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Ireland now entering ‘new phase’ in pandemic recovery

·6-min read
Minister for Finance Paschal Donohoe (right) and Minister for Public Expenditure and Reform Michael McGrath arrive at Government Buildings to unveil the Government’s Budget for 2022 (Damien Eagers/PA) (PA Wire)
Minister for Finance Paschal Donohoe (right) and Minister for Public Expenditure and Reform Michael McGrath arrive at Government Buildings to unveil the Government’s Budget for 2022 (Damien Eagers/PA) (PA Wire)

Ireland is now entering “a new phase” in which the country will recover from the pandemic, restore public services and repair public finances, the Minister for Finance has said.

Unveiling the Budget for 2022, a package that amounts to 4.7 billion euro, Paschal Donohoe said the Government is “conscious” of the cost-of-living pressures on the public and businesses.

Addressing the Dail Mr Donohoe noted that the last time he announced the Budget in the chamber was two years ago before the Covid-19 pandemic.

“None of us could have foreseen that the worst global pandemic in a century awaited,” he said.

“We knew well about the risks associated with Brexit and had prepared for it, but we could not have predicted the devastation Covid-19 would leave in its wake.

“Both events have demonstrated our need to prepare for the worst while striving for the best.

“Many lives were lost and many livelihoods suddenly were ruined.

“The pandemic was an unprecedented experience for all of us and unfortunately life-changing for so many.

“But it also brought out the very best in Irish society and the bravery, resilience and fortitude of our frontline workers and those working in the community and social care sectors.”

Mr Donohoe said that, in framing the budget, the government has been conscious of the cost-of-living pressures on the public and businesses.

It was confirmed that welfare payments will increase by 5 euro, while the weekly state pension will also rise by 5 euro.

Minister for Public Expenditure Michael McGrath said that the living alone allowance will increase by three euro, while the fuel allowance will rise by five euro.

“I am pleased to announce a 100% Christmas bonus for 2021 which will assist many families with outgoings over the festive period,” the Fianna Fail minister added.

It was also confirmed that young people, aged between 19 and 23, can use public transport with a 50% discount on fares.

“In order to promote modal shift in the transport sector, I am providing 25 million euro for the introduction of a Youth Travel Card,” Mr McGrath said.

“This card will be available to any person between the ages of 19 and 23 and will allow them to avail of a 50% discount on fares across the transport network.”

Mr McGrath said that more capacity is needed in the childcare sector and more flexibility for working parents.

He said Budget 2022 marks a “turning point” in the state’s approach to the early years and childcare sector.

“A new funding stream for up to 4,700 early years and childcare providers will be put in place from September 2022 onwards, at an estimated cost of 69 million next year, to support improvements in the quality of childcare provision.

“This additional funding will improve conditions for workers. The funding the Government is allocating will support providers in attracting and retaining staff and it will provide more options for parents and is linked to a commitment of no increases in fees to parents.

“To address affordability for parents, we will extend the National Childcare Scheme universal subsidy to children under 15 from September 2022, benefiting up to 40,000 children at a cost of five million euro.

“We will also remove the practice of deducting hours spent in pre-school or school from the entitlement to NCS subsidised hours. This will benefit an estimated 5,000 children, particularly from low-income families.”

Mr Donohoe also confirmed that the Employment Wage Subsidy Scheme will remain in place until April 30 next year, while the scheme will taper off over the coming months.

Mr Donohoe also said that the country’s reduced VAT rate of 9% for the hospitality sector will remain in place until August 2022.

Some of the measures announced will also benefit remote workers.

Mr Donohoe said: “I am announcing an income tax deduction amounting to 30% of the cost of vouched expenses for heat, electricity and broadband in respect of those incurred while working from home.”

As expected, the finance minister has also announced that the standard rate band for income tax will increase by 1,500 euros.

He also said that personal tax credit, employee tax credit and earned income credit will increase by 50 euros.

Mr Donohoe also said that the national minimum wage will increase by 30 cent to 10.50 euros an hour.

Mr Donohoe has told the Dail that a 3% zoned land tax will be introduced, set to apply to land which is zoned as suitable for housing but remains undeveloped.

“The tax will be based on the market value of the land and I have determined that the rate at the outset should be 3%,” he said.

The tax has a two-year lead-in time for land zoned before January 2022 and a three-year lead-in time for land zoned after January 2022.

“To support carers and people with disabilities, from January next year I will extend the period during which domiciliary care allowance can be paid for children in hospital from three to six months,” Mr McGrath added.

“The rate of wage subsidy scheme for people with disabilities will rise by a euro per hour.

“I am increasing the income disregard for carer’s allowance from 332.50 euro to 350 euro for a single person and from 665 euro to 750 euro for a couple.”

The Finance Minister described climate change as “one of the most important issues of our time”.

“The world is burning,” he told the Dail.

Alongside the annual increase in the carbon tax by 7.50 euros per tonne, Mr Donohoe said that to incentivise uptake of electric vehicles the Government will extend the 5,000-euro relief for battery electric vehicles until the end of 2023.

Mr Donohoe said that by the end of the year, the rate of unemployment is forecast to be just over 9%, and employment is forecast to grow by about 8% or around 150,000 jobs.

Next year, the unemployment rate is expected to fall to about 6.5%, and employment is expected to grow by more than 13%.

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