Budget 2023 will help individuals, families and businesses while preparing us for what may yet come

The main focus of Budget 2023 is to help families, individuals and businesses deal with the rising cost of living. We will do this while also ensuring we have sufficient reserves for what the future may yet bring.

The Irish economy has strong foundations. Due to the hard work of the Irish people, the labour market has made a remarkable recovery over the past year. We now have more people at work in our country than ever before.

Our public finances have recovered strongly from the effects of the pandemic. Much of this recovery is due to their careful management over recent years and by undertaking appropriate responses to the unique challenges which we faced.

On Tuesday, I announced to the Dáil that we will register a General Government surplus of €1 billion, or just under ? per cent of national income this year, and €6.2 billion or 2? per cent next year. To put this recovery in context, last year we recorded a General Government deficit of €7 billion.

While this is extremely welcome news, headline deficit and tax revenue figures do not account for the fact that much of the surge in tax revenue is due to excess corporation tax. These receipts could change significantly in the future, and with little warning. Corporation tax amounted to nearly €12 billion to end-August and my officials expect these receipts to exceed €20 billion this year. While these receipts are extremely welcome, they cannot be depended upon to fund permanent expenditure. It is now appropriate to use some of these excess receipts to build up our economic resilience

Following so soon after Brexit and COVID, it is a major achievement for our country to be in a position to put additional resources aside in order to prepare for future challenges, and to run a surplus.

And let me be clear:

• firstly, there are the major challenges which we know are coming, and which we know will be very costly for future generations. These include an ageing population, the digital transition, and climate change
• secondly, as noted earlier, challenges which were largely unforeseen, are becoming increasingly frequent, and increasingly impactful

It is therefore imperative that we prepare our public finances appropriately.

On Tuesday night, the Dáil passed a resolution to give effect to the transfer of €2 billion into the National Reserve Fund, and €4 billion in 2023.

Once-off package

In the Budget on Tuesday, we announced a significant and broad package of once-off measures worth €4.1 billion. This, together with measures for 2023 worth over €6.9 billion brought the total size of Budget2023 to €11 billion.

The once-off measures include:

- The €200 electricity credit being paid in November, January and March providing a total relief of €600 on energy bills.

- The extension of the reduced excise duties on petrol and diesel and the VAT on electricity and gas to end-February.

- €1billion in measures for our most vulnerable including an Autumn cost of living double payment for all pensioners, carers and people on disability payments, double payments of child benefit in November, and a €400 lump sum fuel allowance.

The largest part of the Budget, and the once-off package is the new Temporary Business Energy Support Scheme costing €1.2 billion to help businesses deal with their rising energy costs throughout the winter months. Revenue will issue detailed guidance on the scheme in the coming weeks and payments will be made to qualifying businesses shortly after.

Income Tax

One of my core objectives in Budget 2023 is to ensure that workers do not find themselves in a position where they pay more income tax solely because of inflation.

I am increasing the Standard Rate Cut Off Point by €3,200 to €40,000, with proportionate increases for married couples and civil partners.

Secondly, I am increasing the main tax credits (Personal, Employee and Earned Income Credit) by €75 and the Home Carer Tax Credit by €100.

I am also increasing the second USC rate band to ensure that full-time workers on the minimum wage will remain outside the top rates of USC, while also giving a modest benefit to all workers whose income is above that amount.

Further analysis of the TSG report which examined the impact of introducing an intermediate or third rate of income tax will now commence and conclude prior to the publication of next year’s Summer Economic Statement to assist government in arriving at an informed decision in a timely manner.

The government is also committed to developing a medium-term roadmap for personal tax reform, taking account of the recent Report of the Commission on Taxation and Welfare, and will consider a range of measures across income tax, USC and PRSI together with other related personal taxation issues.

Other tax measures

• The Help-to-Buy scheme, will be extended, at current rates, until the end of 2024.
• a new rent tax credit valued at €500 per year
• an enhancement of the pre-letting expenses regime for landlords to encourage the supply of more high quality rental properties.
• the introduction of a Vacant Homes Tax to increase the supply of homes for rent or purchase to meet demand.
• an extension of the Residential Development Stamp Duty Refund Scheme to the end of 2025.
• a levy on concrete blocks, pouring concrete and certain other concrete products to contribute to the costs involved in the redress scheme for home owners affected by Mica.
• ?a reduction in the VAT on newspapers from 9 per cent to zero from 1 January 2023.
• the removal of VAT on defibrillators as well as to hormone replacement and nicotine replacement therapies, and the small number of period products that are currently subject to a 9 per cent rate.

Full details of all the budget measures can be found on gov.ie/budget

Conclusion

Despite the challenges facing our country, I am confident that we will be able to continue to support individuals, families and businesses.

This confidence is based on the fact that we approach this test from a position of strength. A record number of people at work, with a budget surplus, reserving money for the needs of the future, inside – not outside – efforts to reform global corporate tax and intervening to help homes and businesses with rising costs.

But we know we have many risks. Recent years have shown how quickly they can develop.

I know we need to do more - build more homes, continue to improve public services, respond with courage and resolution to our defining challenge of climate change. We can and we will.

The political centre of Ireland, that is pro-European, supportive of enterprise, committed to a sustainable future for our public finances and for our environment has, with the hard work of the Irish people, helped get us ready for today. So soon after confronting a pandemic.

Many were looking at the Budget on Tuesday for confidence, for help.

We can, and we should be confident about our future.

We know our citizens need help, we know our employers need help and this budget aims to give this help.