Budget 2019 has seen a range of modest tax cuts and increases in spending on housing, health and education.
The Minister for Finance Paschal Donohoe announced a €1.5bn package of tax cuts and spending measures in the Dáil this afternoon.
The third and final budget under the confidence-and-supply agreement arguably saw a bigger spend than expected - with the threat of an international downturn and Brexit looming over the economy.
It includes a range of modest tax cuts and increased spending in areas like health, housing and education.
Social welfare increases, alongside changes to USC and income tax thresholds are set to put money back into many people's pockets.
However, the abolition of the special 9% tax rate for bars, cafés and restaurants is likely to see an increase in the price of a night out around the country.
And there it is, Budget 2019 pic.twitter.com/HaHEiqjGVS
— Sean Defoe (@SeanDefoe) October 9, 2018
Announcing the Budget, Minister Donohoe said the economy is "again growing strongly and sustainably" a decade on from the financial crash.
He said the "shared progress that we have made is real" however, with the threat of Brexit and the move towards protectionism internationally, he said the economy continues to face real challenges.
"Brexit is the political, economic and diplomatic challenge of our generation," he said.
"The Government has been clear in our objective, robust in our negotiations and thorough in our planning.
"We will remain at the heart of the EU and open to the world."
He said the Budget would provide "significant additional capital investment to enhance the growth potential of our economy and to improve the quality of life for our people."
He warned however that the possibility of a 'no deal' Brexit had influenced his thinking in putting the package together - with a range of measures introduced with Brexit specifically in mind.
Rainy day fund
Describing the health of the economy, Minister Donohoe noted that unemployment is now at its lowest point in a decade.
However, he said Ireland has historically been disproportionately impacted by changes in the international economy.
Warning that the country must be prepared to deal with unforeseen economic shocks, he confirmed the Government's plans to move forward with the establishment of a rainy day fund.
He said the fund would be set up with €1.5bn from the Strategic Investment Fund and would be supplemented with €500 million from the Exchequer every year from 2019.
Introducing #Budget19 pic.twitter.com/wH0lnaIKRU
— MerrionStreet.ie (@merrionstreet) October 8, 2018
Housing
Minister Donohoe acknowledged that the housing crisis "is not where we want to be" - and admitted that a lot of work is still needed to tackle homelessness and provide permanent and affordable housing for the public.
He said he was allocating a total of €2.3bn to the State's housing programme.
He said this would include the allocation of €1.25bn to deliver 10,000 new social homes in 2019.
He also announced an extra €121m for the Housing Assistance Payment to provide for over 16,000 additional tenancies next year.
As a direct response to the homelessness crisis, he said he was allocating an extra €60m in capital funding to fund emergency accommodation.
He also announced an increase of €30m for homelessness services, bringing the total for 2019 to €146m.
It comes after Fianna Fáil said it would use its influence over the Government to ensure the budget was a 'housing budget.'
This afternoon the party's finance spokesperson Michael McGrath said it secured a €300m affordable housing package that will provide thousands of homes for eligible first-time buyers over the next four years.
He said the homes would be sold at up to €50,000 below the cost of building the home subject to a maximum discount of 40% of the market value.
Health
The Minister said he was increasing spending on health by €1.2bn.
It includes a change in the weekly income threshold for GP visit cards - with some 100,000 more people now eligible for free GP care.
Meanwhile prescription charges for medical card holders have dropped by 50c to €1,50 per item.
He also announced a €10 reduction in the Drug Payment Scheme for prescriptions - bringing the maximum spend down to €124 a month.
The budget also includes an increase of €20m in funding for the National Treatment Purchase Fund in a bid to reduce hospital waiting lists.
There is also an increase in funding for mental health and a €150m increase for disability services.
Social Welfare
Minister Donohoe also announced an increase of €5 in all social welfare payments from next year – with the Christmas bonus restored to a double payment for the first time since it was scrapped in 2009.
The bonus was returned at a rate of 25% in 2014 and increased to 75% in 2015 before a further increase to 85% in 2016 and 2017.
It was paid to 1.2 million people this year, and it is expected this year’s increase to 100% will cost the Exchequer €257m.
The self-employed will also gain access to social welfare payments from next year.
Childcare
Parental leave has been extended by two weeks – however, the extension will not be introduced until closer to the end of next year in a bid to reduce the impact on the taxpayer over the coming months.
There is also an extra €90m for affordable childcare.
It means families with a net income of €60,000 will be eligible for the Affordable Childcare Scheme - a rise from the current threshold of €47,500.
Changes to the thresholds will start in the latter part of next year and will bring around 16,000 more children inside the threshold.
