A crisis budget for households: What we know so far
The Government have assured the public that Budget 2023 will put money back into their pockets. Picture: Pexels
In just under two weeks, Budget 2023 will be unveiled and the Government has now promised that every household in the country will gain.
The crux of the challenge facing Finance Minister Paschal Donohoe and Public Expenditure Minister Michael McGrath is the need to balance measures that will immediately help households with the cost-of-living crisis, but also sustain economic recovery into the future.
We know that Budget 2023 will be a package of €6.7bn worth of spending increases and tax cuts.
Around €3bn of the overall package is already committed to previous commitments like the National Development Plan, demographic shifts, and existing public sector pay deals.
It is believed that the Government’s once-off cost-of-living package will cost €2bn or more.
Here is what we know so far:
It is expected there will be a widening of the income tax bands that will see people take home more of their salary and move them out of the higher income tax rate.
Tánaiste Leo Varadkar mooted the idea of a 30% income tax band which could see major savings for workers.
If the new bracket was introduced to cover income from €36,800 to €46,800, it would lead to a tax saving of €1,000 per year for the individual.
However, in recent weeks the possibility of this has diminished, but it is not firmly off the table.
To tackle soaring energy bills, it is almost definite that households are in for a series of energy credits from the Government.
Proposals up for consideration would give households a total of €600 off their bills over a number of months.
It is expected this will come in three installments of €200 energy credits between now and next spring.
Tanáiste Leo Varadkar indicated that people will get support before and after Christmas.
It is also expected the Government will assist businesses with “mammoth” energy bills, and will prioritise protecting jobs.
Taoiseach Micheál Martin indicated that a system of energy credits as opposed to a cap on bills will be included in the Budget.
Households will also benefit from windfall taxes on energy firm’s earnings, but this relief won’t happen until after the Budget announcement, once the EU agrees on a deal.
The understands there will be a one-off double payment of social welfare, pension, and child benefit payments before Christmas.
This will form part of the Government’s package to help with the current cost-of-living crisis, but it is also expected welfare will see increases in the Budget.
Mr Martin has said that money will be targeted at families and children.
Child Benefit is €140 a month for each child and is payable to the parents or guardians of children under 16 years of age.
It is also paid to the parents or guardians of children aged under 18 if the child is in full-time education.
Mr Martin said: “Certainly, we’re looking at families and children, in particular, because obviously, the costs will be higher for families. There are two elements to it; in the cost-of-living package, we want to allocate as much as we possibly can in the 2022 financial year. Then there are the budgetary measures where we do have to look at it from a policy perspective, a more sustained improvement for example.”
Government sources have strongly indicated that renters will feature in the support measures in Budget 2023, and the Department of Housing is pushing for a tax credit.
Officials believe it will be quick and easy to do for tenants who are experiencing increasing rental costs when supply is at an all-time low.
Housing Minister Darragh O’Brien has also signalled relief for landlords, with the aim to incentivise them to remain in the housing market.
Minister for Children Roderic O’Gorman has been adamant that his plan is to reduce the cost of childcare for parents.
It is understood Government parties have agreed that childcare costs will decline by €200 per month next year and a further €200 per month the following year.
A 25% increase in student grants and a considerable reduction in third-level fees are among the measures being considered as part of the budget.
The Government has already moved to abolish in-patient hospital charges for children which is due to come into effect in the coming weeks.
It’s expected that charges of €80 a day, up to a maximum of €800 a year, will be slashed.
Health Minister Stephen Donnelly is also pushing for the Government to help fund IVF fertility treatment and said this is something he will be discussing with Minister McGrath in the coming days.
