News

Devil is in the Budget detail

October 4th, 2022 11:40 AM

Share this article

HAT is being dubbed Ireland’s most generous Budget has been and gone.

There were few surprises, given the massive leaking of details in the previous 48 hours.

But it was well handled by the spindoctors in those two days – expectations were well managed and when the finer details came out, the overall effect was of a positive, money-fuelled giveaway.

The changes in tax bands, increases across a broad section of social welfare payments, and the energy subsidy were among the ‘big ticket items’ that the government hoped would dominate the headlines.

But, thankfully, we have a tradition in this country of good journalism delving behind the scenes on Budget day to elicit some hidden charges and cuts – the well-hidden devils in the detail, as it were.

Before the ink was dry on the Minister’s Dáil speech, the accountants, actuaries and business journalists were poring over the pages and seeking to uncover the elements of the document that the government would prefer were kept under wraps, for a few days at least.

The change in tax bands was welcome overall, and a major accountants firm estimated that by changing the top tax rate to apply to income above €40,000 – rather than €36,800 – €640 could be back in the pocket of a single person and €1,280 for a two-income household.

But the Social Democrats estimated that those who would benefit most would be the 23% of earners who are on the higher rate of tax – and they would gain an additional €800 per person, while those on lower incomes would gain just €150 approximately. Hardly a fair deal then, joint party leader Róisín Shorthall commented.

Ian Prenty, a tax partner at accountants Deloitte, noted that while Ireland has one of the most progressive income tax systems in the developed world, policy makers need to be mindful of the negative impact which higher marginal rates of tax can have on business growth and economic development, and particularly on the need to guard against workers moving into higher tax brackets due purely to rising gross incomes as a result of inflationary pressures.

We also learned that a €600 energy credit for households will be delivered in three instalments. But again, this was not a targeted measure, and will be payable to many earners who can easily absorb higher energy costs, while those struggling below the poverty line will be getting the same amount.

There were also fears about the amount of funds allocated to combat inflation at public sector level in the next fiscal year. Many believe the government has not budgeted sufficiently to keep our public services like health, education and our local authorities properly funded.

There was good news for parents with the decision to offer free schoolbooks for primary level, but there was little by way of measures to tackle the student accommodation crisis at third level – in a week in which a number of universities said a significant number of students were deferring courses for a year, because they couldn’t find anywhere to live.

And while a major scheme to provide schools with solar panels was also announced this week, climate activists would wonder why it has taken so long and why the scheme isn’t being extended to all public buildings, if the government is serious about tackling the greatest threat to the planet.

Journalists noted the ultimate ‘spin’ of describing the 9% rate on Vat for tourism as being ‘extended until March 2023’, when the reality is that the tourism Vat rate ‘is increasing’ to 13.5% in March, at a time when the industry is reeling from a cost of living crisis following hot on the heels of a global pandemic.

On Tuesday the government also opted to drop the 9% Vat rate on newspapers, in line with many other European countries. At least this may go some way to ensuring good journalism can continue to be resourced. And we can continue to challenge those wily government spindoctors.

Share this article


Related content

Subscribe

to our mailing list for the latest news and sport:

Thank You!

You have successfully been subscribed to SouthernStar newsletter!

Form submitting... Thank you for waiting.