Another year, another budget with new hopes. The long-awaited Irish Budget 2023 has been unveiled today. A total Budget package worth €11bn has been revealed by Finance Minister Paschal Donohoe. Also, an income tax package worth €1.1bn was announced. The standard rate cut-off point will rise to €40,000, an increase of €3,200. Considering all the elements of employment considerations, taxation matters, cost of living, transport, welfare and pensions, child care and parenting, let’s go through the key takeaways and important points to note from this year’s budget. This article will walk you through the main points of the budget speech’s economic and tax statements by Irish Finance Minister Paschal Donohoe.
The 9% VAT on hospitality will not be extended beyond February. The VAT rate will return to 13.5% at this point. Mr. Donohoe told the Irish parliament that while the country emerged from the Covid-19 pandemic last year, it is now facing a further economic challenge. He called this budget a cost-of-living budget.
There will be an increase of €75 on personal, employee, and earned income credits. Also, the home carer tax credit will rise by €100 to support stay-at-home parents. The Help to Buy scheme will extend at the current rates until the end of the year 2024. At the same time, the Government will also introduce a new rent tax credit of €500 per year for renters.
Mr. Paschal Donohoe today announced that the government will cut the VAT on newspapers to 0% from January 1. “This is in line with the Government’s commitment to support an independent press and the Future of Media Commission’s recommendation on this matter”, he added.
With a “pro-rata increase on other tobacco products,” the excise duty on a packet of 20 cigarettes will rise by 50c. However, HRT and nicotine replacement products will become VAT-free.
Every household will get €600 electricity credit, with the first payment before Christmas and two more in the new year. There will also be a once-off double payment week for core social welfare recipients. The measure aims at lightening the impact of fluctuating bills on families and individuals.
Through this scheme, 75,000 households have been allocated broadband connections. This number is expected to will increase to 185,000 households by the end of 2023.
A total of €4 million will be allocated to help with the extra ordinary performance Olympic and Paralympic athletes build up to the Paris 2024 games.
A total of €2.6 billion was allocated to the transport department that involves the key transport infrastructures like BusConnects and MetroLink and the DART. There will also be reductions in passenger fares. Electric vehicle grants will be continued.
A €2.1bn has been allocated to the Agriculture department. €500m has been allocated to the sustainability of Irish agriculture and the sector’s climate emissions. Also, €238m was allocated to the Brexit Adjustment Reserve.
1,000 new Gardai will be recruited into the Garda College in 2023 and 430 will be taken as Garda civilian staff.
€215 million will be allocated to homelessness services this year. There is a rise of €21 million from 2022.
There will be free GP care for 400,000 extra children. The budget allows free contraception schemes for those aged 16-30 years. Funding has been allocated for public access to IVF. Also, there will be additional funding for screening for women’s healthcare services.
The budget allocates a total of €6.2 to the Department of Housing for 2023 with €1.7 billion for social housing.
Under the social welfare announcements, the weekly social welfare payments will be increased by €12 per week. Similarly, the payment threshold for the Working Families Payment will rise by €40 per week. Over 70s will also see a hike in the fuel allowance for €500 for a single person and €1,000 for a couple.
A once-off reduction of the Student Contribution Fees of €1,000 for eligible students has been announced. A once-off double monthly payment of the SUSI Maintenence Grant, a €1000 increase to the postgraduate fee contribution grant, an extension of the 20% reduction on public transport fares until the end of 2023, etc. are other key announcements. Apart from that, the student contribution fee will be reduced by €500 on a permanent basis for families who earn between €62,000 and €100,000. Also, all SUSI Grants will be increased between 10% and 14% from September 2023.
The budget signals that the rate per tonne of carbon dioxide emitted for petrol and diesel will go up from €41 to €48.50 from October 12, 2022. This will be an increase of just over two cents including VAT per litre of petrol and diesel.
The scheme will be open to businesses that carry on a Case 1 trade, are tax compliant, and have experienced a substantial increase in their natural gas and electricity costs.
The Vacant Homes Tax will be charged at “a rate equal to three times the property’s existing basic Local Property Tax rate.” This tax will be applicable to residential properties which are occupied for less than 30 days in a 12-month period.
The Government is increasing the second Universal Social Charge Band from €21,295 to €22,920. It is expected that this will ensure full-time workers’ minimum wage will remain outside the top rates of USC.
As per the budget, the Standard Rate Cut Off Point will be increased by €3,200 to €40,000 with increases for married couples and civil partners.