Record €25bn budget surplus will fund pension hike, USC cut, and cost-of-living package
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A record €25bn surplus will give the Government freedom to deliver a bumper budget of USC cuts, pension increases, cost-of-living payments, and investment in public services.
Talks are set to continue long into the weekend, with government leaders and line ministers to finalise the overall shape of the budget.
The Department of Finance has given a new update on the nation’s finances ahead of Tuesday's budget, with the €14bn Apple tax windfall added to a record surplus.
Finance Minister Jack Chambers revealed that approximately €8bn of the €14.1bn Apple taxes will be received by the exchequer in 2024, with the remainder due in 2025.
He said he is working with Public Expenditure Minister Paschal Donohoe on a proposal for party leaders relating to a "wider strategic direction" for the Apple tax, rather than specific spending decisions.
Asked about corporation tax levels, Mr Chambers said receipts are 28% ahead of last year which is "far in excess" of projections.
Overall corporation tax receipts are expected to be €30bn this year. Mr Chambers said:
Mr Chambers told reporters he did not expect the Budget's cost-of-living package to be of the same scale as last year, given that inflation is just over 1%.
However, he acknowledged there was still an impact of high prices from underlying inflation.
The expected giveaway budget on Tuesday comes ahead of what many expect to be a winter general election, with a polling day potentially falling in November.
A number of changes on tax are due to be made, with a reduction of 1% in the universal social charge on incomes between €25k to €70k. This will reduce the USC from 4% to 3%.
The standard rate cut-off point for income tax is set to be raised by €2,000, meaning that taxpayers will not pay the higher rate on earnings less than €44,000.
On the cost of living, households are in line for a €250 energy credit which will be paid out before the end of the year.
Other changes on the cards are a further extension of the 20% cut in public transport fares, as well as further funding to provide new public transport routes.
Parents are also likely to get a boost as Leaving Cert students look set to be included in the free school books scheme.
On welfare rates, Social Protection Minister Heather Humphreys is pushing for a €15 increase, but it is expected that a final rate could be between €10 and €12 on key rates like the State pension.
Renters will see a hike in the rent tax credit, which will rise from €750 to €1,000, while mortgage holders will be able to avail of mortgage interest relief for a further year.
More funding for services
It is understood that significant investment is to be allocated to tackling domestic, sexual, and gender-based violence, increasing prison spaces, and speeding up the processing of international protection applicants.
Funds to recruit between 800 and 1,000 Gardaí are also set to be provided.
The Government has agreed a deal, meanwhile, to press ahead with residential zoned land tax to come into effect this February.
The tax has been planned for several years to target land hoarding by developers and other individuals during the housing crisis.
However, last month Mr Chambers said it may need to be deferred due to a potential unintended impact on "active" farmers.
Government sources confirmed that the deal had now been reached after the Green Party pushed back on plans to delay the tax.