Budget to include enhanced cost-of-living package after surge in public finances
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A €10.7bn year-on-year swing in the public finances means the Government will be able to deliver a far greater cost-of-living package to help struggling families in next month’s budget.
Senior Government sources have told the the scope is now there to deliver a “significant package” of targeted and universal once-off measures.
Economist Austin Hughes estimates the Government will be able to spend up to €2bn on the package.
This will be in addition to the €6.7bn increase in spending already pencilled in for Budget 2023, to be revealed on September 27.
Extending current fuel rebates beyond budget day, another round of the €200 energy credit, an autumn welfare bonus, and extending the reduced public transport fares are among the measures to be announced by Public Expenditure Minister Michael McGrath.
Officials in Mr McGrath’s department are currently working on a menu of options from across the government.
Sources said the focus will be on relieving the pain of inflation on hard-pressed working families.
The desire is to bring forward measures which can be delivered “simply and quickly” this year.
The understands this to include a repeat of the €200 energy credit and a Christmas-bonus type payment in the autumn; reducing student fees from €3,000 a year; extending the reduced public transport fares into 2023; extending the current cut to excise on fuel beyond budget day as well as extending free GP care.
Government sources have also said there will be a focus on building more social, private, cost-rental and affordable-purchase homes.
The exchequer generated a surplus of €5bn in July, compared to a deficit of €5.7bn this time last year, an improvement of €10.7bn.
Big increases in corporate tax, Vat, and income tax drove tax revenue — for the seven months to the end of July — to €43.5bn, the latest exchequer returns show.
This was 23% or €8.2bn higher, than the same period last year.
Record corporation tax receipts, which generated €9bn for the seven-month period, more than €3bn ahead of the same period last year, were behind the surge in tax revenues.
The figures also show that Vat generated almost €12bn, up €2.2bn on the same time in 2021.
While Government sources insisted the economy is “in rude health” the Department of Finance did sound a note of caution saying there was a “significant deceleration in growth” in sales tax receipts in July.
The department also warned that inflation and higher living costs are likely to negatively impact VAT receipts later in the year. Income tax was also ahead of profile reflecting strong job creation figures.
Ciarán Nugent, economist at the Nevin Economic Research Institute (NERI) said in the short term, a budget package will need to put an energy price cap on energy firms and increase social protection payments for households facing poverty as consumer price inflation rates above 9%.
Paul Joyce, senior policy adviser at the Free Legal Advice Centres (Flac), said his sense is the debt levels will increase by the end of the year.
A budget for the cost-of-living crisis will need to address escalating rents, people who cannot afford to pay their utility bills, and households who cannot pay to replace broken-down washing machines.
Colette Bennett, economic and social analyst with Social Justice Ireland, called on the Government to ensure increases of at least €20 a week to core welfare payments and ensure low-income earners are refunded unused tax credits by year-end.
She said while once-off alleviation measures such as the energy credit are welcome the government must look to direct such windfall revenues into long-term infrastructure projects, such as social housing.
“We can’t keep relying on once-off token measures, what we need to see proper investment in infrastructure projects,” she said adding there are 130,000 households who need social housing.
She also called for action in terms of subsidising childcare for struggling parents.