Tánaiste Leo Varadkar has said he does not envisage a mini-budget being implemented next year.
Speaking on RTÉ’s Morning Ireland, Mr Varadkar said Budget 2023 is being front-loaded with most of the one-off payments before Christmas, while permanent increases in payments, pensions and welfare will come into effect in the New Year.
Two of the three energy credits announced yesterday will be paid next year, and while it is possible energy prices will fall by February, it is uncertain, Mr Varadkar said.
He said that is why they must put money in the tank, by putting €2 billion in the “rainy day” fund.
He added that this has been a dynamic response to an unpredictable and rapidly unfolding situation.
Mr Varadkar said there is a projected surplus for this year and next, so there is “some financial firepower” to intervene in the New Year if necessary.
He also said it is not fair that those earning less than €50,000 would pay the highest tax rate, and that widening the tax bands was a big step forward.
He said people can zero in on any aspect of the Budget and claim it is unfair, but said it is “very progressive” if you take it in the round.
Meanwhile, Taoiseach Micheál Martin said that when the various measures were combined, the three lowest income groups got the highest amount.
Speaking on RTÉ’s Nine O’Clock News last night, Mr Martin said the Budget’s social welfare package had “very targeted measures, including for working families”.
In response to calls for a bigger increase to the core social welfare rate, Mr Martin said the €12 rise in the Budget is now built into the system, but the Government had to be sustainable in relation to the country’s welfare and tax systems.
Asked about taxation, he said the State’s system was progressive – “those on higher incomes pay the most”.
He said the budgetary reform of the PAYE system – that the higher 40% rate now only applies to earnings above €40,000 – had been “needed for some time”.
He added: “Close to a third of earners on low incomes do not pay tax.”
Electricity credits for all households totalling €600 and a double Child Benefit payment for November were among the measures announced in Budget 2023 yesterday.
The Budget measures also included a €12 increase to core social welfare payments, the price of diesel and petrol is to remain static and the entry point for paying the higher 40% income tax rate is to increase by €3,200 to €40,000 a year.
All third-level students will see a once-off reduction of €1,000 in their college fees this year, and there will also be a once-off double monthly payment for those in receipt of a SUSI grant.
A new tax credit for renters, a tax on vacant homes, free books for primary school children and a extension of the GP visit card scheme were also among the measures.
Minister for Finance Paschal Donohoe said his department had updated its forecasts to headline inflation of 8.5% for 2022, and just over 7% for 2023.
There was a mixed reaction from the opposition on different aspects of the Budget, with Sinn Féin welcoming the inclusion of measures which it had been calling for.
But the party said the Government should have done more to give certainty to those who are struggling.
Sinn Féín’s finance spokesperson Pearse Doherty accused the Government of abandoning the most vulnerable to “wither on the vine” over the past year, and of merely offering more of the same in the Budget.
Irish Fiscal Advisory Council welcomes ‘sensible’ Budget
The Irish Fiscal Advisory Council has said that Budget 2023 was “sensible”.
Speaking on RTÉ’s Morning Ireland, the Chairman of the Irish Fiscal Advisory Council Sebastian Barnes has said that the decisions made in Budget 2023 are welcomed.
“The Government had a really difficult job in this Budget and it’s had to strike a very difficult balance between helping people and helping the economy, but at the same time not putting too much money into the economy that would have contributed to higher inflation,” he said.
“And so, what they’ve done is they’ve pretty much stuck to their plans they set out in July and that’s pretty much consistent again with the fiscal rules they set out last year. And we think that balance struck is about right and so, so that’s why we welcome this budget in those terms,” he added.
Mr Barnes said the Government has managed to direct resources to those who need it most and more money is being targeted towards those people.
He said this “does strike a much better balance between helping people and not contributing too much to inflationary pressures.”
Looking at the overall package, he said about half of it is targeted but there is a significant part that is not, including electricity credit.
However, he said, it does strike a better balance and it is better targeted than previous policies.
Mr Barnes said there is still a concern about the reliance on Corporation Tax, but the Government has committed to paying “quite large amounts of money into the National Reserve Fund, the kind of rainy day fund, which will help us to avoid increasing our exposure to corporation tax”.
He said using that money in the short-term is OK to pay for emergency measures and if we did not have that money we would have to borrow it.
“So, though the long-term concern remains, using that money in the short term is a reasonable thing because of inflation,” he added.
Mr Barnes also said there will be more pressure on spending in the public sector due to increasing wages.
But it will be “a little bit of a sort of mild squeeze on the public services” and the Government also has to see if there are ways of making savings of increasing productivity to offset that.