A cut to the much-hated USC and a tweaking of income tax bands will be included in next week’s Budget following a compromise between Fine Gael and Fianna Fáil in an effort to ensure that the budget will pass.
As part of a compromise deal being hammered out between Finance Minister Paschal Donohoe and Fianna Fáil, it has been agreed that a double-edge approach to personal taxation will be taken.
The USC cut will help the ‘squeezed middle’ earning up to €70,000 a year, while the tax band changes will benefit people on salaries over €33,800.
The Government looks set to make good on their commitment to introduce another €5 increase in the old age state pension. However, it is understood Finance Minister Paschal Donohoe is considering delaying the increase for a number of months due to concern over the €150m cost of the move. The reintroduction of a telephone allowance for elderly people is also expected.
The party, alongside Fianna Fáil and the Independent Alliance want to boost all social welfare payments.
Fianna Fáil are understood to be requesting an increase of up to €5 for all social welfare payments but have not tabled suggestions for how these should be funded.
The notion of prioritising one welfare payment over another has been dismissed with one Government source saying: “We can’t leave anybody behind.”
“Paschal has warned this will cost an awful lot of money and limit potential elsewhere,” a source told the paper.
But despite the push for universal hikes, some sources cautioned that “tough decisions” would have to be made and “it simply mightn’t be possible to do everything”.
The Sunday Independent revealed that the entire cost of the social welfare package being discussed by the Government could come to €450m.
A hike in stamp duty on the sale of commercial property is being considered by the Government for Budget 2018.
It is also expected that the Help to Buy scheme is to be retained, with little or no amendments to the first-time buyers grant scheme.
Homeowners are expected to further benefit as mortgage relief, which was due to expire at the end of this year, may be extended.
Parents are not getting their hopes up ahead of Tuesday's Budget with no changes to child benefit expected and very slight increases in other social welfare payments.
It is expected that the bereavement grant will be brought back but will not match the previous once-off payment amount.
Under previous commitments to increase the threshold on inheritance tax from a parent to a child to €500,000 another increase in the threshold is expected this year. In last year's budget it was raised to €310,000 but it is unlikely that this year will see the ceiling raised to the full €500,000.
The price of diesel is expected to remain unchanged in Budget 2018, despite speculation it could be equalised with petrol.
According to AA the average price of a litre of diesel is currently €1.22. This already includes taxes totalling almost 73c.
Meanwhile, the Budget will include a number of initiatives aimed at encouraging a greater uptake of electric vehicles.
A series of long-term measures are under consideration, with a focus on incentives to encourage a change in driver behaviour.
Also read: Minster Donohoe to resist spending €3.2bn