Government Announces €17.7 Billion Budget

It's the largest budget in the history of the state, to deal with Covid and Brexit

Finance Minister Paschal Donohoe has unveiled a 17.7 billion euro budget package in the Dail.

There will be a 3.4 billion euro recovery fund aimed at increasing employment.  The fund will be targeted to boost domestic demand. 

As part of the stimulus package the VAT rate for hospitality will be reduced to 9% from November 1st.

The Temporary Wage Subsidy Scheme or a similar scheme will remain in place to the end of 2021

Carbon tax will increase by 7.50 a tonne from midnight but there will be no broad changes to tax credits or tax bands.

The Minister has announced some changes to Vehicle registration tax aimed at encouraging people to buy low emission cars.

Cigarettes are to go up by 50 cent - bringing the average cost of a packet of 20 to fourteen euro. 

Minister Paschal Donohoe said the budget is framed with both Covid and Brexit in mind:

Drivers will pay an average of two euro more to fill their car with petrol or diesel from tomorrow due to the carbon tax hike, according to the Society of the Irish Motor Industry.

Brian Cooke, Director General of SIMI, says drivers will be paying more for petrol and diesel from midnight:

Health:

Ireland has signed up to EU advance purchase agreements for potential COVID vaccines. Minister McGrath also outlined there will be an extra four billion euro for the health service.

An extra 1,146 actue beds will be made available with an increase in critical care beds to 321 by end of year from 255 pre-COVID. Minister McGrath announced the extra beds during his budget speech:

1,250 community beds are coming in 2021, which will include 600 new rehabilitation beds. 

€5 million will also be invested in homecare hours.

Another €5 million will be provided for the development of community based dementia supports. 

Funding is also being made available for cancer screening services. 

€50m for new drugs and 25 mill for Healthy Ireland and National Drugs Strategy.

€38m is being allocated for mental health under the Sharing for Vision initiative.

€10 million in this year funding for voluntary hospices 

An extra 20 million for disability services through transforming lives programme.

Housing:

5.2 billion is going to the for Department of Housing - an increase of 773 million from last year. 

€500m is being allocated for capital expenditure on housing to bring 9,500 new social housing units in 2021. 

€65m has been set aside for deep retrofitting of existing social housing. 

There is an expansion of HAP tenancies for 800 more rental accommodation scheme tenancies and 85,000 tenancies will be supported through next year. 

€22m is being allocated for homelessness programmes including additional beds. 

€110m for affordable housing package for affordable and cost rental.

€210m under Rebuilding Ireland Home Loan scheme.

An additional €100m of carbon tax revenue will be put towards energy efficiency of our homes

Public Expenditure Minister Michael McGrath on social housing plans:

Welfare:

Social welfare rates to be maintained in 2021

There will be an increase in the carers support grant by €150 to €1,850 a year.

Children's Benefit up by €5 for over 12s and €2 euro for under 12s.

Fuel allowance will go up by €3.50 a week to €28 and pensioners will also get an increase in the Living Alone allowance of €5 to €19.

Parents Benefit to be extended by a further three weeks. 

Self employed on PUP can take up some freelance work and not lose their benefit. 

The Christmas bonus to be paid to those on PUP and other welfare if they've been on that for 4 months instead of usual 15.

Public Expenditure Minister Michael McGrath announcing the planned pension age increase in Jan 2021 WON'T proceed:

Agriculture:

€179m extra will be provided for Department of Agriculture to fund controls on agri-food exports and imports to/from the UK post Brexit. 

Rural:

There will be a 7% increase in budget for rural affairs including town and village renewal scheme. 

€5m will be proivided for new digital hubs in rural Ireland. 

Gardai:

There are plans to recruit 620 new gardaí and 500 new civilian staff. 

Further ICT for the Gardaí and courts services under 258m for them. 

Forensic Science Lab and redevelopment of Limerick Prison funded 

Education:

The Department of Educationwill have an 8.9bn euro budget with €2bn of that will be put towards children with special education needs. 

900 additional SNAs and 403 additional teachers are being provided.

€270m is being given for Higher Education for 20 building projects. 

There will be 5,000 places for demographic changes arising from calculated grades. 

€50m fund to give all third level full time students €250 .

The SUSI grant for postgraduates will rise by €1,500 to €3,500 and income eligibility threshold has been changed. 

Public Expenditure Minister Michael McGrath on reduction in the pupil teacher ratio by 1 to 25:1 in primary schools by providing more than 300 posts. 

80 million extra for school building programme, ICT and minor works scheme for Dept of Education.

Children:

€120m increase for Dept of Children which includes €61m for Tusla.

638m investment in further years education and childcare in 2021

Sports:

Sport Ireland is being granted €36 with €7 being allocated for large scale sports infrastructure and €2m for major sporting events.

Entertainment sector:

50m for live entertainment supports and arts council funding to increase it to 130m. 

Heritage and the Gaeltacht:

€14m extra will be allocated for the Gaeltacht and Irish language bringing its total to €78 million.

€29m is being provided for heritage sites. 

Tourism:

55m for a tourism business support scheme and 5 million for toruism product development

Enterprise:

€1.1bn will be provided to the Department of Enterprise.

There will be a credit guarantee scheme, LEO supports and developing R&D. 

Apprentices:

10,000 upskilling opportunities and 4,000 new apprentices 

Defence Forces:

€131 million for Defence Forces capital expenditure. 

