TUESDAY’S Budget 2018 announcement by Minister for Finance Paschal Donohue was on fairly predictable lines, as have been most of the Budgets of recent years apart from that for 2016 when the outgoing Fine Gael-Labour government decided on a giveaway one to try to ‘buy’ votes ahead of that year’s general election. We all know how badly that went for them.
A lot of the thrust of Budget 2018 had been roughly mapped out already by his predecessor Michael Noonan even before Mr Donohue became Minister for Finance last June, with a lot of the elements broadly agreed with main opposition party Fianna Fáil as part of the ‘Confidence & Supply’ arrangement that sees it propping up the government and which is why it hasn’t been criticising the Budget contents too much.
The Taoiseach’s new Strategic Communications Unit is ‘spinning’ how great a budget this is across the board with pensioners and social welfare recipients also benefitting once again.
For workers, a badly-needed action by the Minister for Finance was the raising of the income threshold for going on to the higher tax rate. This will be welcomed by lower-paid workers in particular, as will the USC rate reductions, but it should only be regarded as an incremental step as people are still going on to the higher rate too soon and future budgets must continue to raise the threshold.
The big ticket issues of housing and homelessness cannot be tackled in one fell swoop. The housing allocation of €1.83bn is an increase of 50% on last year, but a lot more capital is needed for social housing provision on an ongoing basis.
Even though there was a hike in the levy on vacant sites, housing charity Cluid described the government’s failure to impose taxation on all empty properties as ‘a missed opportunity.’
The introduction of a tax on sugary drinks is a step towards tackling the obesity crisis, while a further hike in the price of cigarettes may encourage more people to quit smoking. All is not rosy on the health front, however, as GPs are threatening industrial action over the lack of investment in their sector.
The reduced VAT rate of 9% remains for the hotel and restaurant sector and is seen as a cushion against the effects of Brexit. Overall, the Small Firms Association described Budget 2018 as ‘a step in the right direction for small business.’
Taoiseach Leo Varadkar is pinning his hopes, as he looks towards a general election in the next year or so, that the underwhelming nature of Budget 2018 will be compensated for by a more favourable and enthusiastic reaction to the government’s capital expenditure plan, committing €2bn per annum over the next 10 years, when it is announced next month.