipt of this payment.
The budget could bring some relief for them if the minister directed that all such receipts be treated as taxable income spread over a four-year period, for example.
Overall, it is likely that government spending will remain relatively consistent to avoid any further economic shock triggered by a major uplift in taxes incurred by the general public.
Some changes to our tax code are made effective from Budget day, this has been the case in the past where the lifetime threshold between parents and children was reduced, or where stamp duty rates have been increased.
With that in mind, it might be worthwhile taking action ahead of budget day, if you feel there is a risk you will be affected by tax rate, relief or threshold changes.
My crystal ball-gazing highlights some actions the minister for finance might make. But we ultimately will have to wait and see what is delivered.
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