Broadband:

€132 is being allocated for the National Broadband plan. 

Capital spending:

There will be another €600m in Capital spending and the total capital expenditure will rise over 10 billion for the first time ever. 

Brexit:

340 million of voted expenditure will be spent on Brexit supports in 2021, which includes money for ports and airports and 500 staff for customs

COVID-19:

2.1 billion of COVID funds will be held in contingency. 

Rates:

Public Expendditure Minister Michael McGrath on commercial rates waiver:

Finance Minister Paschal Donohoe on scheme to assist businesses significantly impacted or temporarily closed due to Covid restrictions:

Change to Capital Gains Tax Entrepreneur Relief so that anyone who has owned at least 5% of the shares for continuous three years will qualify for relief.

There are changes to the motor tax regime, rates will be unchanged for those before 2008 but the most pollutant cars will be impacted:

Amending legislation to provide that intangible assets acquired after today will be within the scope of balancing charge rules.

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There will be no change to the 12.5% rate of Corporation tax.

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Stamp duty relief for the transfer of agricultural land to family members will be extended until December 2023.

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A pack of 20 cigarettes increase by 50 cent and there will be a pro-rata increase on other tobacco products.

It will cost €14 now for a pack of cigarettes.

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The Minister outline changes for people from home:

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Changes to VRT based on emissions which is aimed at incentivising people to buy low emission cars

Weaker emissions tests on imports will also be changed to bring them up

Current VRT reliefs for hybrids will be allowed to expire in light of the new rates system

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Carbon tax increases by 7.50 a tonne from midnight and the carbon tax will increase by €7.50 every year out to 2029 and then by €6.50 in 2030 to achieve €100 per tonne. 

Minister Donohoe on increases in carbon tax:

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Stamp Duty scheme which refunds a portion of stamp duty paid on acquisition of non-residential land where it is then developed will be extended until end Dec 2022

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Help to buy scheme extended until end of 2021 at the higher max 30,000 euro rate 

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Extension of the accelerated capital allowances scheme for energy efficient equipment for further three years 

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Section 481 scheme for film will now run until Dec 31st 2023 at its highest rate of 5 per cent 

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Finance minister on breakdown of spending:

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The Knowledge Development Box relief on intellectual property being extended until end Dec 2022.

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VAT for hospitality will be reduced to 9% from November 1st until December 2021 

The Minister also outlined a vat reduction for hospitality sector:

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There will be a new COVID restrictions support scheme to provide targeted support for businesses that have temporarily closed because of the pandemic 

This scheme will operate when level three or higher is in place

The payments will be based on their 2019 weekly turnover

The scheme will be effective from today until March 31st. First payments mid-November 

Finance Minister Paschal Donohoe on the establishment of a Covid recovery fund:

The Finance Minister says they will be using savings to address the current challenges:

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No broad changes to income tax credits or bands.

The ceiling for the second USC rate adjusted up to €20,687.

Weekly threshold for higher rate of employers PRSI will go from €394 to €398.

Self employed income tax credit to rise by €150 to €1,650.

Increase in the Dependent Relative Tax Credit by €70 to €245. 

Finance Minister Paschal Donohoe on some specific income tax changes:

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The Temporary Wage Subsidy Scheme or a similar scheme will be needed out to the end of 2021

Govt to apply to SURE EU fund to support this which could yield 2.5 billion euro.

Minister Paschal Donohoe on Employment Wage Subsidy Scheme:

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Extension of the accelerated capital allowances scheme for energy efficient equipment for further three years.

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Self employed can also benefit from tax warehousing.

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Work to begin on a tax credit for the digital gaming sector from Jan 2022 on.

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Section 481 scheme for film will now run until Dec 31st 2023 at its highest rate of 5 per cent. 

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Finance Minister on breakdown of spending:

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The Knowledge Development Box relief on intellectual property being extended until end December 2022.

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VAT for hospitality will be reduced to 9% from November 1st until December 2021.

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The Temporary Wage Subsidy Scheme or a similar scheme will be needed out to the end of 2021.

The government is to apply to SURE EU fund to support this which could yield €2.5 billion.

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The total budget package will be €17.75 billion - €17 billion in expenditure and €270 million in taxation.

€8.5 billion on public services. including €2.1 billion on contingency funding.

Capital spending to increase by €1.6 billion.

There will be a €3.4 billon recovery fund. This will be aimed at increasing employment.

Finance Minister speaking on the total budget package:

Minister Donohoe on GDP and unemployment projections:

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A deficit of €21.5 billion is to be recorded this year.

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Minister Donohoe says Ireland entered 2020 with a had a surplus of €1.3 billion and a 'rainy day fund' of €1.5 billion.

He says that was a positive:

Watch the #OireachtasTV Live budget 2021 Special from 12.05pm on Twitter, Facebook, online and on the Oireachtas TV channel - click here to view #seeforyourselfhttps://t.co/lEqB3DaKmx https://t.co/EgbabRnecl

— Houses of the Oireachtas (@OireachtasNews) October 13, 2020

Finance Minister Paschal Donohoe on the difficulties ahead of Budget 2021:

Quite the day for the first budget in the Convention Centre. Speeches live on @NewstalkFM from 1pm pic.twitter.com/0MyMIiccXB

— Seán Defoe (@SeanDefoe) October 13, 2020