After a year of high spending because of Covid – (an estimated €48 Billion extra) – It is still likely that that Budget 2022 will include a mixture of tax cuts , increased spending and some revenue-raising measures.
By the end of 2021 , Irish public sector debt will stand at close to a quarter of a trillion euros. On a per-capita basis, public debt stands at almost €44,000 per person, one of the highest levels in the world.
The Budget Estimates for 2022 will include a €4.2 billion increase in core expenditure, comprising €3.1 billion in current expenditure and €1.1 billion in capital expenditure.
Extra spending on Social Welfare and enhanced public services is expected to cost about €1 billion. Tax changes (reductions) are expected to account for half a billion .
Leo Varadkar was quoted on 13th Sept as saying that
“There will be a tax package to help middle-income people in particular, there will be a welfare and pensions package and also there will be a package to help businesses ,particularly those sectors that are not fully open yet and need a bit more help.”
When is Budget 2022?
The 2022 Budget will be announced on October 12th 2021.
Budget 2022 Forecast
State Pension rates haven’t risen since March 2019 (See Budget 2019 ) . It is expected that there will be an increase to state pensions in Budget 2022. The actual amount could be around €5 a week.
Social Welfare Rates for the majority of people have not increased since 2019 – when they were all increased by €5 a week. We forecast an increase to some but maybe not all Social Welfare payments in Budget 2022. The increases will possibly be targeted to ensure that those who are most vulnerable receive the support they need.
Christmas Bonus : We expect another 100% Christmas Bonus this year for state pensions and welfare benefits.
There will be an extension of the reduced 9% VAT rate for the tourism and hospitality sector until Sept 2022.
Minimum Wage – although this is independent of the Budget , we expect the minimum wage to be increased in January 2022 from the current €10.20 to around €10.50 an hour.
USC – a small increase to the thresholds is expected to tie in with the minimum wage increase.
PSRI – there has been a suggestion by the Pensions Commission to increase PRSI for the self-employed – from 4 per cent to 11 per cent. This may be announced in Budget 2022 – but is looking unlikely.
There may be a halving of the stamp duty on some residential purchases from 1 per cent to 0.5 per cent. This will apply to people who are living in family homes and want to trade down to a smaller property.
Help to Buy Scheme may be extended past Dec 2021.
Vacant Property Tax – A tax on vacant properties was mentioned in the Housing for All Plan earlier this year. It might be announced in Budget 2022 – however, it may be introduced later in the year or next year.
Carbon Tax will be increased again in Budget 2022. It is currently €33.50 a tonne and could increase to around €41 a tonne. That would mean will mean about a 2.5 cent increase in the cost of a litre of diesel and 2 cents on a litre of petrol .
Tobacco – an increase in excise duty cannot be ruled out again this year.
Alcohol duty has not risen in Ireland since 2014 – so maybe Budget 2022 could see an increase ?
We will update this post with any news of Budget 2022 as we hear it and it will be updated on Budget day (Oct 24th) as changes are announced.