What you need to know - Donohoe announces "broadly balanced" Budget 2018

Budget 2018 has made money available to recruit more nurses, doctors, teachers and gardaí

The Minister for Finance has announced his spending plans for 2018 – with a number of measures aimed at tackling the housing crisis and improving front-line services.

Speaking in Leinster House this afternoon, Minister Paschal Donohoe said budget 2018 builds on “progress that would have looked impossible only a few short years ago."

The majority of additional funds available to the government has next year will be taken up by the restoration of public service pay – however there will be money available to recruit more nurses, doctors, teachers and gardaí.

There will also be an increase in take-home pay for workers and higher payments for those on social welfare.

Minister Donohoe noted that unemployment is now at its lowest since 2008 – adding that the country is forecast to reach “full” employment by next year.

He said the budget would “broadly balance our books in structural terms” – noting the threats to the economy posed by Brexit and the changing political situation globally.

He said the government would establish a Rainy Day Fund in order to protect against these threats – with the exchequer set to pay €500m into the fund every year from 2019.

Tax increases

The announcement included tax increases on tobacco and stamp duty – alongside the introduction of the new sugar tax from April 2018.

Cigarettes are set to cost an extra 50C per packet – with a typical pack now costing around €12.

The level of stamp duty on commercial property transactions will rise from 2% to 6% with effect from midnight tonight.

The government hopes to introduce the sugar tax at the same time as it is introduced in the UK – and at the same level. The move will see the price of fizzy drinks rising by between 20c and 30c.

There was no change in the price of petrol or alcohol.

Spending

A spend of over €10bn on education will deliver almost 1,300 be teaching posts – reducing the pupil to teacher ratio to 26:1.

An increase of €658m in health spending will see the Department of Health’s budget rise to €15.3bn – and allow for the recruitment of an additional 1,800 staff across the acute, mental health, disability, primary and community care sectors.

An additional 800 gardaí will be recruited – with 500 civilians also set to join the force.

Housing

The Minister insisted housing remains a priority for the government and introduced a range of measures aimed at tackling the crisis.

An extra €1.83bn is to be made available – with 3,800 new social homes to be constructed in 2018.

An additional €500m is to be made available to the direct building programme – with 3,000 additional new social houses due by 2021.

€750m is to be made available for commercial investment in housing finance through a new entity entitled Home Building Finance Ireland (HBFI).

The Housing Assistance Payment (HAP) scheme is to be increased by €149m - supporting an additional 17,000 households next year.

Meanwhile, funding for homeless services is to be increased by €18m to over €116m.

The planned vacant site levy for 2019 will rise from 3% after one year to 7% ever year thereafter.

The main measures announced in Budget 2018 are:

  • Establishment of Rainy Day Fund – Minimum of €1.5bn to be lodged into the fund beginning in 2019
  • €1.83bn for housing – with 3,800 new social homes to be built in 2018
  • Housing Assistance Payment Scheme provided with an extra €149m to support an additional 17,000 households
  • Funding for homeless services increased to over €116m
  • Additional €500m for direct building programme – with 3,000 additional new social houses by 2021
  • €750m to be made available for commercial investment in housing finance through new entity entitled Home Building Finance Ireland (HBFI)
  • Commercial stamp duty to rise from 2% to 6% from midnight
  • Vacant site levy to rise from 3% after one year to 7% ever year thereafter
  • Funding for Department of Health increasing by €685m to €15.3bn. The funding will allow for the recruitment of 1,800 additional front-line staff across the health service
  • Reduction in prescription charges for all medical card holders under 70 - from €2.50 to €2 per item.
  • Mortgage interest relief to be phased out – affecting up to 300,000 homeowners. It will be lowered 25% in 2018 – saving the State €50m – and by the same amount for the two following years
  • Excise duty on a pack of cigarettes to rise by 50c
  • Introduction of sugar tax from 2018 with increase of between 20c and 30c in price of fizzy drinks.
  • Funding for recruitment of an additional 1300 extra teaching posts in schools for 2018 – reducing primary pupil teacher ratio to 26:1
  • 1000 extra Special Needs Assistants to be recruited by Sept 2018 - bringing total to 15,000
  • An additional 800 gardaí will be recruited in 2018 – with 500 civilians also set to join the force
  • A Brexit Loan Scheme is to be introduced -with €300m to be made available at competitive rates
  • No change to VAT rate on tourism & services sector
  • €13 million increase in the Overseas Development Aid budget.
  • Tusla to receive an extra €40m in funding for child protection – bringing total to €754m
  • Increase of €5 per week in all weekly social welfare payments – beginning from last week of March 2018
  • Christmas bonus payment of 85% to be paid to all social welfare recipients in 2017
  • Point of entry rate for higher income tax band raised from €33,800 to €34,550
  • 2.5% rate of USC lowered to 2% with ceiling for the new rate raised from €18,772 to €19,372, thus ensuring minimum wage earners are not included
  • 5% USC rate reduced to 4.75%
  • Earned income credit raised by €200 to €1150 – benefitting 147,000 self employed workers
  • Home Carer Credit increased by €100 in 2018 to €1200 a year