Monday 24 September 2018

Budget talks go down to the wire amid growing dissatisfaction

Paschal Donohue
Paschal Donohue

Budget talks between Fine Gael and the Independent Alliance are set to go down to the wire amid dissatisfaction among members of the junior Government partner.

Finance minister Paschal Donohoe faces some difficult choices as he balances the demands of the Independents and Fianna Fail with the limited funds available.

Mr Donohoe has only so-called fiscal space for about €350m in new tax cuts and spending increases, although he is likely to raise some additional funds through initiatives such as the sugar tax and a hike in excise duty on cigarettes.


The five Independent Alliance TDs, who include Dublin ministers Shane Ross and Finian McGrath, are keen to put their stamp on next week's Budget.

Housing and health, increased allowances for people with disabilities and carers and a return of the €850 bereavement grant are understood to be among the Independent Alliance asks.

However, members of the group are still unhappy with what is on offer after some "tense meetings".

In particular, John Halligan is continuing to push for an additional betting tax of up to 5pc on all transactions. This could raise about €55m, which the minister of state wants ring-fenced for mental health and addiction services. Mr Donohoe is resistant to the idea.

As talks continue, Fianna Fail finance and public expenditure spokesmen Michael McGrath and Dara Calleary will today outline their party's Budget priorities. The confidence and supply agreement between Fianna Fail and the Fine Gael-led minority Government covers three Budgets.

Under the arrangement, Mr Donohoe must commit to an at least 2:1 ratio of public spending to tax cuts, and reductions to the Universal Social Charge (USC) must largely benefit low and middle income earners.

It was revealed yesterday that the USC will be cut while income tax bands will be tweaked to give back workers about €20 a month.


Meanwhile, smaller opposition parties have released alternative Budget proposals.

Green Party leader Eamon Ryan has floated the idea of introducing basic income schemes in six towns around the country.

It would see everyone paid €200-a-week as a safety net and a way of combating poverty.

Such schemes have been implemented in Finland and other places. The party also wants 10pc of the transport Budget ring-fenced for cycling.

A new land-hoarding tax and an enhanced Affordable Housing Scheme for first-time buyers were among proposals put forward by the Social Democrats.

Solidarity-People Before Profit argue that increasing taxes on corporations and the "super-rich" could generate €16bn and that 40,000 social and affordable homes could be provided next year.

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