Neale Richmond (Dublin Rathdown, Fine Gael) | Oireachtas source

I am delighted to appear before the Seanad to discuss budget 2025 following its presentation earlier today to Dáil Éireann. As has been evident in recent years, we are living in a more shock-prone world - Brexit, a global pandemic, the war in Ukraine and a cost-of-living crisis led to rates of inflation not seen in decades.

However, despite these challenges, we have an economy that is operating at effective full employment. There are 2.7 million people at work in this country, more than Ireland’s entire population in the 1950s. This reflects the fundamental strength of our economy. We see many countries pulling back and cutting costs. Meanwhile, we are in a position to invest €2 billion in cost-of-living measures before Christmas; and to invest €3 billion in our infrastructure for our future, while planning for the future. This is down to prudential management of our economy by this Government.

Budget 2025, the fifth and final budget of this Government, puts in place measures to continue our economy's positive trajectory, while also investing in our public services, our infrastructure and, crucially, our people. Budget 2025 has been framed against an economy that is, quite simply, in good shape. Since its peak in mid-2022, the rate of inflation has eased significantly. Inflation is set to remain below 2% this year and, indeed, next year.

However, prices are still high and we fully recognise that many people who work incredibly hard, pay their way, play by the rules and support their families are still struggling. This is why budget 2025 includes a cost-of-living package to support people and families by helping them now and in the lead up to Christmas. Alongside the strong performance in the labour market and the moderation in inflation, economic activity is continuing to expand. Modified domestic demand, the preferred measure of domestic activity, is projected to grow by close to 2.5% this year and by close to 3% next year. While the economy is performing well, a clear budgetary objective is to support increased investment, narrowing the infrastructure gap and improving the productive capacity of the economy. Recognising the need for further capital expenditure, €3 billion from the AIB share sale receipts will be invested in housing, water and energy infrastructure. This investment is crucial in attracting investment to Ireland, maintaining our competitiveness, helping to eliminate key bottlenecks and improving living standards.

Turning to the fiscal outlook, a general Government surplus of €23.7 billion is projected for this year and €9.7 billion next year. Windfall corporate tax receipts are estimated at €15.9 billion, almost half of the total surplus projected for this year. It is a key priority of Government to not use potentially transitory receipts to fund permanent expenditure measures.

As set out in the summer economic statement, budget 2025 consists of a total package of €8.3 billion, comprising €1.4 billion in taxation measures and expenditure worth €6.9 billion. There is also a cost-of-living package totalling about €2.2 billion. While inflation has eased considerably, people still need our help. At a time when we have a strong economy, it is only right that we invest in our people, those who need it most, in the here and now.

Building on the progress already made by this Government, the income tax package of €1.6 billion is designed to further reduce the tax burden on individuals. Specific measures include an increase in the personal, employee and earned income credits by €125 each; an increase of €2,000 in the standard rate cut off point, increasing entry to the higher rate of income tax to €44,000; a reduction in the applicable rate of USC from 4% to 3%. The entry threshold will also be raised in line with the increase in the national minimum wage; and an increase in the home carers and the single person child carers tax credits by €150, the incapacitated child and blind tax credit by €300 and the dependant relative credit by €60 to support those with caring responsibilities and to help address child poverty. These measures will provide a tangible benefit to workers and those who need our support. To put these changes in perspective, a single person earning €20,000 or less in 2025 will now be outside of the income tax net.

I am particularly proud to announce that budget 2025 will also introduce an exemption from income, capital gains and capital acquisitions tax on payments to women impacted by the failures in the CervicalCheck national screening programme. In addition, future and historic income or gains arising to these women will also be exempt from the relevant taxes.

More broadly, additional measures to help to address cost-of-living pressures include an extension of the 9% reduced VAT rate for gas and electricity for another six months. To assist mortgage holders who experienced increased interest rates, the mortgage interest tax relief is being extended for another year. In addition, the Government has decided to increase all capital acquisition thresholds that apply to gifts or inheritances in recognition of the increases in property values since the thresholds were last raised in 2019. No one should fear leaving the family home to a son or daughter because of a tax bill. Today we are making inheritance taxes fairer, allowing a son or daughter to inherit up to €400,000 before paying inheritance tax.

