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Budget 2023 in full: From cost-of-living to social welfare, pensions, tax, childcare and a few surprises

Minister for Public Expenditure and Reform Michael McGrath and Minister for Finance Paschal Donohoe pictured as they made their way to the Dail ahead of delivering Budget 2023meeting.Picture Credit:Frank McGrath 27/9/22

Finance Minister Paschal Donohoe has announced a Budget of around €11bn as the country battles against a worsening cost-of-living crisis.

Among the main components is a package worth €1,100 for pensioners, an increase in the higher rate tax band to €40,000 and a reduction in childcare costs of about €170 per month.

The Budget – announced two weeks earlier than usual – will also see the introduction of a €600 energy credit paid out to households in three instalments to help stave off sky-rocketing energy costs.

Mr Donohoe highlighted the war in Ukraine as a major factor in the crisis currently being experienced, adding that Brexit could bring further challenges.

Here is a breakdown of all the measures announced by the coalition for Budget 2023 and will continue to be updated.

Pensions

  • Pensioners are in line for one-off payments of up to €1,100 before the end of the year under a series of last minute social welfare spending measures agreed by the Coalition.
  • A double payment of the €253 per week state pension will be paid twice in the coming months – once soon after the Budget and then again in December.
  • Pensioners in receipt of the Living Alone allowance will receive a separate €200 payment while those claiming the Fuel Allowance are in line for once-off €400 lump sum on top of their usual rate.
  • The Fuel Allowance scheme extended to up to 80,000 people who currently do not qualify for the payment.
  • This will mean around 450,000 people will be able to claim the welfare payment over the coming months.
  • Social Protection Minister Ms Humphreys also secured a €12-per-week increase in all social welfare rates in the new year, along with a special once-off €500 payment for carers and people with disabilities this year.

Housing

  • New rent tax credit introduced valued at €500 a year and will apply for 2023 and subsequent years. It will also be backdated for 2022.
  • The Help-to-buy scheme has been extended until 2024.
  • Landlords will not see the tax they pay on rental income reduced but will be able to claim more from pre-letting expenses.
  • A vacant homes tax is being introduced which will apply to residential properties which are occupied for less than 30 days a year. This is expected to affect thousands of holiday home owners in Ireland. Exemptions will apply where the property is vacant for “genuine reasons” according to Mr Donohoe, and the tax will be self-assessed.
  • The pre-letting expenses regime for landlord is being changed, doubling the amount that can be claimed to €10,000 and reducing the amount of time the premises must be vacant from 12 months to six months

Cost-of-living package

  • Public Expenditure Minister Michael McGrath will separately detail the new cost-of-living package which will feature a series of one-off spending measures to help people struggling to pay bills due to record levels of inflation.
  • It will see the introduction of a €600 electricity credit taken off energy bills in three instalments of €200 over the coming months. First payment before Christmas
  • Lump sum of €400 before Christmas for those eligible for fuel allowance.
  • Parents are also set to benefit from a double payment of the monthly Child Benefit which will be worth €840 to a family with three children.
  • There will also be a two double payments of welfare rates between now and the end of the year.
  • The overall cost-of-living package will be €4.1bn, including €1.4bn allocated to the new Business Energy Support Scheme (BESS).
  • Under BESS, businesses will be able to avail of grants of up to €10,000 per month per premises to help with their energy costs, subject to meeting certain criteria.
  • The Government will put €2bn of the exchequer surplus into a new reserve fund and €4 billion is earmarked for the fund next year.
  • The double child benefit payment will be paid to all qualifying parents on November 1.

Taxation

  • Top rate of tax at 40pc will only apply to income above €40,000 when changes to tax bands come into effect in the new year, as part of an income tax package worth €1.1bn.
  • The personal tax credit will rise from €1,700 to €1,775, while the employee tax credit and the earned income tax credit will both increase by the same amount.
  • The tax changes are set to save single people around €800 a year and couples €1,600.
  • The current €5,000 limit on the amount of tax relief landlords can claim on pre-letting expenses will double to €10,000
  • The second USC band is set to be increased from €20,687 to 22,920 due to the increase in the minimum wage.
  • The annual limit on vouchers that employers can give their staff is rising from €500 to €1,000. In addition, two vouchers can be given under the exemption in this tax year if an employer wishes to do so.
  • Personal tax credits for carers will also increase by €100 to €1,700.

