Budget 2018 is due to be announced on Tuesday October 10th 2017.
The 2018 Budget will be overseen by the new Finance Minister Paschal Donohoe , who was appointed in June.
The government estimate , back 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 €300 million because of the carry over effects of some measures from Budget 2017.
In a speech on June 28th , Taoiseach Leo Varadkar pointed out that there 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 to use. He called this the hidden ‘fiscal space’.
What can we expect to be announced in Budget 2018 ?
It’s getting closer and here is our list pf some of the possibilites for Budget 2018
USC reductions – with possible balancing income tax increases for higher earners. There could be the start of kind of merger of the USC and pay-related social insurance (PRSI) – which might mean more people paying PRSI but less paying USC.
USC for over 70’s – a decision will need to be made about the current reduced rate of USC . It will either be extended past it’s current end date of 2017 or allowed to end.
Income Tax – Currently, PAYE workers pay the higher rate of 40pc when their earnings reach €33,800. There is the possibility of this threshold being increased. An increase to €34,800 would cost €178m.
Reducing the 20% standard income tax rate to 19% might also be an option – this is estimated to cost about €580 million.
Income tax bands have not changed since 2015 – so thery could be increased which would mean cuts in Income Tax .
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 by increasing the “Earned Income Credit” by at least €350.
Mortgage Interest Relief – we expect to hear details of how this will be extended for current recipients beyond the current 2017 end date.
Diesel : There will probably be a phased increase on the excise duty on Diesel to gradually bring it in line with petrol . This could increase the price by as much as 3c a litre in 2018.
A 2% cut to DIRT – (as promised in Budget 2017)
Sugar Tax details are expected to be announced for the sugar tax to begin in 2018
Corporation Tax – No change from the current 12.5%
School Transport – possible changes to bus fares .
Welfare and Pensions
There will probably be small increases to pensions and benefits across the board.
A restoration of the telephone allowance is also a possibility.
A new Working Family Payment was promised back in 2016 – so we finally expect to hear some details about this in Budget 2108
Land tax on vacant sites could be introduced to encourage house building.
Incentives for landlords – such as restoring the 100% mortgage interest deductibility or simplifying tax rules on rental properties.
Possible Tax Incentives to encourage the building of affordable housing.
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). The planned revaluation date is 2019 .
VRT relief on electric cars – the €5000 cap on VAT relief might be increased or even removed .
Student Loans – this has been on the back burner for a couple of years. Maybe 2018 is the year it begins?
Updated Sept 18th
We will keep this page updated with any Budget 2018 related news as we hear about it.