Alongside protecting households from cost-of-living pressures, housing is, quite simply, the number one priority for this Government. For renters, the Government is increasing the value of the rent tax credit by €250 to €1,000 for 2025, and in 2024, the credit is also increasing to €1,000. The help-to-buy scheme has been one of the great successes of this Government. Since its introduction by Fine Gael, it has supported almost 50,000 individuals or couples to buy their own home by giving them back up to €30,000 in their own taxes. I am glad to see that the scheme is being extended until the end of 2029.

We are building tens of thousands of homes in this country. There were 33,000 built last year. We will build almost 40,000 this year. However, we want to make sure that these homes are bought by first-time buyers, by individuals and families. The bulk purchasing of homes by investment funds impacts the number of homes available to purchase. To address this, the budget increases the rate of stamp duty on the bulk acquisition of houses from 10% to 15%. This is a crucial measure to support first-time buyers and to support home and house ownership. The vacant homes tax will also increase from five times, to seven times the property’s existing base local property tax rate, to maximise the use of existing housing stock.

I am happy to confirm that following its reduction in budget 2024, the motor insurance solvency compensation fund levy will be further reduced to 0%. The reduction will benefit all motor insurance policyholders on renewal from January. This follows on from last year’s reduction from 2% to 1%. The reduction in the annual percentage rate will reduce the level of motor insurance contributions by almost €20 million next year and, in turn, have a direct and positive impact on the cost of insurance for motorists.

The Government is committed to supporting businesses in Ireland. A comprehensive package of supports for business is contained in budget 2025. A €4,000 power-up grant will help hospitality and retail businesses to address rising costs. In recent years, significant complexity has been added to the corporation tax code. Budget 2025 takes an important step towards reducing this burden through the introduction of a participation exemption for foreign dividends.This measure, which will come into effect from 1 January next, will provide an alternative, simpler mechanism for double tax relief for multinational businesses. Budget 2024 saw the research and development tax credit increase from 25% to 30%. This year, the first-year payment threshold in the research and development tax credit will increase from €50,000 to €75,000. We are also keen to support and promote start-up and scaling businesses. This includes helping them to attract funding through schemes such as the employment investment incentive, the start-up relief for entrepreneurs and the start-up capital incentive. All three schemes are being extended to the end of 2026, including significant enhancements to the employment investment incentive and the start-up relief for entrepreneurs. In a modern economy, it is important to have a thriving ecosystem of angel investment. In this regard, capital gains tax relief is being amended to target investors in innovative start-ups to provide for an increased lifetime limit on gains to which the relief applies, from €3 million to €10 million.

As regards agriculture, a number of important reliefs are being extended to the end of 2027, including the general stock relief, stock relief for young trained farmers and stock relief registered farm partnerships.

To incentivise the use of electric vehicles, the Government is making an amendment to vehicle registration tax, VRT, to allow battery electric commercial vehicles to quality for the €200 VRT rate. To further incentivise the use of cleaner cars, the carbon tax on petrol and diesel will rise by €7.50 to €63.50 per tonne of carbon dioxide emitted from 9 October. These revenues will be used to address fuel poverty, invest in socially progressive national retrofitting programmes and support farmers in the green transition.

In further revenue-raising measures, the bank levy is being extended for a further year to raise €200 million. In addition, to support public health policy, excise duty on a pack of 20 cigarettes is increasing by €1, with a pro rataincrease on other tobacco products. A domestic tax on e-cigarettes, of 50 cent per millilitre of e-liquid, will also be put in place.

On 30 July, the Minister, Deputy Chambers, signed the commencement order to officially establish the Future Ireland Fund and the Infrastructure, Climate and Nature Fund. These funds are key to the Government's strategy to plan for the future. Some €4.3 billion was transferred into the Future Ireland Fund and €2 billion into the Infrastructure, Climate and Nature Fund from the National Reserve Fund. A further €4.1 billion will be transferred to the Future Ireland Fund this year. As set out in the legislation, the Irish Fiscal Advisory Council must provide an assessment of the economic and fiscal position of the State so as to assess whether contributions to the funds should be made next year. The fiscal council assessed that it is appropriate for transfers to take place to both funds.

Budget 2025 is a good budget. It helps people who need help the most, puts money back in people's pockets when they need it most, builds more homes, opens more hospital beds and builds more schools, all while securing our future. I commend the budget to the House and look forward to engaging with Senators in the debate.