BUDGET Day always has showmanship. Big numbers, photo ops and bold claims. But for most people, the question is simple: does it help with the rent, the mortgage, the challenges of running a small business or paying for the weekly grocery shop? Yesterday’s Budget delivered a few marginal wins – but also plenty of misses.
Let’s face it: an across-the-board tax credit of €200 per person is welcome but is set against tax increases of more than eight times as much for renters in the planned rent credit reduction. The £1.50 increase in VAT for the development of new housing is designed to dampen the price of housebuilding. There is no doubt about that.
The €2 rise in the excise duty on beer and cider should help fund road improvements and protect the housing budget. But it won’t lower the price of a pint.
The extension of the Help-to-Buy scheme for first-time buyers, and the First Home Scheme support will assist some with deposits. The Government claims up to €30,000 for first-time buyers, and the First Home Scheme can provide an equity stake of up to 30% on top of deposit contributions by buyers.
House buyers will also get a break through the stamp duty refund for homes built and purchased by owner-occupiers. However, the Budget ignores the pain of those who bought at higher rates.
Car owners will see VRT cuts as electric and hybrid cars get a boost, but many motorists will be unhappy. VAT on fuel has inched up from 13.5% to 9%, matching the AA Roadwatch forecast. Insurance has also edged up. Add the local authority housing charge. The biggest winners are small-scale cafes and retail operations, pubs and restaurants – especially in rural areas. They get another extension on the 9% VAT rate allowing them to ‘play on’.
Then the blanket increase in carbon taxes is expected to earn the exchequer €600m. Once a much-lauded benefit for homeowners, the renter’s credit has barely moved since 2021, but that is set to change. The Budget is politically balanced but misses the mark for those on the cusp of mortgages or buying their first home.
Where the Budget disappoints most is that there is little relief for PAYE workers – the lower-paid get no increase in tax credits and middle earners get caught in the up-to-date rate bracket, with the average industrial wage now €52,000 a year, and a surplus of those earning €60,000 and more feeling swallowed up by the cost-of-living increases.
The PSC increases, however, are welcome in child support payments of €8 per month (under 12s) and €16 (over 12s), while the one-off welfare contributions to them by €500 and there is an extension of the VAT reduction on fuel and domestic services. There are also across-the-board increases in all social welfare payments.
The Budget has all the right noises but lacks punch. There’s no fiscal space tug-of-war this time. The Government has found the biggest number of losers, but will you spend €14bn, next year – and will that €10bn amount of new spending effectively go to those who need it rather than everyone?
Why does someone earning €150,000 per year get a €200 net relief credit and someone on €26,000 get nothing to keep the heating on?
One good measure is the rent tax credit reinstatement of the €750 credit for renters and a €500 credit for those in house shares. However, that is on a par with the increase in the cap on the children’s book allowance.
What stands out from the civil servants’ briefing is that this is not a targeting exercise in the traditional sense, but only flings out measures at a broad base, targeting all the advances in AI tech too.
In the half decade, Ireland will have a new generation fluent in AI, but will they stick around if there is no equity in housing for renters who can’t afford huge deposits for first-time purchases?
In the meantime, we can only hope that those in the middle incomes see some cheer and can add to the €16bn economy that tries to cushion them in it.
