OVERVIEW: All new measures announced in Budget 2023

The Minister for Finance has announced the details of Budget 2023. 

Minister Paschal Donohoe spoke to the Dáil at lunchtime today, detailing the key measures and changes to the highly anticipated Budget, which was touted as a "cost of living" document "focused on helping individuals, families and businesses with rising prices". 

The Minister credited Ireland's strong financial position on the "immense work" of the Irish people and the labour market recovery from the Covid-19 pandemic. 

He said "Budget 2023 helps with the challenges of today but also ensures we have sufficient reserve for what the future may bring. We must also be aware of danger by making inflation worse by decisions we take." 

The minister cited recent challenges to the health of Ireland's economy including the Covid-19 pandemic, Brexit and the ongoing war in Ukraine. 

He said, "While the Ukraine war holds the most immediate threat to our economy, we remain vigilant of other risks on the horizon, noticeably Brexit could bring further challenges. 

"The government understands and I understand the worries which small business owners, farmers, pensioners, those who worked so hard to get by feel, and that is why the government will help and by helping our country we will overcome this challenge. We can do this because our economy has strong foundations." 

The minister confirmed over 2 and a half million people are currently in employment across Ireland, a figure he called the "highest on record", with unemployment figures as of August marked at 3.3%. 

He said, "Looking ahead, while we do expect employment growth to slow in line with changes for outlook for domestic demand, we also expect the unemployment rate to remain at relatively low levels. 

"This is why our public finances matter, we recovered strongly from the events of the pandemic, much due to the careful management of this government in undertaking appropriate responses to the unique challenges that our country faced." 

The minister revealed a general government surplus of €1billion has been achieved compared to last year's deficit of €7billion. 

He said, "It is essential we use the surplus wisely, we should not spend everything today. This will ensure we are ready for tomorrow. 

"We simply do not know what we could face in the future [but] when we face these challenges I believe we will prevail. The crucial economic foundation of this is managing debt safely. It matters." 

According to Minister Donohoe, the government is aware of their responsibility to "strike a balance" between helping with the cost-of-living pressures while not making them worse by "adding fuel to inflationary fire". 

He confirmed the package of once-off measures to help families and businesses deal with the rising cost-of-living crisis amounts to €4.1billion, accompanied by budgetary measures for 2023 worth €6.9billion, totalling €11billion. 

The minister called the figures "significant". 

He confirmed the current excise reduction of 21c per litre for petrol and 16c for diesel will be extended until February 28 2023. 

The standard rate cut-off point for incomes taxed at the 40% rate has also changed, with today's announcement confirming an increase of €3,200. 

A further increase in the second USC band of 2% from €21,295 to €22,920 has also been announced, in line with the 80c per hour increase in minimum wage. 

The increase ensures full time workers on minimum wage will remain outside the top rates of USC while there is a modest benefit to workers above that amount. 

The minister announced an analysis into an intermediate rate of income tax will commence immediately which, if opted for by government, would require considerable change to systems if a policy decision is made. 

Minister Donohoe continued: "A central challenge over the next number of years is too many people can't afford to buy their own home or are paying too much of their income on rent. Too many have no home at all, [and] hundreds of thousand of homes are required over the next decade across all sectors. 

"Some 25,000 new homes were built in the last 12 months, 28,000 have begun construction, and further 44,000 have been granted planning permission. Despite this progress, it is clear government can do more and will do more." 

He confirmed an independent review into the Help-to-Buy scheme, due to be published today, was commissioned by the government, with a number of recommendations due to come under consideration. 

He also announced tax payers paying rent on their principal private residence will receive a new tax credit valued at €500. 

The minister emphasised the importance of maximising the use of homes which are already built, with the vacant homes tax expected to increase the supply of homes for rent or purchase to meet demands. 

The tax will apply to residential properties occupied for less than 30 days in a 12 month period, with a number of exceptions lined up to ensure owners are not unfairly charged when a property is vacant for a genuine reason. 

It will operate on a self-assessment basis and administered by the Revenue Commissioner. 

The tax charged will be equal to three times the property's existing basic Local Property Tax rate. 

Meanwhile, small and medium sized enterprises (SMEs) were also highlighted by the minister, who announced a range of supports to ease the impact of the current energy crisis. 

This includes the introduction of a temporary business energy support scheme to assist businesses with energy costs over the winter months; the scheme is open to tax-compliant SME businesses which experienced a significant increase in natural gas and electricity costs. 

Businesses will be required to register for the scheme and to make claims in required time limits. It will operate by comparing the average price for energy in the relevant period in 2022 with the average unit price in 2021. 

