Income tax reductions will be a “core part” of the tax package in the Budget according to Minister for Finance Jack Chambers.
He also said inheritance tax is “a significant imposition on many families” signalling that consideration will be given to cuts in that tax.
And Mr Chambers said the Government is looking at how families can continue to be supported with the cost-of-living over the winter when asked about the prospect of the reduced VAT rate on electricity and gas being extended.
His remarks came as he announced the commencement of two-long term funds designed to protect future State investment in public services and infrastructure.
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He was asked about a series of possible Budget 2025 measures during a press conference at Government Buildings.
Mr Chambers said “a core part of our tax package will be to put money back in people’s pockets and reduce the income tax burden for families.”
He said highlight previous measures related to USC – which has seen cuts to the rates and changes to thresholds – and he said “they’re part of our wider consideration around income tax”.
The chances of a renewed cut of the VAT rate for the hospitality industry to 9 per cent seem remote with Mr Chambers saying the Government is prioritising income tax cuts.
Asked about this issue he said: “a core part of our tax package will be to support reductions in income tax and support the over two million people in our economy, who are working who are paying high levels of income tax presently, and we really want to give them a break in 2025.”
Mr Chambers said: “That leaves additional scope for other taxation measures, but not enormous scope”.
The rate for Capital Acquisition Tax (CAT), better known as inheritance tax, currently stands at 33 per cent on inheritance over €335,000.
Taoiseach Simon Harris said recently that “unfairness” and “anomalies” relating to inheritance tax were issues that deserve to be considered in advance of the budget while Tánaiste Micheál Martin described it as “punitive”.
The recent Tax Strategy Group papers published by the Department of Finance set out how raising the parent-to-child threshold of €335,000 to €350,000 would cost just €15 million while raising it to €400,000 would cost €52 million.
On inheritance tax Mr Chambers said: “capital acquisitions tax is a significant imposition on many families and there are specific circumstances that I know have been really difficult for families in recent years, particularly as property prices have risen.”
The VAT rate on gas and electricity bills was reduced from 13.5 per cent to 9 per cent in May 2022 as part of Government efforts to help households with the cost of living. The reduced rate is due to expire on October 31st.
Asked about the possibility of the lower rate being extended Mr Chamber said: “I fully understand that for many families the cost-of-living is still a central issue”.
He added that the reduced VAT rate “will be considered in the context of Budget 2025, particularly during the winter period and how we can continue to support families during that time.”
Mr Chambers this week signed the commencement order to officially establish the Future Ireland Fund and Infrastructure, Climate and Nature Fund.
The Future Ireland Fund, which has potential to grow to around €100bn by 2040 is designed to help with future public spending pressures surrounding an ageing population, climate and digitalisation.
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