The 2024 Budget is set to take place on 10 October 2023 – here are some predictions

Paschal Donahoe, Minister for Public Expenditure, has said that the 2024 Budget is going to be ‘big’. The reason for this is likely due to the corporation tax windfall: corporation tax revenues are so high, the government is able to run a budget surplus. With Ireland’s corporation tax rate of 12.5% being among the lowest in the developed world, major US companies are choosing to pay tax on their international profits here. How will this surplus affect the tax measures that are announced in October? We cannot be certain, but we can consider what has already been announced and arrive at some key tax predictions for the Budget.

Personal Tax

Taoiseach Leo Varadkar has said that the budget will prioritise middle-income families and workers who pay too much tax. He has also said that he wishes to raise the point at which people pay the higher rate of tax. However, the Central Bank of Ireland and the Economic and Social Research Institute have both warned that excessive tax cuts will risk fueling inflation. 

Business tax

There are doubts that the high corporation tax receipts from the international sector cannot be sustained in the long term, so there are calls to mitigate the risk of over-reliance on this sector. One way of doing this is by providing tax reliefs aimed at the indigenous business sector. In the Irish Tax Institute’s pre-Budget submission, they call on the Minister for Finance, Michael McGrath, to stick to his commitment to take a fresh look at the range of enterprise tax measures, in particular, their complexity and barriers to entry.

VAT

The current temporary VAT reduction on supplies of electricity and gas (from 13.5% to 9%) is set to end on 31 October 2023. We could see this measure being extended if energy prices have not started to decrease sufficiently.

Property Sector

In their Pre-Budget submission, KPMG advised the government to introduce measures to help the struggling housing sector. They remind the government that the recent EU Directive gives Ireland greater flexibility in respect of reduced and super-reduced rates of VAT, which could be applied to the supply of new housing. KPMG also recommends that the government introduces tax reliefs for converting old commercial buildings into homes.

The rental market is also struggling, with a shortage of available properties and many landlords choosing to exit the market. The government may announce tax measures designed to encourage growth in this sector.