The government is considering increasing the social welfare rate in the upcoming 2022 Budget, even as they warn of tax hikes and the national debt about to hit a quarter of a trillion euros.
In addition, as state pensions have not been increased in the last two budgets, sources say they will likely be increased this time around.
The news comes as Finance Minister Paschal Donohoe warns of significant tax-hikes after the massive surge in pandemic spending and the costs incurred by the state by the government-imposed lockdown.
Finance Minister Paschal Donohoe warns taxes will rise after Covid https://t.co/TvxQnVL3Hx pic.twitter.com/k7dIa4JOSy
— Irish Independent (@Independent_ie) March 4, 2021
https://twitter.com/Ben_Scallan/status/1413473456901943300
Additionally, in a letter published last week, governor of the Irish Central Bank Gabriel Makhlouf warned that the government needs to tackle the deficit by “measures such as broadening the tax base, reducing certain tax reliefs or changing certain tax rates.”
However, the government coalition has said that tax increases are not on the immediate agenda.
Makhlouf also noted that the government’s Summer Economic Statement (SES) forecast the deficit growing over the coming years, amounting to an eye-watering deficit of €7.4 billion by 2025.
For scale, this is €6.6 billion more than the original target set by the government just three months before in their Stability Programme Update.
However, Donohoe has insisted that pandemic-level borrowing by the state must end soon, saying that the debt is “a burden on future generations and it is inequitable to saddle future taxpayers with large debt-servicing costs.”
It is rumoured that there will be little in the way of tax cuts in the upcoming budget.
It’s also believed that the government’s Housing For All plan will feature prominently in the budget, and that the Department of Housing may receive as much as a €400 million increase in taxpayer-funding.