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Labour, Sinn Féin and Social Democrats are going all in on the cost of living
The three main Opposition parties have published their alternative budgets and – not surprisingly – one thing is clear. There is no constituency for the a lower spending/lower tax agenda.
Sinn Féin, the Social Democrats and the Labour Party are all trying to lure voter support by majoring on cost-of-living measures and even greater giveaways to households than the Government is likely to find money to afford. The alternative budgets for the three parties sets the scene for fierce budget rows in the Dáil next week. They will try to ambush the Government with one underlying message – " you should have given more to households.
" Here is what they are proposing and where the rows will be: Sinn Féin’s package The largest party in opposition plans to spend a lot more money than the Government and raise a lot more in taxes. Its total budget package of €13.4 billion compares to the Government’s €8.5 billion.
It proposes significant additional State investment spending, notably on housing where €3.6 billion extra is proposed to fund an additional 10,000 social and affordable homes, along with a scheme to support small and medium builders. But it is the cost-of-living package which will get most attention, renewing the commitment to abolish the universal social charge on the first €40,000 of income, introducing a second tier of child benefit, doubling the renters’ tax credit and capping childcare fees at €10 a day.
On energy, it wants to scrap all carbon tax rises, cut excise duties on petrol and diesel and abolish student and apprenticeship fees. It also wants once off payments to those who qualify for child benefit, social welfare recipients and those who receive disability contingency payments. And – perhaps the most eye-catching proposal – a €500 shopping voucher for one million of the State’s 1.84 million households.
It is a major giveaway funded, the party says, by measures such as upping the bank levy and taxing the excess profits of energy companies and “vulture funds” who have invested in Irish housing. The party also repeats earlier proposals for big income tax increases on those earning over €100,000 and on what it terms " gold-plated pensions". In sum, its tax measures would be a heavy hit on higher earners.
The Social Democrats package Like Sinn Féin, the Social Democrats call for a massive increase in State spending on housing, calling for additional investment of €1.8 billion in 2027, the bulk of which goes toward additional social and affordable housing. It also focuses on the cost-of-living, calling for €400 in energy credits for lower income households and increased support for solar panel installation, including doubling the household grant from €1,800 to €3,600.
It also support a second tier of child benefit and increasing the main welfare and pension rates by €15 a week. In terms of priorities, it proposes significant new investment in a €40 a week cost of disability payment and the abolition of the means test for the carers’s allowance.
It would raise money through higher income tax on those earning over €100,000, a windfall tax on energy companies, a higher bank levy and – most notably – almost €1.4 billion from a proposed new tax on “super wealth”. Raising such as large sum in year one of a new tax looks highly unlikely.
The Labour Party package Like the other two Opposition parties, Labour promises a big increase in capital investment on housing – an additional €1.8 billion – directed towards State led building of social and affordable homes. It wants the Land Development Agency transformed into a new State construction company.
It also calls for a €400 energy credit for households, with an interesting strategy of paying it through the tax system – as a credit – to allow the payment to go to those with lower incomes. This would act like a grant to those who do not pay income tax.
The party has also called for once off spending of €500 million to buy one million plug-in solar units, which it says would help to lower the annual energy costs of households without rooftop panels by up to €150 a year. It also wants lower excise duties on petrol and diesel extended to next May.
Like the other Opposition parties it wants the main welfare rates to rise by €15 a week and allocates €770 million to address child poverty, with a view to introducing a new second tier of child benefit payment and proposals for what to do in the interim as this is planned. It also wants the main rate of child benefit to rise by €10 a month – it has not increased since 2016- and for a €100 grocery supplement per child to be paid to families in both December and January.
Cash would be raised through more tax on higher earners , windfall taxes on energy companies and data centres, a higher bank levy and reversing the 9 per cent VAT rate for hospitality. What does this tell us about the budget flashpoints? Quite a lot. The Opposition is scaling up for an all-out attack on the scale of Government support for households and the cost-of-living pressures they face.
In the run-up to the budget, the Government has said it wants to focus on permanent supports rather than new temporary measures. The question now is how far the permanent supports will go and – given high energy bills – might there still be some temporary once-off payments. Already the Government has indicated it will push forward the restoration of excise duties until next Spring and look at ways to reduce the price of home heating oil.
But the temptation to run down the 2026 budget surplus by making once-off payments in some areas – in the face of huge Opposition pressure – may prove irresistible, especially if reports that corporation tax is due to come in well in advance of target again this year are confirmed in pre-budget figures due this weekend. A Government-appointed group, the National Energy Affordability Taskforce, has been looking at how household supports can be structured.
Has it come up with any new ideas? A big issue is avoiding wasting money by giving it to better-off households who do not need it. Sinn Féin and Labour have also framed additional once-off supports in the light of higher grocery prices – another additional source of pressure on lower income households designed to put pressure on the Government.
Another clear area of budget controversy will be the scale of the increase in the main social welfare and pension rates. All three Opposition parties are seeking a figure of €15 a week. Last year the Government announced increases of an extra €10 a week. Reports have suggested that discussions this year had started at a figure as low as €7.50 a week, though Taoiseach Micheál Martin has said that this “may not be accurate at all.
” If the Government goes under €10 a week, there will be a major row here. The Government is also exposed on some of its longer term promises, such as reducing childcare costs to €200 a month during its term, introducing a new payments to account for the higher cost of living for disabled people and addressing child poverty.
A childcare package is promised, but the Opposition parties, in various ways, are calling for a big increase in the State’s role. Can the Government make enough progress here to persuade voters it has a coherent plan?
There are also reports that it is struggling to find money for a new regular disability payment and it has said that it cannot make progress this year on the second rate of child benefit payments, which the ESRI has said is the best way to address child poverty. Labour has the most thought out strategy here, setting aside funds to actually plan how this should happen and proposing interim measures.
The Government can claim, with some justification, that budgets part-funded by new wealth taxes, big increases in income tax on the better-off, or more money raised from banks and property investors contain significant risks and unrecognised trade-offs. Government TDs warned that Sinn Féin would " blow" the country’s finances. But with a large budget surplus these arguments may not get much traction in the ferocious post-budget political debate.
Labour’s document argues that a debate is needed on tax and expenditure in the years ahead. But with a “spend, spend, spend” philosophy across much of the Opposition, budget night will be all about the dividing the spoils of the corporate tax bonanza across Ireland’s households.
Budget Cost-Of-Living Land-Development-Agency Sinn-Fein Labour-Party Social-Democrats
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