Budget tax package of €1.5 billion is ‘sensible and prudent’, says Harris

By David Young, Press Association

Increasing funding available for tax measures in this year’s budget to €1.5 billion is a “sensible and prudent” move, the Tánaiste has said.

Simon Harris stressed a desire to deliver meaningful tax cuts for working people in Budget 2027 as he and Minister for Public Expenditure Jack Chambers published the Government’s Summer Economic Statement.

The annual statement sets out the spending parameters that ministers will be operating within when drawing up October’s budget.

The overall budgetary package amounts to €8.5 billion

I think it is really sensible and prudent to actually enable people to keep some more of their own income

The budget represents additional spending and tax measures within an overall government expenditure ceiling of €125.5 billion for 2027.

The €8.5 billion package compromises additional public spending of €7 billion and €1.5 billion in new tax measures. Last year’s budget saw €1.3 billion allocated for a tax package.

Harris said the bulk of the 1.5 billion would be focused on income tax measures.

“I think it is really sensible and prudent to actually enable people to keep some more of their own income,” he told reporters at the Department of Finance in Dublin.

The Tánaiste said the Irish economy remained in a “good position” despite the challenges so far this year, including those caused by the conflict in the Middle East.

“There have never been more people at work, consumer spending is strong and both public and private investment levels are high,” he said.

“However, the international backdrop remains highly uncertain, and our economic resilience could yet be tested.

“For that reason, Budget 2027 will be about rewarding hard work, boosting competitiveness and investing for the future.

“The budget package of 8.5 billion euro will allow us to continue to improve public services, to ramp-up spending on critical infrastructure and, importantly, to deliver a tax package that supports workers at a time when cost-of-living pressures are weighing on so many people.

“The people of Ireland rightly expect to keep more of their money at the end of the week. They also expect the taxes they do pay to be spent wisely. In short, they expect Government to deliver.

“In Budget 2027 I intend to do just that.”

Earlier on Wednesday, Taoiseach Micheál Martin said the budget would deliver a “significant tax package” that would particularly “look after middle-income workers and lower-income workers”.

He said it was important Government did all it could to reduce the pressure of the cost of living on workers and on families.

“Because cost of living is still a very significant issue for people out there, because of the impacts of the Middle Eastern war and other global events,” he told reporters as he arrived for a Cabinet meeting at Government Buildings on Wednesday morning.

Joining Mr Harris at the later press conference, minister Chambers noted that the increase in public spending was not as significant as in recent years as he characterised the budget strategy as one characterised by “moderation”.

The €7 billion envelope includes 5.9 billion for current expenditure and 1.1 billion for investment in capital projects.

The minister said “trade-offs and prioritisation” would be required within departments.

Chambers did express confidence that the budget would be sufficient to achieve a pay settlement with public sector workers and also deliver new spending measures.

The minister insisted the Government was also focused on reforming public services to ensure more efficient use of taxpayers’ money.

“There must be an increased focus on delivery, productivity, spending efficiency and reform so that every euro the state spends maximises value for taxpayers’ money,” said Mr Chambers.

“Budget 2027 is the opportunity to achieve this.

“Increased expenditure must deliver improved public services, deliver high quality infrastructure including new homes, roads, public transport and critical water and energy infrastructure, and drive better living standards for people in communities across our country.

“We must continue to invest in Ireland’s future while ensuring that public expenditure remains sustainable over the medium and long term.

“Budget 2027 is the opportunity to better reward work through a substantial tax package; build the critical infrastructure our communities need now and safeguard our country’s future through sustainable investment.”

The statement document highlighted the economic disruption caused by the conflict in the Middle East, particularly the effect on commercial shipping due the ongoing dispute in the Strait of Hormuz.

It noted that the rollout of artificial intelligence (AI) technology has had a positive impact on the Irish economy over the last 12 months. However, government officials have cautioned about the prospect of an AI bubble leading to a potential correction of the US stock market – a development that would have negative international economic consequences.

On Ireland’s soaring corporation tax take, the statement acknowledged the “vulnerabilities” associated with deriving such a high proportion of the revenue from such a small number of multinational companies.

Just 10 companies account for more than half of the 33 billion euro in corporation tax receipts in Ireland last year.