Cigarettes, sugary drinks and an extra fiver - Donohoe set for first budget speech

The Taoiseach says Budget 2018 will balance the books for the first time in ten years

Cigarettes, sugary drinks and an extra fiver - Donohoe set for first budget speech

The Minister for Finance Paschal Donohoe. IMage: Sam Boal/RollingNews

Updated 11:10

The Taoiseach has insisted this afternoon’s budget announcement could be worth €500 or €600 to the average family. 

The Minister for Finance will announce the Budget 2018 measures in the Dáil this afternoon. 

This morning, Leo Varadkar said we can expect tax cuts, funding for childcare and lower prescription costs. 

On the way into Leinster House this morning, he said the so-called "squeezed middle" deserves something back:

"For an average family with two incomes, you are talking maybe an extra €500 or €600 per year," he said.

"Add to that obviously savings in childcare, savings in medicine costs, maybe a little higher than that.

"So it is modest but it is real and we are also finding additional money for services and additional money for infrastructure."

The announcement had been agreed with Fianna Fáil and the Independent Alliance, and Mr Varadkar said there no surprises in the announcement:

“It is a good budget overall,” he said. “There are no fireworks; no big bonanza but it is another small sustainable step in the right direction for our country.”

“Everything else will be announced by Paschal at 1pm.”

Broadly balanced

Minister Donohoe insisted the Government is not over-spending, adding that the Budget will lay the foundations for a "more resilient and a fairer Ireland":

“All my plans will be revealed at 1pm this afternoon,” he said. “I will be going into Cabinet in a short while to gain approval of my budget.”

“It will be delivering against the objective that I set when I was appointed Minister for Finance, Public Expenditure and Reform.

“Making sure that we have a broadly balanced budget next year.

“Making sure that we sustainably invest in how we can reduce taxation and how we can improve the funding of our public services and then making long term investments in our hospitals, our schools and our public transport.

“They are the foundations for a more resilient and a fairer Ireland – and an Ireland that can respond back to all of the challenges and opportunities that are ahead.”

Main measures expected in Budget 2018:

  • Workers are expected to get an extra €5 a week through cuts to the USC and changes to income tax bands.
  • Social Welfare recipients are also likely to find themselves €5 better off.
  • Minimum wage is to be raised by 30c.
  • There will likely be a rise in the price of cigarettes and sugary drinks.
  • Increases in carbon taxes are also expected.
  • Commercial Property Tax rates are expected to rise to 5%.
  • The Children's Minister says 20,000 more children will be given free childcare.
  • There will be measures to reduce the cost of prescription medicines.
  • Mortgage interest relief is likely to be phased out – affecting up to 300,000 homeowners. The relief is expected to drop incrementally every year until it reaches a low of 25% in 2020.

Confidence and supply

Despite the government's insistence that the budget will "balance the books," critics have voiced concern that the government is over-spending.

Fianna Fáil trade spokesman Darragh O'Brien claimed his party restrained the Finance Minister during budget negotiations:

"We actually have been able to stop the worst of Fine Gael excesses," he said."

"If you look at what they wanted to do in the first budget and what they promised in the run-up to the General Election [it was] was a low-tax economy; it was basically cut taxes all over the place and not invest in services.

"What we have insisted upon was a two-to-one ratio of investment in services versus tax cuts."

Homelessness crisis

The crises in housing and health will be front and centre with campaigners calling for measures that can make a real difference at the coalface.

Among the top priorities for homelessness charity The Peter McVerry Trust are capital building projects, incentives for landlords and keeping families in their rental accommodation.

Today marks World Homelessness Day - with 1,700 people entering homelessness in Ireland in the year since Budget 2017. 

Both Savills Ireland and Construction Industry Federation (CIF) have warned that the proposed increases in Commercial Property Tax could worsen the crisis by making it more expensive for developers to bring properties to market.

Public services

In the run-up to the announcement, the Labour Party urged the government to abandon plans for tax-cuts and instead focus on increased spending.

Party leader Brendan Howlin said the money could instead be used to reduce college fees, cut class sizes in primary and secondary schools, raise childcare workers wages and eliminate waiting lists for home care packages.

This morning, Labour Senator Aodhán Ó Ríordáin said he is concerned that education is being forgotten:

"The obsession of Fianna Fáil and Fine Gael going back to the mistakes of the past of trying to cut taxes while increasing spending," he said.

"We are saying that a very small amount of investment could make a real difference in education - but education is not featuring at all in the pre-budget discussion and that is very disappointing."

In an online video last night, Mr Varadkar said Budget 2018 will allow for more spending on public services – with the appointment of more teachers, nurses and gardaí:

Minister Donohoe promised spending increases - but insisted the mistakes of the past won't be repeated:

“We are going to have increases in spending that are affordable, that are sustainable,” he said.

“We know from the recent past that the big spending increase of tomorrow is the savage cut-back of the year afterwards.

“We don’t want to do that again.

“We want to make sure our increases are affordable and fair to everyone.”

These people in Limerick told us what they want to see tackled in the minister's speech:

Minister Donohoe will begin his speech in the Dáil at 1pm.

Newstalk’s Budget 2018 special is airing from 12pm to 4pm today with Jonathan Healy in the hot seat to run you through what the changes mean for your back pocket.

We’ll have the speech live from Leinster House as well as in-depth analysis, expert reaction and much more.