The Budget for 2018 is due to be announced on Tuesday October 10th 2017.
The government estimate , in Feb 2017 , of the net “fiscal space” available for Budget 2018 was €1.2 billion. But , whilst Budget 2018 is expected to allow for at least a €1.2 billion “adjustment ” , the real room for manoeuvre could be as little as €500 million because of the carry over effects of some measures from Budget 2017.
But – in a speech on June 28th , Taoiseach Leo Varadkar pointed out that in the run up to each Budget, a lot of emphasis is placed on the ‘extra’ resources that are available, the so-called fiscal space.
He said it is ” important to bear in mind that this represents only a small increment of the total resources available. What we should focus on is the totality of expenditure and taxation.”
Varadkar said thatthere is a need to review existing spending programmes and if just 1% or 2% of the €53 billion state expenditure could be re-allocated we would have another billion. He called this the hidden ‘fiscal space’.
He also said that Budget 2018 would “find some space to increase the take home pay of two million people who work really hard in this country, who get up every day, go to work, pay the taxes that make everything else possible”
What exactly is meant by “fiscal space”?
It can be defined as “room in a government´s budget that allows it to provide resources for a desired purpose without jeopardizing the sustainability of its financial position or the stability of the economy.”
Budget 2018 will now be overseen by new Finance Minister Paschal Donohoe , who was appointed in June.
The Department of Finance will produce a summer economic statement in June , giving an updated estimate of the room for manoeuvre in the budget. The recent proposed public sector pay increases could also mean less money available for Budget 2018
What can we expect in Budget 2018 ?
It’s a few months away yet – but here are a few things we might expect to see in Budget 2018
Student Loans – this has been on the back burner for a couple of years. Maybe 2018 is the year it begins?
USC reductions – with possible balancing income tax increases for higher earners. There could be a kind of merger of the USC and pay-related social insurance (PRSI) – which might mean more people paying PRSI but less paying USC.
Medical Cards : Health Minister Simon Harris has hinted at a widening of the eligibility for medical cards – or at least GP visit cards. This might involve a raising of the income thresholds.
Further income tax reductions for the self employed.
A small cut to DIRT – probably 1%
Sugar Tax details are due to be announced for 2018
School Transport – possible changes to charges.
Welfare and Pensions – probably some more small increases.
Land tax on vacant sites could be introduced to encourage house building.
VAT – the IMF have suggested increasing VAT on items that are currently lower rated for VAT. Retailers are asking for a cut of 3% to the standard VAT rate. Maybe we will get both?
Property Tax – this could be increased ; it has remained the same since it’s introduction. (The IMF have suggested it could be increased)
Updated July 7th
We will keep this page updated with any Budget 2018 related news as we hear about it.