Anniversary budget
What the Minister said:
"A decade on from the financial and economic crisis that wrought havoc with the lives and aspirations of so many of our citizens, I can report that our economy is again growing strongly and sustainably. A record number of people have jobs and many of our citizens who left in the wake of the economic crisis are returning home."
Hello, and welcome to the Financial Crisis Anniversary Budget and the sophomore outing in the big job for Minister for Finance Paschal Donohoe. "Minister, you have one hour," the Ceann Comhairle suggested/pleaded in vain. Donohoe went on to comfortably overshoot the hour mark. Eschewing the colourful asides of predecessor Michael Noonan, he began his speech by pointing to the ostensibly good-news phenomenon of returning emigrants, prompting a large chunk of his listeners to collectively wonder "yes, but where are they going to live?"
Brexit spectre
What the Minister said:
"Brexit is the political, economic and diplomatic challenge of our generation. The Government has been clear on our objectives, robust in our negotiations and thorough in our planning. We will remain at the heart of the European Union and open to the world. We will protect our hard-won peace."
The shape-shifting spectre of Brexit is “edging closer each day”, the Minister noted, but because Westminster is locked in an increasingly ludicrous political stasis, its impact is still unclear. All we do know is that this was very much a Brexit contingency budget, with some €710 million in measures allocated to countering the chaos a no-deal Brexit will cause. The word itself was given 24 mentions in Donohoe’s speech, easily beating last year’s tally of 15, while the reaffirmation that the State will remain “at the heart” of the EU seems a message intended for international ears.
Housing admission
What the Minister said:
"I acknowledge that where we find ourselves today is not where we want to be. There is much work to be done to reduce the level of homelessness, find permanent solutions for those in temporary and emergency accommodation and to improve affordability for those on low and middle incomes."
This time last year the Minister suggested that the Government's actions to support the housing sector were "bearing fruit". Another 12 months of record homelessness and soaring rents makes this assertion seem optimistic at best. In Budget 2019, Donohoe allocated €2.3 billion to the housing programme, though the extension of interest tax relief for landlords raised weary eyebrows among both those who say this is hardly the time to be helping private investors and those in the property business who say the measure won't stop landlords selling up anyway. Much work to be done, indeed.
Carbon tax stasis
What the Minister said:
"It is my intention to put in place a long-term trajectory for carbon tax increases out to 2030 in line with the recommendations of the Climate Change Advisory Council and the special Oireachtas committee which are examining climate change."
In a week in which the UN’s Intergovernmental Panel on Climate Change warned that the world has only 12 years to avoid a climate catastrophe, the stage couldn’t have been better set for a hike in carbon taxes. Instead, fearing that a rise from the €20 per tonne tax would be unpopular in rural areas, the Government held fire on its original plans to make it more expensive to burn fossil fuels - a policy choice to remember if the earth turns into a giant ball of fire in decades to come. Suddenly, 2030 doesn’t seem too far away.
‘Responsible’ Paschal
What the Minister said:
"The budget I have announced today is a progressive budget with an emphasis on strengthening our national finances. It is a responsible budget for a modern and caring Ireland that aims to be at the centre of a changing world. I commend the budget to the house."
Political journalists were briefed in advance that the “theme” of Budget 2019 would be “a responsible and caring budget for a modern Ireland”, which was almost verbatim. In the word cloud of Donohoe’s speech, “resilience” and “strength” beat “caring” and “vulnerable”, though “responsible” emerged triumphant as the most common adjective, closely followed by its cousin “sustainable”. The idea that Ireland is “at the centre” of the world, meanwhile, is an echo of a line from last year’s speech and reflects the Government’s view that globalism has been kind to us.
Balancing act
What the Minister said:
"Building on this progress, I am pleased to announce that next year I will balance the budget for the first time since 2007. It is my intention to run surpluses into the future if the economy continues to perform well and to use them to reduce our national debt."
The books are being balanced and - in theory - the Minister will run surpluses in future. Alongside his new “rainy day fund”, these will create an economic buffer for the next big crisis. The only problem is the next big crisis might happen first. Indeed, some might say it’s already raining out. With Brexit still a sticky known unknown, Donohoe wouldn’t and couldn’t create any hostages to fortune about when he might get to the surplus stage, making “if the economy continues to perform well” the big “if” at the heart of Budget 2019.
Withdrawal symptoms
What the Minister said:
"A Government's decision to provide stimulus to the economy is often an easy one to make and in the case of the tourism sector in 2011, the application of a reduced 9 per cent VAT rate was justified. Judging when it is appropriate to withdraw stimulus measures is always more challenging."
Hotels and restaurants have grown hooked on the special rate of VAT and now it's time for them to wean themselves off it was the implication here. It seems avoiding the ire of various lobby groups simply wasn't worth more than the €466 million the restoration of the rate to 13.5 per cent will generate for the exchequer in 2019. The best part of all this for the Minister for Finance is that the Restaurants Association of Ireland called not for his head, but that of Minister for Tourism Shane Ross.
Lights, camera, action plan
What the Minister said:
"To support the continued growth of the film industry in Ireland, I am legislating to extend the film corporation tax credit beyond the current end date of 2020, until December 2024. To ensure all areas of our country can benefit from the film industry I am also introducing a new, time-limited, regional uplift of an additional 5 per cent."
The Minister for Finance, a Star Wars fan once pictured with Yoda, Han Solo and Luke Skywalker bobblehead figures nodding away in his office, was Minister for Tourism when its producers first sniffed around Skellig as a filming location - the Section 481 tax credit will have made its natural beauty glow that little bit more. The Government's ambitious audiovisual action plan depends on favourable tax policy to keep the cameras rolling. The cool plot twist for Limerick's Troy Studios is that Donohoe is now keen to spread some of the movie-love away from the Dublin-Wicklow axis.
Old (un)reliables
What the Minister said:
"I am increasing excise duty on a pack of 20 cigarettes by 50 cents, with a pro-rata increase on other tobacco products. This will bring the price of cigarettes in the most popular price category to €12.70. I am also increasing the minimum excise duty on tobacco products."
And that long-predicted 50 cent on a packet of 20 was pretty much that for the old reliables. "Holy smokes!" declared Ryanair, advertising "fares cheaper than cigarettes" in a quick-off-the-mark budget-themed email. Once again a rise in alcohol excise duty was conspicuous by its absence, perhaps because Border area off-licences are smack in the Brexit danger zone, and perhaps because it would have stunk of a double whammy for tourism businesses already hit by higher VAT. For the rest of us, it's time to uncork.
