Robert Troy (Longford-Westmeath, Fianna Fail)

I am pleased to appear before the Seanad to discuss budget 2026 following its presentation earlier to Dáil Éireann. Our economy has proven to be incredibly resilient. This is based on the transformation of Ireland in recent decades and the steps taken by successive Governments to return the public finances to health.

There are now 2.8 million people at work, more than the number who lived here in 1961. In addition, people are living longer and healthier lives. While this progress is something we can all be proud of, we also understand that the benefits of this are not felt equally. The cost of living and access to homeownership are a concern for many. Acknowledging the progress we have made, we also acknowledge that we need to achieve more.

Budget 2026 is framed at a time of great uncertainty. We have conflict on our doorstep in Europe and significant uncertainty as a result of tariffs and trade wars. As one of the main beneficiaries of peace, partnership and global prosperity in recent decades, Ireland’s fortunes are connected to the world around us. While the EU–US framework agreement is welcomed for providing a level of certainty, a general tariff rate of 15% will, of course, affect growth over the coming years. As such, it is more pressing than ever that this Government present a budget that supports growth and protects jobs.

To help to achieve this, we recently published the updated national development plan. The plan commits to increase capital expenditure, with a focus on investment in energy, water, housing and transport. These areas are critical to improving the attractiveness of our economy for investment and making Ireland a better place to live. It is something I see and hear in my brief. Financial services companies want to continue to do business in Ireland, and we must ensure that we can create an environment that encourages them to do so.

Notwithstanding the high level of uncertainty, modified domestic demand, the best measure of domestic activity, is projected to grow by close to 3.3% this year and by 2.3% next year. It is expected that domestic activity will be supported by the continued strength of our labour market. Employment in Ireland reached a record high of 2.8 million people this year and is projected to grow again next year. Aided by lower inflation, real incomes are also expected to continue to grow. That said, while inflation is falling, price levels remain high for many necessities, such as food. This is why budget 2026 includes targeted measures to support those most in need, benefiting those on the lowest incomes, households with disabilities and lone parents the most.

We have the capacity to improve public services because the public finances are in reasonably good shape. We have run budget surpluses and will do so again this year. This helps to reduce the debt burden, and to save funds for the future.

However, the economy’s reliance on the FDI sector presents a clear risk to the public finances. We have seen volatility in corporation tax receipts in recent months. We know that this overreliance poses a vulnerability. Given this risk and the need to prepare for structural challenges, the Government has agreed to continue putting money into the Future Ireland Fund as well as the Infrastructure, Climate and Nature Fund. By the end of 2026, it is projected that the total value of these funds will be around €24 billion.

Budget 2026 prioritises capital investment. This investment is critical if we are to unlock the bottlenecks that would constrain economic growth. Therefore, a balance must be struck between increasing public expenditure now and investing to ensure the economy can maintain solid growth in the future. I believe this budget strikes that balance.

Let me turn to the individual budget measures. We all know housing is the key challenge facing our country. To help address the viability gap in apartment construction, the VAT rate on the sale of completed apartments is being reduced from 13.5% to 9% from midnight tonight.

We are also introducing an enhanced corporation tax deduction for certain costs incurred on the construction of apartments and for the conversion of non-residential buildings into apartments. This will improve the viability of such projects.

In this budget, the Government is committed to measures that will improve the overall standard of living, with an emphasis on affordable, permanent measures. This has meant that the scope for significant tax changes is limited. However, we will stand by our commitment to make progressive changes to income tax over the course of this Government if the economy remains strong.

This budget is introducing a targeted reduction in USC. On 1 January 2026, the national minimum wage will increase by 65 cent per hour to €14.15 per hour.Accordingly, the ceiling for the 2% band rate will be increased to €28,700. This ensures that full-time workers on minimum wage will remain outside the top rate of USC and gives a modest benefit to all whose income is above that threshold.

The rent tax credit has proven to be a meaningful support for renters. Understanding the cost pressures faced by individuals and families, budget 2026 is extending this measure to the end of 2028. In relation to homeowners, the mortgage interest tax relief is being extended by another two years with a reduced value of the relief applying in the final year.

Recognising that energy prices remain elevated and to help alleviate cost pressures facing households, the 9% rate of VAT on gas and electricity bills is being extended until 31 December 2030.

As outlined in the programme for Government, to further support business the VAT rate on food and catering businesses, and for hairdressing services, is being reduced from 13.5% to 9% from 1 July 2026.

In a challenging global environment, research and development credits are essential to Ireland’s competitiveness. Recognising this, this credit will increase from 30% to 35% and the first year payment threshold will increase to €87,500. This is an important measure. It is a significant attraction for companies who want to establish and grow here, and can help diversify our corporate tax base.

Tax simplification is a key reform for supporting businesses. Last year, to enhance Ireland’s competitiveness for multinational businesses, a participation exemption for foreign dividends was introduced to simplify double tax relief. This year, these rules will be enhanced, for example providing for technical amendments to improve the reliefs operation. If we want to make good on our promises to further develop infrastructure, as well as activating the significant level of capital sitting idle, or indeed losing money, on demand deposit accounts, we need to continue to promote and enhance our funds industry. I particularly welcome these measures.

The EU savings and investments union is key to moving more savings into investment. This will help to grow businesses and increase the return on investment for citizens. Recognising the importance of encouraging retail investment, the rate of taxation applied to Irish and equivalent offshore funds and foreign life assurance products is being reduced from 41% to 38%.

A roadmap will be published early next year which will consider issues raised in the Funds Sector 2030 report and the European Commission’s recommendation on savings and investment accounts. This roadmap will set out our approach to simplifying the tax framework to encourage retail investment.

The investment funds and asset management industry in Ireland has a leading position globally. It is a significant employer supporting almost 37,500 jobs.

In line with the commitment in the programme for Government, an implementation plan for the Funds Sector 2030 report is being published today. While the report recommended a public consultation on potential options for an entity level tax for Irish real estate funds, IREFs, the Department will instead undertake a public consultation on proposals to simplify the IREF regime without limiting its effectiveness. I am pleased to announce that the insurance compensation fund levy will be reduced from 2% to 1% from 1 January 2026. This measure will reduce the level of insurance contributions by approximately €57 million next year and, in turn, should have a direct and positive impact on the cost of insurance for motorists and homeowners.

Agriculture plays a key role in our society and economy. As such, the farm consolidation relief, farm restructuring relief and the young trained farmer relief are being extended to 2029. The accelerated capital allowance scheme is also being extended for another four years. In addition, the scope of farm restructuring relief from capital gains tax is being expanded to include woodlands and forestry.

This budget protects jobs, boosting the economy’s resilience. It focuses on strengthening our competitiveness, while meeting the needs of our people today and in the future. To achieve this, we have to strike the balance between increasing investment and moderating the growth in day-to-day spending.

We are determined to meet the challenges we face through investing in our people, jobs and homes and to take action to match our hope and ambitions for tomorrow.