The Government is in a very strong position ahead of the budget next week. The exchequer was already in line to run a surplus for the year, and now with the Apple tax money on the way, that could exceed €20bn.
The Department of Finance, in the Summer Statement, suggested that spending next year would increase by €6.9bn, while tax cuts would amount to €1.4bn. With the extra money from Apple arriving and an election possibly only weeks away, it seems like a fairly good bet that those expected budget measures will be topped when Minister Jack Chambers gets to his feet on 1 October.
Priorities
Chambers will look to spread his fiscal good fortune as widely as possible. This means that on the tax side, an increase in the income level before workers hit the higher income tax rate will probably be introduced.
A cut to the much-maligned USC (universal social charge) is also likely. It is also widely expected that there will be an increase in the level of inheritances that are tax-free, with the allowance for family homes and farms possibly rising as high as €400,000, from the current €335,000.
Despite a vigorous campaign by restaurateurs, it is unlikely that the 9% hospitality VAT rate will be reintroduced.
On the spending side, there is likely to be an increase in the State pension and a widening of fuel allowances. Another energy credit is possible, although this may not be as generous as what was given last year. There has also been some talk about an extra child benefit payment before Christmas. Education minister Norma Foley has pushed for an extension of the free books scheme for school children up to Leaving Certificate level.
Looking at a departmental level, Health and Social protection between them accounted for half of spending in last year’s €96bn budget, and there is no reason to expect that share to be any lower this year. Education spending topped €10bn in 2024, and there is likely to be another increase in the allocation there – especially as the Taoiseach has made eliminating child poverty a policy goal.
While there are not going to be any specific measures attached to the Apple tax bonus announced in the budget, numerous ministers and the Taoiseach have said that the priority for that money would be capital spending on projects such as housing, infrastructure and water.
Agriculture
While the amount of money allocated to the Department of Agriculture has been growing as overall Government spending increases, as a share of the budget, its allocation fell to 2.01% of total spending last year (see Figure 1). If Minister McConalogue manages to hold it at the 2% level, then spending on the sector should rise by around €180m to €2.12bn for 2025.
While much of that rise will be taken up with increasing Department day-to-day costs, there should be some extra money for schemes.
However, with the jump in ACRES applications and the Organics scheme widening, it would probably be a bit much to expect anything new.
In Agriculture, as in every department this year, each spending decision will be accompanied by the extra calculation on how many voters it will benefit. So sheep and beef schemes will probably do better than anything for dairy – based purely on the number of farmers in each sector.
Comment
This year’s budget will be a balance between keeping spending somewhat under control, while also trying to reach as many voters as possible with measures.
This means that new spending plans will be spread as wide as possible, rather than benefitting any particular interest group.
Basically, Minister Jack Chambers will do his best to give €1 to a million people rather than €1m to one sector.
With the election being as little as a few weeks away, expect as many measures as possible to be front loaded.
Chambers is very fortunate in that he has such a large pot of money to spend, but he will need to be careful not to commit to long-term spending measures which may have to be reversed in future years should the current high level of Government receipts reverse.
Recent opinion polls suggest that the current Government (or something similar) may be returned after the election. While nothing is guaranteed in politics, those polls may also curb Chambers’ spending, as he may feel less desperate about having to buy an election on 1 October.
In short
Government running exchequer surplus.Cuts in tax and increased social spending expected.Election calculations will feed into every spending decision.Agriculture needs to hold above 2% share.Apple money will not feature in budget.
The Government is in a very strong position ahead of the budget next week. The exchequer was already in line to run a surplus for the year, and now with the Apple tax money on the way, that could exceed €20bn.
The Department of Finance, in the Summer Statement, suggested that spending next year would increase by €6.9bn, while tax cuts would amount to €1.4bn. With the extra money from Apple arriving and an election possibly only weeks away, it seems like a fairly good bet that those expected budget measures will be topped when Minister Jack Chambers gets to his feet on 1 October.
Priorities
Chambers will look to spread his fiscal good fortune as widely as possible. This means that on the tax side, an increase in the income level before workers hit the higher income tax rate will probably be introduced.
A cut to the much-maligned USC (universal social charge) is also likely. It is also widely expected that there will be an increase in the level of inheritances that are tax-free, with the allowance for family homes and farms possibly rising as high as €400,000, from the current €335,000.
Despite a vigorous campaign by restaurateurs, it is unlikely that the 9% hospitality VAT rate will be reintroduced.
On the spending side, there is likely to be an increase in the State pension and a widening of fuel allowances. Another energy credit is possible, although this may not be as generous as what was given last year. There has also been some talk about an extra child benefit payment before Christmas. Education minister Norma Foley has pushed for an extension of the free books scheme for school children up to Leaving Certificate level.
Looking at a departmental level, Health and Social protection between them accounted for half of spending in last year’s €96bn budget, and there is no reason to expect that share to be any lower this year. Education spending topped €10bn in 2024, and there is likely to be another increase in the allocation there – especially as the Taoiseach has made eliminating child poverty a policy goal.
While there are not going to be any specific measures attached to the Apple tax bonus announced in the budget, numerous ministers and the Taoiseach have said that the priority for that money would be capital spending on projects such as housing, infrastructure and water.
Agriculture
While the amount of money allocated to the Department of Agriculture has been growing as overall Government spending increases, as a share of the budget, its allocation fell to 2.01% of total spending last year (see Figure 1). If Minister McConalogue manages to hold it at the 2% level, then spending on the sector should rise by around €180m to €2.12bn for 2025.
While much of that rise will be taken up with increasing Department day-to-day costs, there should be some extra money for schemes.
However, with the jump in ACRES applications and the Organics scheme widening, it would probably be a bit much to expect anything new.
In Agriculture, as in every department this year, each spending decision will be accompanied by the extra calculation on how many voters it will benefit. So sheep and beef schemes will probably do better than anything for dairy – based purely on the number of farmers in each sector.
Comment
This year’s budget will be a balance between keeping spending somewhat under control, while also trying to reach as many voters as possible with measures.
This means that new spending plans will be spread as wide as possible, rather than benefitting any particular interest group.
Basically, Minister Jack Chambers will do his best to give €1 to a million people rather than €1m to one sector.
With the election being as little as a few weeks away, expect as many measures as possible to be front loaded.
Chambers is very fortunate in that he has such a large pot of money to spend, but he will need to be careful not to commit to long-term spending measures which may have to be reversed in future years should the current high level of Government receipts reverse.
Recent opinion polls suggest that the current Government (or something similar) may be returned after the election. While nothing is guaranteed in politics, those polls may also curb Chambers’ spending, as he may feel less desperate about having to buy an election on 1 October.
In short
Government running exchequer surplus.Cuts in tax and increased social spending expected.Election calculations will feed into every spending decision.Agriculture needs to hold above 2% share.Apple money will not feature in budget. 
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