Students

  • A reduction in third-level fees of €1,000 as a once-off cost-of-living measure, students will also benefit from a once-off double grant payment.
  • Student fees to be reduced by €500 permanently to €2,500 (for incomes up to €100,000)
  • For households earning between €55,240 and €62,000 per year, their student contribution fee will capped at €1,500.
  • Student grants will also increase in January between 10pc and 14pc depending on how much their family earns. Families on lower incomes stand to receive an extra €856 next year. The total package for students will come to €148m.
  • Around 10,250 students from the poorest households will see their Susi grant increase by €856 per year.
  • A total of 15,716 students will benefit from a €450 increase in the rate paid to those based more than 30km from their college.
  • The permanent reduction of €500 in the student contribution fee will apply to households earning between €62,000 and €100,000 per year.

Education

  • Government allocating €9.6bn to the Department of Education in 2023, including a capital budget of €860m
  • Free school books for primary pupils
  • Provision for 686 additional teachers.
  • Continued rollout of the NDP will involve a further 150 school building projects that are currently at advanced design or tender stage commencing construction over the course of 2023

Businesses

  • Meanwhile, businesses will get up to €10,000 a month paid in their electricity or gas bills as part of a €1bn scheme.
  • Small to medium enterprises will have 40pc of their increases in electricity or gas bills paid up to a maximum of €10,000 per month.

Transport

  • Government extending the current excise reduction of 21c per litre for petrol, 16c cent per litre for diesel and 5.4c per litre for Marked Gas Oil (MGO).
  • Minister McGrath pledges €3.5bn (including current expenditureenditure) to support the delivery of BusConnects, MetroLink, DART+ and a range of projects in 2023. The €2.6bn of capital funding represents the highest level of capital investment since 2008

Health

  • The extension of free GP care to 430,000 more people will see around 70,000 children aged six and sevem become eligible for free doctor visits by the end of the year under a measure that was already announced in last year's Budget.
  • In addition, Health Minister Stephen Donnelly intends to have some 360,000 adults and children in low-income homes become eligible for a free GP visit card by 1 April next year. Qualifying for the scheme will depend on household income and the number of dependants.
  • There is also €10m being allocated for publicly funded IVF in 2023. including money to subsidise private IVF and the development of public clinics
  • Extension of free contraception for women aged 16-30

Irish colleges

  • An extra €2.5m to support the Irish summer colleges sector.
  • This includes a 10pc increase in the subsidy per child for Mná Tí, who provide meals and accommodation for Irish students.
  • Trebling of the grant for households who decide to accommodate students for the first time, from €2,000 to €6,000, and increased funding for Údarás na Gaeltachta and Foras na Gaeilge.

Newspapers

  • In a last-minute move, newspapers will be zero-rated for Vat in today’s speech from January 1.
  • The abolishment of Vat on newspapers will also apply to digital editions and subscriptions.

Hospitality

  • Minister Donohoe confirms that special VAT rate for hospitality of 9pc will expire at the end of February 2023.

Defence forces

  • Defence budget is set to be more than €1.1bn next year as Foreign Affairs Minister Simon Coveney seeks to address shortfalls in funding in the Defence Forces.
  • This will includes €176m on building projects at barracks, new vessels for the navy, new aircraft for the Air Corps and more armoured vehicles for the Army.

Alcohol and cigarettes

  • Cigarettes will cost an extra 50c from tonight, rising to €15.50 for a packet of 20.
  • There will be no increase in the price of alcohol

Agriculture

  • A new suckler scheme with a similar level of funding to the €28m Beef Environmental Efficiency Programme for sucklers. This new scheme will sit alongside the new €150-per-cow Suckler Carbon Efficiency Scheme in the new Common Agricultural Policy (Cap).
  • Funding for a new Fodder Support Scheme which will pay farmers up to €1,000 to save hay and fodder in 2023.
  • Funding has been secured for 30,000 places in an Agri-climate Rural Environmental Scheme for 2023, and there will also be extra funding for farm modernisation supports through the TAMS programme, forestry and organics as well as the new and enhanced suckler and sheep supports.
  • Specific capital funding to support the development of anaerobic digestion in 2023,an enhanced Multi Species Sward / Red Clover scheme plus the introduction of a new €8m grant-aid scheme to support the spreading of lime.
  • New €10m Tillage Incentive Scheme. Farmers will also be part of the energy price support scheme promised to support businesses, with payments likely to be based on their energy usage.

The surprises (so far)

  • A levy will be introduced on concrete blocks and pouring concrete in a bid to raise €80m a year. It will be applied from April 3 at a rate of 10%.
  • 50c excise relief for independent cider producers
  • Additional €2bn into the rainy day fund
  • Officials to examine a third rate of income tax
  • Contingency fund of over €4bn to deal with with potential Brexit and Ukraine war repercussions.

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