Tax breaks for renters totalling €1,000 over two years have been agreed as senior Government figures finalise the budget, with the final shape emerging of a multibillion-euro intervention that will attempt to cushion the impact of rampant inflation with a wide array of measures.
Large and small firms, students, parents of younger children, welfare recipients and middle-income households are among a host of groups which will benefit along with renters, with indications that few groups will be left without some budget bonus — tempered by a belief in government that no measures will be sufficient to offset the impact of price rises this winter.
It is understood that tenants are in line for tax relief of €500 this year with another €500 to come in 2023.
The total sum involved is more than twice the level of tax breaks discussed at the weekend.
Budget 2025 main points: Energy credits, bonus welfare payments, higher minimum wage and tax changes
Budget 2025 calculator: How this year’s budget will affect your income
Most-read: The top 10 business and personal finance stories of the year
Renters and households with children most likely to have income that doesn’t match needs - ESRI
Meanwhile, businesses will be eligible for payments of up to €10,000 a month to help them with energy bills, under a new €1 billion plan to help struggling small and medium-sized firms.
The design and structure of the temporary business energy support scheme (TBESS), which is intended to assist smaller firms facing massive energy bills, is one of the last elements of the budget to be nailed down.
A source said two principal schemes will be announced on Tuesday to help businesses with the cost of electricity and gas.
The first is a €200 million scheme administered by Enterprise Ireland for larger firms that are involved in exporting and manufacturing. Under one of its strands, businesses can receive up to €2 million in financial aid. They will have to produce a business plan that shows how they will get through the crisis and control their energy costs.
The second scheme is targeted at SMEs. The TBESS will cover 40 per cent of the increase in electricity or gas bills, up to a maximum of €10,000 per month per business. It will be administered by the Revenue Commissioners, will be backdated to September, run at least to February and is estimated to cost about €1 billion.
These two measures will also be backed up by a new, low-cost loan similar to the Brexit and Covid loans. Firms would have to demonstrate that they’re tax compliant.
Students will also see a €1,000 reduction in fees this year, regardless of income and effective immediately.
Next year, a family earning under €100,000 will see a permanent reduction of €500 in fees and any family earning under €62,000 will pay no more than €1,500 in fees due to changes in student grant rules.
All student grant recipients will also get a double payment and PhD students will get a once-off cost-of-living payment before Christmas. The student grant is usually paid in instalments and it is likely that December’s instalment will be the double payment, a source said.
Some 430,000 more people will become eligible for free GP care next year under plans being drawn up by Minister for Health Stephen Donnelly as part of Budget 2023. For the first time more than half the population will be covered by either a GP visit card or a medical card, representing the biggest expansion in eligibility for decades.
Parents are also set to see childcare fees fall by an average of €1,200 per year per child under a deal struck by the Coalition which will see a reduction in fees by a projected 25 per cent, up to a maximum of €2,100.
The level of support agreed is at the top end of the range that went to Coalition party leaders on Monday night.
Minister for Children Roderic O’Gorman has signalled that the cost of childcare will come down by an average of 50 per cent over two years.
The deal will see the subsidies paid to childcare providers under the scheme increase from €0.50 per hour to €1.40 per hour, for a maximum of 45 hours per week. Sources said this will start from January 2023.
Coalition leaders have agreed to extend public-transport fare reductions of between 20 and 50 per cent for another year.
The final touches were being put on to the budget on Monday ahead of its publication on Tuesday afternoon.
Talks on a €2 billion welfare package went down to the line, with a €12 increase in welfare payments and a further double payment of welfare payments in either October or November.
The Christmas bonus will be paid, a double payment of child benefit and a €500 lump sum for families availing of the working family payment. There will also be a €500 lump sum for carers, which will be given to every carer in November; a €500 cost-of-disability payment; and a €20 increase of the domiciliary care allowance for sick children, meaning the payment will now be €320.
The budget package is expected to include the setting aside of up to €2 billion into a rainy-day fund, and a commitment to make a similar allocation next year. The Government is already committed to making a €500 million payment into the fund each year but this will be significantly increased.
The expected budget surplus this year is €4.4 billion. With more than €3 billion of this expected to go towards once-off measures, the rest will go into the fund, together with some other exchequer funds.
The allocation will underline the ability of the exchequer to respond if the energy crisis continues into next year.
The entry to the top rate of tax is expected to rise to about €40,000, with tax bands widening.
Parents of younger children will benefit from free schoolbooks at primary level under a deal struck by Minister for Education Norma Foley. She secured agreement for the €47 million schoolbooks scheme from September next year, and it will not be a once-off measure, continuing in the years to come with schools purchasing books with funding from the Department of Education.
Mr Donnelly is understood to be focusing on budget measures related to the cost of living, expanding services and tackling waiting lists. A sum of €1.15 billion has been mooted to cover cost increases to existing services as well as new spending, which would bring the overall health budget to more than €22 billion.
Free contraception is also to be extended to women aged 30 and under from next year.
Women between the ages of 17 and 25 became eligible for free contraception earlier this month, with the full-year cost of the expanded scheme coming in at €26 million.
Meanwhile, the help-to-buy scheme looks set to be extended for two years. A new vacant property tax is set to be announced in Budget 2023. The rates of payment are to be double the existing local property tax (LPT) rate for a given property.
Under the plans, owners will have to pay the vacant property tax on top of the existing LPT payment.
Minister for Media Catherine Martin has also secured €75 million for the establishment of Coimisiún na Meán for online safety and media regulation. New commissioners will be selected by November this year.
Farmers will also be able to access the energy price support scheme on offer for businesses, up to a cap of €62,000 over the period it is on offer due to state-aid rules.
A new fodder support scheme will pay farmers up to €1,000 to save hay and fodder in 2023.
There will also be a scheme for beef farmers to replace the €28 million beef environmental efficiency programme for sucklers, with a similar level of funding understood to be on offer.
In relation to the new Common Agricultural Policy, funding has been secured for 30,000 places in the agri-climate rural environment scheme for 2023, as well as extra funding for the targeted agricultural modernisation scheme, forestry and organic farming, as well as enhanced supports for suckler and sheep farmers.
There will be specific funding to support the development of anaerobic digestion to produce biomethane as part of climate action measures in 2023.
An €8 million grant aid scheme to support the spreading of lime will be introduced to help farmers deal with high fertiliser prices, on top of the new €10 million tillage incentive scheme which Minister for Agriculture Charlie McConalogue announced at the National Ploughing Championships last week.
