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With the government set to unveil the largest budget package in state history in the next few days, details of the new spending measures have begun to emerge.
The Government is finalizing the 2021 Budget this weekend before its release on Tuesday, and the package is expected to be as high as € 5 to € 6 billion, according to the Irish Times.
Expected spending has skyrocketed from the € 3 billion previously forecast as the government continues to borrow and spend large amounts to pay for the costs of the coronavirus pandemic.
So what do we know about spending so far?
Income
No increases in income tax are expected.
Up to € 9 billion of the budget will go to social assistance, although the pandemic unemployment payment is unlikely to return to its previous level.
Affordable housing
High-level sources have indicated to the Irish Times that an additional allocation will be made for affordable housing.
Negotiations continue on a plan for the state to take part in home ownership, a stake that would be returned over time, in an effort to make property ownership more accessible.
Construction and housing are likely to be shielded from any policy or tax changes amid fears that they could jeopardize employment or tax revenue.
Health and Covid-19
The budget spending will be added to the additional Covid-19 spending already committed, which is already forecast to add between 8 and 9 billion euros to current spending next year.
The budget is likely to contain funds for new investments in maternity services, following signs made yesterday by Health Minister Stephen Donnelly.
VAT reduction
Sources have indicated that the VAT cut introduced in the July stimulus program will not be extended and will expire in February.
However, a VAT reduction is expected to bolster the hospitality sector, according to the Irish Examiner, as pressure mounts on the government to reduce the current rate of 13% to the 2018 rate of 9%.
An extension of the commercial fee waiver is also likely until next April.
Climate action
An increase in the carbon tax is expected.
The changes are also expected to make the purchase of new high-emission vehicles more expensive.
Music and arts
The performing arts sector will receive “tens of millions” of euros in funding for small community venues and large commercial concert venues, according to the Irish Examiner.
Grants of up to € 10,000 for theater and music venues are expected to be included in the budget in a program described as “a lifesaver for the industry.”
Deficit
Finance Minister Paschal Donohoe said yesterday that the deficit for 2020 was expected to be 21 billion euros, warning that the projection would increase if more restrictions are lowered as a result of the pandemic.
The Minister of Public Expenditure, Michael McGrath, said that total spending this year would amount to more than 86,000 million euros, the largest bill for the functioning of the State in its history with some 16,000 million euros of extraordinary measures related to the pandemic.
All the money needed to finance the deficit this year and next will be borrowed and added to the public debt, the ministers confirmed.
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