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Finance Minister Michael McGrath and Public Expenditure Minister Paschal Donohoe unveiled billions of euro in tax cuts and spending that targets working families as the European and local elections loom.
Despite warnings from economists and think-tanks, the Government went ahead with an expansive Budget that introduced significant welfare increases. It was coupled with a €2.3bn cost-of-living package involving a raft of bonus payments to those in receipt of state benefits.
This also included three instalments of electricity credits worth €150 each to every household in the country.
However, the Government came under fire from the opposition, who accused them of prioritising landlords over renters through the introduction of a €270m tax relief for those who have rental properties.
In his first Budget speech as Finance Minister, Mr McGrath announced a €1.3bn package aimed at reducing “the burden of tax in real terms” and attracting “inward investment”.
The tax cuts mean a married couple with two children and a single income of €65,000 will be €1,067 better off in the new year. They will also get a double payment of Child Benefit worth €560 and get €450-worth of electricity credits.
Additionally, they could be in line for mortgage interest relief worth up to €1,250. This would come under a new scheme aimed at easing the burden of a wave of interest-rate hikes.
Families will also benefit from a free schoolbooks scheme for all secondary school pupils up to third year.
This follows a free schoolbooks scheme for primary school students, which was introduced this year.
There are also reductions in third-level education fees along with increases in grants for students.
Free school dinners will also be rolled out in all primary schools in another measure to help working families.
Taoiseach Leo Varadkar said the goal of his second tenure in office was to reduce child poverty. The Budget included several measures in the tax and expenditure side aimed at tackling the issue.
This included increasing tax credits for people caring for sick children along with a range of welfare increases and bonuses for parents in low-income households.
Fianna Fáil and Fine Gael lost big in the last general election, forcing them into coalition together with the Green Party. But with a view to next summer’s elections, all three claimed to have put their stamp on the Budget.
Fine Gael pointed to the tax package and welfare hikes, along with increases in the justice budget for gardaí and barristers. Fine Gael also secured significant funding for businesses, including a €250m fund to help with “challenges associated with cost-of-living pressures”, according to Mr Donohoe.
Several tax breaks for businesses were enhanced, including a major tax cut for the film industry and investors in start-up companies.
Meanwhile, a senior Fianna Fáil source said it was important to the party that it was a “fair and progressive Budget that targeted those who needed it most”.
“For example, it was important to Fianna Fáil that low to middle earners proportionally gained the most,” the source added. “Someone on the minimum wage has €2,300 more a year in take-home pay.”
Fianna Fáil also pointed to the Future Ireland Fund, announced by Mr McGrath, that could reach as much as €100bn by 2035. The party source said the fund would be needed to keep up with demographic demands on healthcare and pensions, which will soon cost around €8bn extra every year.
Fianna Fáil backbenchers who pushed for the extension of the free schoolbooks scheme took this as a major victory.
The Green Party’s big win was the €3bn Climate and Nature Fund, which will be used to finance infrastructure aimed at reducing carbon emissions.
Eamon Ryan’s party also secured an increase in the age limit for half-price travel on public transport, from 23 to 25 years old.
There was backlash for Mr McGrath from Sinn Féin, the Labour Party and Social Democrats over the introduction of a significant tax break for landlords.
It will allow them to apply the lower 20pc rate of tax to between €3,000 and €5,000 of their rental income in the coming years as long as they remain in the market. Meanwhile, renters’ tax credits increased from €500 to €750.
Sinn Féin’s finance spokesperson Pearse Doherty said the country “needed a Budget for renters, [but] instead we got a Budget for landlords”. Mr Doherty said the tax break for landlords was double the amount renters were getting.
“This sop to landlords will go down as one of the stupidest tax reliefs ever to be provided by a Minister for Finance in recent times. It is shameful what he is doing with public money in this regard,” Mr Doherty said.
Labour’s finance spokesperson, Ged Nash, criticised the landlord tax break as “nonsensical”. He described it as a “reeling in the years” Budget because it was a “lazy rerun of all that was wrong with Budget 2023”.
“This is a Budget that, again, will be found to be regressive, once lump-sum payments melt away like snow on a ditch,” Mr Nash said. “Like the Late Late Show, we have changed the faces, but the formula is the same no matter who is fronting the gig.”
Social Democrats finance spokesperson Róisín Shortall also criticised the Budget for lacking ambition and failing to adequately invest in public services and address child poverty.
The State’s fiscal watchdog also warned that Budget 2024 will keep inflation “higher for longer” and that the Government’s spending and tax plans are “a serious cause for concern”.
In comments posted on social media site X, the Irish Fiscal Advisory Council said the Government’s bigger-than-expected €14bn budget package “repeats past mistakes” and will make its future plans “less credible”.
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