‘Far too early’ to say if FG proposal for €1,000 middle income tax break will be in Budget

It is “far too early” to speculate on whether or not a Fine Gael proposal for a €1,000 tax break for middle income workers will be included in the Budget, according to senior Fianna Fáil minister Darragh O’Brien.

Fine Gael junior ministers have said they want to see tax relief of more than €1,000 for full-time workers on an average wage of €52,000.

Ministers of State Jennifer Carroll MacNeill, Martin Heydon and Peter Burke included the proposal in an article in the Irish Independent among a number of ways to use the billions in budget surpluses expected in the coming years.

Some €65 billion in surpluses are forecast up to 2026 and the ministers for finance and public expenditure, Michael McGrath and Paschal Donohoe, are expected to come under pressure to deliver on budget demands from ministerial colleagues and Government backbenchers.

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Mr McGrath recently outlined his view that it is “blindingly obvious” that Ireland should set up a new long-term reserve fund in which to invest the anticipated large corporation tax receipts.

He also said there will still be room from recurring tax receipts for a “significant budget package” and there will be tax and welfare measures in the Budget as well as improvements in public services and an increase in the public capital programme.

The tax break proposal from the three Fine Gael junior ministers comes almost five months before Budget day.

Mr O’Brien said it is “It’s far too early ... to speculate as to what’s going to be in a budget in October” when asked if Fianna Fáil supports the Fine Gael idea and what his own party will be looking for in the Budget.

He said all three Government parties “have full input into the creation of the Budget itself, looking at new measures that may potentially be in place”.

Mr O’Brien put the expected billions of surpluses down to “good economic management”.

He cited housing and health as among the “many challenges in this country”, while saying progress is being made, and added: “We’ve got to be careful about how we manage our finances too and we will.”

He said the Government will take collective decisions on “how we move forward”.

Asked again if Fianna Fáil supports the tax break he said it is “far too early to speculate as to what will happen”.

He said his party has said “a couple of things very clearly in relation to the upcoming Budget”.

Mr O’Brien said that both Mr McGrath and Fine Gael Minister for Public Expenditure, Mr Donohoe, have signalled a “desire to ensure that we retain and attract new landlords into the system so we can have a functioning private rental market”.

He also said: “We want to make sure fundamentally in everything that we do that those that need most, get most,” and he listed working families, people with special needs and disabilities and the elderly.

Mr O’Brien said he is sure there will be many proposals and asks before the Budget “all of which will be considered”.

He said the Government is aware families are under pressure in relation to energy costs and the cost-of-living and highlighted mortgage holders impacted by the increase in interest rates.

“So there will be a lot of asks and our job is to frame a budget that’s fair, that’s equitable, and that works and that builds on the progress that we’ve made”.

Mr O’Brien was speaking at the launch of a pilot project that sees Fingal County Council become the first local authority to partner with social enterprise EnergyCloud to provide free hot water to homes using otherwise wasted renewable energy.

There are 60 homes in a pilot project in Swords, north Dublin with around 1,000 homes nationwide using the EnergyCloud devices that can help save energy costs for lower income households.

Funding is provided by energy generator SSE Airtricity.

EnergyCloud chairman Gabriel D’Arcy said that currently hundreds of millions of euro worth of renewable energy – like that generated through wind power – is wasted due to the drop in demand at night.

His company’s technology uses otherwise wasted energy to heat water in homes at risk of fuel poverty.

Mr D’Arcy said around 80,000 applications have been made to sign up to the EnergyCloud service.

Mr O’Brien praised the initiative which he said helps from a climate perspective and in terms of keeping bills down and said there will be 10,000 homes connected by the end of the year.

Mr McGrath said discussions among the Coalition partners on the exact detail of the budget have still to begin but when they do, they will address issues like tax relief, cost of living, improving social welfare and public services and increasing investment in childcare and education and health.

“We are four and a half months out from a budget so I’m not going to get involved in any auction with any other party in Government  ... there will be lots of asks and demands and individuals and parties will have ample opportunities to lay out what their priorities are.

“Minister Donohue and I will have a difficult job of work to do to prepare a budget for October – we are very much aware of the level of expectation that is there, the fact that we are running budget surpluses will lead to more and more calls for increased spending and tax reductions.

Speaking at a conference hosted by University College Cork entitled ‘Good Friday Agreement 25 and the Island of Ireland’, Mr McGrath said the Government had not yet begun discussing the specific detail of changes in income tax in this year’s budget, but it was committed to further reform.

“We have a programme for Government commitment to increase the entry point to the marginal rate of tax and to increase tax credits in line with earnings – that’s a commitment that the three parties signed up to in the programme for Government and we made progress in the first three budgets.

“It will fall to me as Minister for Finance to bring forward proposals for Budget 2024 and that’s what I will do in the coming months, but all parties will be putting their priorities on the table, be it social welfare, childcare, education, healthcare and those discussions have yet to be had.”

Mr McGrath said that he and Mr Donohoe had worked well in partnership on the Government’s three previous budgets, and he fully expected the same spirit of co-operation and trust to inform their discussions on this year’s budget.

“I have no doubt that Minister Donohoe and I will continue to work very closely in the lead up to the budget – we have brought forward three main budgets so far and a number of other fiscal interventions so far and they have always been done jointly and in a genuine spirit of co-operation.”