Bernard Durkan (Kildare North, Fine Gael)
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56. To ask the Minister for Finance to outline his proposals to address the important issues now arising and likely to present a challenge in the future to family households and the productive/caring sectors as required and necessary; and if he will make a statement on the matter. [45467/24]

Jack Chambers (Dublin West, Fianna Fail)
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The Irish economy is in relatively good shape at an aggregate level, reflecting the easing in inflationary pressures, the solid growth in the domestic economy and strength of the labour market.

The brightest spot in the Irish economy has undoubtedly been the labour market, with over 2.75 million people in employment in the second quarter of 2024. The unemployment rate is also expected to remain low by historical standards and consistent with full employment.

Cost of living pressures which had weighed heavily on households and businesses over recent years have now eased significantly. Indeed, the inflation rate in Ireland has been at or below 2 per cent since March 2024.

However, even as the headline rate of inflation has declined, I am acutely aware that many are still struggling as price levels throughout the economy remain elevated. That is why Budget 2025 includes a cost of living package, designed to support the most vulnerable and ease the financial burden over the winter months.

Budget 2025 included a personal income tax package amounting to just under €1.6 billion in 2025 and €1.8 billion in a full year and builds on the significant progress made over the lifetime of this Government. The package was built around 3 key pillars: changes to tax credits, the standard rate band and Universal Social Charge (USC). The tax package was designed in a manner which allowed the Government to use these levers to distribute the benefit of the package as effectively as possible. For the fourth year in a row, the main tax credits and the Standard Rate Cut-Off Point were increased.

The package also had a particular focus on Carers, and tackling child poverty by providing a suite of tax enhancements to support and assist such individuals and families. The Home Carer Tax Credit, Single Person Child Carer Credit and the Incapacitated Child Tax Credit were all increased. In addition, the Dependent Relative Tax Credit and the Blind Person’s Tax Credit were increased.

Furthermore, the 4 per cent rate of USC was reduced to 3 per cent and the ceiling of the band for the 2 per cent rate of USC was increased to €27,382 (from €25,760) in line with an increase in the National Minimum Wage.

Looking ahead, real income growth should support a continued expansion of consumer spending this year and next. Indeed, consumer spending is expected to act as the primary driver of growth in the domestic economy. My Department now forecasts Modified Domestic Demand (MDD), the preferred measure for the domestic economy, to grow by 2.6 per cent for this year and 2.9 per cent next year.