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It doesn’t seem like it’s been that long when Budget ads brought many surprises.
During the Celtic Tiger years, when cash was plentiful, there was a “something for everyone in the audience” mentality that often permeated the budget process, as successive ministers doled out cash to each and everyone.
Then came financial collapse, austerity, and even supplemental budgets, accompanied by a feeling of dread about the bad news that budget day could bring.
However, the subsequent years of trust and supply rule, combined with the rules imposed by the EU, have made the budget preparation process much more open.
That, combined with the usual plethora of media leaks, means that before the Finance Minister stands in the Dáil chamber (or in the case this year at the Convention Center), we generally have a pretty clear idea of what is going to happen. saying.
So, with Budget 2021 delivery now less than a day away, what can we expect from it?
The general package – We expect the general budget package to be in the region of 20,000 million euros, of which 14,500 million euros have already been previously committed to expenses derived from Covid-19 support and other political decisions made in previous years. It will be the largest budget package in state history.
Income tax – We know with certainty that there will be no changes in income tax, USC or PRSI, neither up nor down, because the Government has already said so. Despite the desperate need for more income due to the Covid-19 pandemic, politically this is not the time to increase personal taxes, nor can the government afford to reduce them.
But there may also be no indexing of the bands, with the result that more people could end up paying taxes than previously did not and others would end up paying at the higher rate.
Social Welfare – No big changes are expected in the main social welfare rates, such as the old-age pension. However, money can be set aside to allow for a delay in the planned increase in the state pension to 67.
Caregivers – However, there may be something extra for caregivers, with an increase of € 150 per year on the cards.
Allowance for living alone – There may also be an additional € 5 per week for recipients of the Living Alone Grant.
Pandemic Unemployment Pay (PUP) and Wage Subsidy Scheme (EWSS) – As the intensity of restrictions across the country increased in recent weeks, the government has come under significant pressure to restore PUP payment levels to their pre-cut amounts.
That seems unlikely to happen on budget. However, the government can still commit to moving the expiration dates forward for both the PUP and the EWSS beyond the spring, to give people who depend on supports more certainty.
Sources indicated, however, that this decision may not be made tomorrow in the budget. There may also be changes to allow freelancers to earn a certain amount without having to give up the PUP entirely.
Christmas bonus – A one-week Christmas bonus is expected to be awarded to social assistance recipients. However, there are still questions about what level of bonus, if any, will be paid to recipients of the Pandemic Unemployment Payment. The problem here is that normally Christmas welfare bonuses are only paid to those who have been receiving the payment in question for 15 months.
Help to buy – The expectation is that the improved Shopping Assistance scheme will extend beyond the planned end of the year. It entitles first-time buyers who buy a new house or apartment to relief of up to € 30,000.
Carbon tax – In last year’s budget, the carbon tax rate was increased by € 6 per tonne to € 26. In line with the government’s climate targets, it is now expected to rise further by € 7.50 per tonne next year. This will lead to an increase of € 1.47 in the cost of a fill of 60 liters of diesel and € 1.28 for a similar amount of gasoline, in addition to adding 90 cents to a bag of coal and 20 cents to a bullet of peat briquettes.
Fuel allocation – An increase in fuel allocation is likely to help offset the above among vulnerable groups and those receiving low wages, and an additional € 3.50 is suggested.
YARD – It is also believed that well-marked changes to the vehicle registration tax are now likely to be introduced, to discourage people from buying large diesel cars and going green with electric vehicles. The VRT change will also have an impact on motor tax for existing car owners.
Cigarettes – A pack of cigarettes could go up in price by as much as 50 cents.
Alcohol – Rights on alcohol do not appear to be increasing.
VAT – It seems likely that the temporary reduction in the VAT rate, from 23% to 21%, will expire at the end of February as planned. However, it also seems likely that the VAT rate for the hospitality sector will drop to 9% from 13.5% over a period, as it did a few years ago.
Commercial supports – A fund of up to 3.4 billion euros is expected to help companies large and small that are in financial difficulties as a result of the Covid-19 pandemic and a possible Brexit trade-free deal.
Compensation scheme – It is believed likely that there is also a markdown scheme in place to compensate sectors that have to close completely due to Level 3 restrictions, through weekly or monthly payments.
Entertainment sector – The budget package will also include a major live music and entertainment package in the tens of millions of euros range. The venues would receive a minimum grant of € 10,000 to help subsidize ticket costs as they address reduced attendance due to social distancing.
Employment agencies – Job creation agencies such as IDA and Enterprise Ireland will receive additional funding.
Commercial rates – Commercial rates for some businesses will remain waived during the last quarter of the year to give more breathing space to struggling businesses.
Training – An increase of 15,000 recycling places is expected in higher and complementary education, especially aimed at young people, where the unemployment rate has skyrocketed in recent months.
Taxis – License renewal fees may not apply and there could be improvements to the scrapping plan to help taxi drivers.
Health – Health will take up a large part of Budget’s pack for the day. An additional expenditure of € 4 billion has been agreed, including € 1.6 billion in funding for new measures such as beds and staff and € 2 billion for Covid measures.
Capital expenditures – We already know that the Government plans to increase capital spending by € 1 billion to € 10.5 billion next year. Possible additional announcements include an additional € 500 million for social housing.
Parental leave – Up to 3 weeks of optional additional paid parental leave is also on the table.
Education – Up to 400 special needs teachers and 1,000 special needs assistants could be hired.
Of course, there will be much more to the budget speeches and the devil will be in the details.
And don’t forget the old adage that “nothing is agreed until all is agreed.”
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