Old-age pension, core welfare benefits and fuel allowance to rise in Budget

Táoiseach Micheál Martin did his best to contain expectations ahead of the €4.7bn increase in spending, saying “there will not be something for everybody in the audience”.

Increases in the old-age pension, core welfare payments, and fuel allowance payments are certain to be included in next Tuesday’s Budget, it can be revealed.

Dealing with the increased cost of living and aiding the post-Covid-19 recovery are the two primary themes that are likely to shape the budget day package of €4.7bn in new spending.

Of that, however, a little over €1bn is unallocated and Public Expenditure Minister Michael McGrath has significant challenges to face in balancing the books.

While an increase of at least €5 on the State pension is expected, it can be revealed that increases of a similar amount to all core social welfare payments such as Jobseekers are also considered to be “locked-in”.

There is also to be a major childcare package aimed at increasing the affordability for hard-pressed parents, many of whom pay charges equivalent to a second mortgage.

'Not something for everybody'

Speaking in Slovenia, Táoiseach Micheál Martin did his best to try and contain expectations ahead of the €4.7bn increase in spending, saying “there will not be something for everybody in the audience”.

"We've already set a finite limit in terms of about a billion euro extra on top of the policy changes. We've indicated that by 2023, we will be eliminating the deficit, borrowing only for capital expenditure, and broadly balanced by 2025.

"We have to focus on the welfare side of it, particularly in terms of energy, and ministers McGrath, Donohoe, and Humphreys will be working on that. Energy prices are an issue across Europe."

On corporation tax, the Taoiseach said he was not going to pre-empt a Cabinet decision, expected later today.

The Government is set to agree in principle to increasing Ireland's cherished 12.5% corporation tax to 15% in line with an OECD proposal for a global rate. It comes after the OECD removed the words 'at least' in relation to the 15% rate from the text of the policy document. 

"We've said all along that we're part of the OECD process," said Mr Martin. 

"We felt that the language around 'at least' (15%) was not acceptable to us. We've made progress, stemming from the latest text that has emanated from the OECD. Businesses want certainty around the longer-term future of tax rates."

Cross-border workers

Meanwhile, Finance Minister Paschal Donohoe is examining a relief for cross-border workers as part of next week’s Budget.

Mr Donohoe met with the Cross-Border Workers Coalition in June and in September, regarding tax rules.

Current Irish personal tax rules mean that if employees in the North perform any work at all in the Republic, including checking emails or attending a conference, a ‘double tax’ can be imposed on income.

There are around 25,000 cross-border workers on the island of Ireland.

After suspending rules during the pandemic, the State currently allows individuals resident in the State and working for a non-resident employer to carry out their employment duties in the State and continue to pay tax in another jurisdiction.

The re-introduction of these rules in January 2022 is "causing serious concern" for thousands of workers, according to Cross-Border Workers Coalition chair Aidan O'Kane.

"Both meetings were really positive, cordial, and constructive; the minister understood the impact of the issue and we felt he got it," said Mr O'Kane.

"We left, certainly the first meeting, very buoyant; the minister understood the issue and said he would put resources behind it to investigate what could be done and potential barriers."