Minister Donohoe also announced a modest increase in the Qualified Child Payment allowance as well as a €25 increase in back to school clothing and footwear allowances.
TAX
The threshold at which people hit the highest rate of income tax has risen by €750 – meaning you will now have to be earning €35,300 to find yourself taxed at the highest rate.
Meanwhile, the rate of Universal Social Charge paid by people earning between €19,300 and €70,000 has been cut by 0.25% to 4.5%.
Those two changes will be worth around €5 a week to the average worker.
The minimum wage will be increased to €9.80 an hour from January, as recommended by the Low Wage Commission
Meanwhile the band at which people hit the lower 2% USC rate has been widened by €500 - to account for the increase in the minimum wage.
The home carer's tax credit is also increasing by €300.
Meanwhile, the tax-free threshold for inheritances has increased by €10,000.
Hospitality
The special 9% tax rate brought in to boost the hospitality sector during the economic crisis has been abolished.
Newspapers are exempt from the raise and the rate for electronic publications will now be reduced to 9% to match.
The Government has justified the hospitality increase based on the apparent resurgence in the sector – notably the high prices currently charged at many hotels.
It had been hoped that restaurants, bars and other entertainment venues would be exempt from the rise, however Minister Donohoe opted to bring in the increase almost across the board.
The special rate has cost the Exchequer around €2.7bn since its introduction in 2011, however the increase has caused fury across the sector and businesses are almost certain to pass on the increase to customers.
Minister Donohoe said the abolition of the special rate would raise an extra €466 million, and claimed the reduced rate had "done its job."
He said the extra money will allow for extra spending in key areas such as housing and education
Meanwhile the cost of having a drink at home is also set to increase with the introduction minimum unit pricing on alcohol as art of the Public Alcohol Safety Bill which finally passed in the Dáil last week.
The betting tax has also been increased from 1% to 2%.
Meanwhile the betting duty on the commission earned by bookies or exchanges will increase from 15% to 25%.
Cigarettes and alcohol
Smokers are being targeted once again with a 50c rise in the price of a pack.
There is no increase in the tax on alcohol – however the price of a pint may rise all the same as a result of the increase in the VAT rate for bars and restaurants.
Tourism
In an effort to alleviate the impact on tourism, the minister said he was investing €35m in the sector.
That will include €4.5m for regional initiatives like Wild Atlantic Way and Hidden Heartlands, and €10m for development of greenways.
Education
Minister Donohoe said €10.8 billion has been allocated to the Department of Education for next - a 6.7% increase.
He said the increase would see almost 1,300 additional posts in schools in 2019.
It also allows for a 5% increase in the standard capitation rate for every student in every school.
Meanwhile, an extra 950 Special Needs Assistants are to be recruited next year.
He said an extra €196 million in capital spending in education would help to create 18,000 new permanent school places while allowing for upgrades to school ICT equipment and a €150m investment in higher education.
Enterprise
With the prospect of Brexit looming on the horizon, the Government has allocated €110 million for Brexit measures across a number of Departments.
The funds will be used for essential customs requirements and a range of other targeted measures.
The Department of Business in particular is to receive €950m to support SMEs in the face of Brexit.
He also announced a Future Growth Loan Scheme for SMEs and the agriculture and food sector worth up to €300m.
Corporation tax
Minister Donohoe said Ireland's corporation tax will not be changing from its current rate of 12.5%.
However, he did announce a new 'Exit Tax' on any unrealised gains arising from when a company moves assets offshore so they leave the Irish taxation system.
He said the new Anti-Tax Avoidance Directive (ATAD) would come into force from midnight tonight.
Transport
An extra €1.26bn has been allocated to the Department of Transport - with €286 made available for investment in new transport infrastructure next year.
Minister Donohoe said some of this money would be earmarked for the N4 Collooney to Castlebaldwin and the Dunkettle Interchange.
He said it would also be used to complete the runway overlay project at Knock Airport and for the design, planning and implementation of cycling and walking projects around the country.
It also includes an extra €40 million for pavement repair and rehabilitation works on regional and local roads.
Climate
Minister Donohoe said he was allocating €103.5m for grants and premium rates for planting forests.
He said the Government was introducing a Beef Environmental Efficiency Pilot (BEEP) in an effort to improve the carbon efficiency of beef production.
He also allocated €70m each to the Targeted Agriculture Modernisation Scheme and the the Environment and Waste Management Programme.
He also extended the VRT relief for hybrid vehicles until the end of 2019 - and introduced a 1% surcharge for diesel vehicles.
He said he was committing Ireland to the Paris Collaborative on Green Budgeting and pledged an increased focus on and integration of climate measures in future budgets.
