Cuts in VAT and increased public spending in a range of areas left no room in Tuesday’s budget for a repeat of recent giveaways to middle-income workers.
Many people who benefited by €2,000 to €3,000 in last year’s budget from tax changes and “one-off” cash giveaways will see no benefit from the package of measures announced by Minister for Finance Paschal Donohoe and Minister for Public Expenditure Jack Chambers on Tuesday.
As expected, the budget ministers unveiled a series of cuts in VAT for the hospitality industry, on energy and on new apartment sales. There was increased spending on disability, social protection, health and other areas throughout Government. Additional tax measures designed to promote home building were also announced.
Overall spending will increase substantially, by €9.4 billion, bringing total voted spending next year to €117 billion, of which €19 billion will be spent on infrastructure projects.
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There will be an additional €2 billion for social welfare payments and an additional €1.2 billion for health, while public sector pay increases will cost €1.2 billion next year. An extra 13,500 public servants will be employed, bringing the total number of public employees to 440,000.
The extra spending will be paid for by growing tax revenues, particularly in corporation tax and income tax. The Government will run a €5 billion surplus and continue to put money aside into its long-term savings funds. By the end of next year, Mr Donohoe said, the value of the funds will have grown to €24 billion.
Stressing that this is the first of five budgets the Coalition will introduce, Mr Donohoe placed the emphasis on prudence, saying: “Every budget is about choices. No budget can do everything, nor should it attempt to.”
He said it is “a sensible budget that will safeguard our future”.
Mr Chambers said the budget “lays the foundations for our future”.
“It shifts the focus from isolated departmental or sectoral needs to our country’s broader strategic priorities, considering the trade-offs and choices we’ll face along the way,” he told the Dáil.
Opposition spokespeople rubbished the package, however, repeatedly questioning what had become of various election promises and attacking the Government for ignoring the needs of ordinary people.
“The Government’s big message in this budget, and people have heard it loud and clear, is that people are on their own,” said Sinn Féin finance spokesman Pearse Doherty.
“There is no help with the cost-of-living crisis, no action to end the rip-off, no break on taxes, a blueprint for the continuation of the never-ending crises in our housing and health, and election promises torn up, one after the other, and thrown in the bin.”
Labour Party finance spokesman Ged Nash described the package as a “budget for burger barons and big builders”.
Representatives of rank-and-file gardaí, teachers and nurses all sharply criticised the offering, saying it fails to address the need for further recruitment in their respective areas. Head of the Irish Nurses and Midwives Organisations Phil Ní Sheaghdha said that for the price of the VAT cut for hospitality, the Government could have hired 11,400 more nurses.
SIPTU general secretary Joe Cunningham said the Government’s “tax-cutting budget delivers for employers at the expense of workers’ living standards”.
He said: “While business owners are receiving VAT and corporation tax cuts, workers’ wages will receive no protection from inflation. With the loss of electricity credits, many workers will receive no real wage increase and even a real wage cut from Budget 2026. It amounts to workers subsidising business tax cuts.”
Other criticisms were more measured. Family Carers Ireland said the budget “includes some positive measures but offers little comfort to families already under financial strain”.
But the Disability Federation of Ireland said the removal of the “one-off” supports means disabled people will see their incomes fall.
While the group said it welcomes the €600 million increase for disability services, “the budget overall represents a devastating setback for disabled people unable to work”.
Business group Ibec welcomed the budget’s focus on “driving innovation, protecting and creating jobs, and increasing investment in critical infrastructure”. It said the measures will support business growth and the viability of housing development.
The State’s largest home builder, meanwhile, said the VAT cut on apartments should be the final piece needed to make “a majority” of planned schemes viable.
Michael Stanley, chief executive of Cairn Homes, said a suite of budget measures announced on Tuesday, together with new apartment construction guidelines unveiled during the summer, are probably worth about €70,000 to €80,000 per apartment.