If the increase in the average unit price is more than 50% then the threshold is passed and the business will be eligible for support under the scheme. Once criteria are met, support will be calculated on the basis of the bill amount. 

A monthly cap of €10,000 per trade will apply. 

A small business exemption will allow employers to provide limited tax-free cash benefits to workers from between €500 and €1000, with two vouchers permitted in a single year.  

Up to 50c excise relief will be offered to independent producers of cider under a commitment to support the night-time economy, with the Minister also announcing a halving of the cost of applying for special exemption orders for late night venues. 

Other measures to support the night-time economy are expected to be revealed within weeks. 

The minister confirmed a 9% VAT rate already in place to support tourist and hospitality sectors will continue until February 28 2023, while a number of VAT rates have been reduced to 0%. 

This includes VAT on life-saving defibrillators, newspapers, HRT and nicotine replacement therapies, and a small number of period products. 

Excise duty on a packet of 20 cigarettes has also increased by 20c in order to support public health policy, as well as a pro rata increase on other tobacco products. 

Funding for one thousand new Gardaí members has been allocated, as well as over 300 extra civilian Gardaí. 

Minister Donohoe identified "clear, major challenges" for Ireland's future, including an ageing population, digital transition and climate change. 

He said, "We know challenges largely unforeseen happen more often and have a big impact, therefore it's imperative we prepare public finances appropriately. 

"We are directing €2billion into the National Reserve Fund and €4billion in 2023. These contributions affectively mean we will have banked a large share of corporate tax revenues [sic] to supply our state with additional firepower to respond to challenges of the future." 

Minister Donohoe concluded his announcements on an optimistic note, stating, "Despite the many challenges facing our country, the government is confident we will be able to continue to support individuals, families and businesses. This confidence is based on the fact we approach this test from a position of strength. 

"We know we have many [sic], know how quickly it can develop, know we need to do more, build more homes, continue to improve public services and respond with courage and with resolution to our defining challenge of climate change, but we can and we will." 

He praised the "hard work of the Irish people who helped get us ready for today so soon after confronting a pandemic, for the people who may be looking at the Budget today for confidence, for help". 

He said, "We can and should be confident about our future, we know our citizens need help, we know employers need help. This Budget aims to give this help." 

Minister Michael McGrath also revealed several measures of Budget 2023, and acknowledged the difficulties facing Irish people all over the country. 

Speaking after the conclusion of Minister Donohoe's speech, he said, "People are finding it very difficult to make ends meet, [they face] difficult choices in daily lives, household bills rise seemingly by the day. Many are generally worried about what's to come." 

Minister @Paschald has today announced an extension of the temporary reduction in the rate of VAT from 13.5% to 9% on the supply of gas and electricity.

These reductions will remain in place until 28th February 2023. #Budget2023 pic.twitter.com/Gl69D907z5

— Department of Finance (@IRLDeptFinance) September 27, 2022

He revealed every household is to receive a €600 electricity credit spread out over two to three bills, with the first payment available before Christmas. 

An extension of the temporary reduction in the rate of VAT from 13.5% to 9% on the supply of gas and electricity will remain in place until February 28 2023. 

The minister also announced further assistance for the most vulnerable, with a €400 lump sum to recipients of fuel allowance. 

Those in receipt of the Working Family Payment will receive an additional lump sum payment of €500 in November, with double child benefit payments to all qualified households also announced. 

A once-off payment of €200 has been allocated to those in receipt of the Living Alone Allowance, which is to be paid before Christmas, with a once-off payment of €500 available to those receiving Disability Allowance. 

A range of measures for students were also revealed, with a once-off reduction in the student contribution of €1000, as well as a once-off double monthly payment to those in receipt of the SUSI maintenance grant. There will also be an increase of €1000 to the postgraduate fee contribution grant, and the public transport fare reduction will be extended until the end of 2023. 

One hundred million euro will be allocated this year to ensure schools are supported in dealing with energy pressures and to support school transport providers, with €10million for higher and further education, €60million to local authorities, and €110million to health-funded bodies including nursing homes and hospices. 

Childcare costs will also be tackled as part of measures announced in Budget 2023, with €59million ringfenced to provide extra hours and enhanced capacity in the sector. 

Next year's childcare budget will reach €1billion, reportedly five years ahead of the government's target. 

Other measures announced today include €200million for homelessness services, with €61million to promote regeneration in rural areas, €138million for disability services, €150million for older persons and €58million for mental health. 

Publications with all details on Budget 2023 are available here.