Budget 2025: USC to be cut and vaping tax among measures to be announced

Minister for Finance Jack Chambers says Government will bring forward “framework” in first quarter of 2025 on how to spend the €14 billion-plus windfall from the Apple tax ruling. He said it would focuson addressing “known challenges” in housing, energy, transport and water infrastructure, writes Joe Brennan
Jack Chambers is on his feet and is delivering his first budget as Minister for Finance with his delivery so far confident and energetic, if a little rushed, writes Jennifer Bray.
If he’s nervous, he’s not really showing it. We can already see the Government is trying present Budget 2025 as one that puts the country on, as they say, “a positive trajectory.”
There was an early mention of prioritising children, and a note that the Government does not plan to use unexpected windfall expenditures on day-to-day expenditure or narrowing the tax base.
Mr Chambers said €1bn would be put towards water infrastructure, with another €1.25bn being put towards the Land Development Agency to deliver more social and affordable homes. Some €750m will also be used to further develop the electricity grid infrastructure.
And we’re off the Minister for FInance Jack Chambers is on his feet and is delivering his first budget.
It’s a ghost town immediately outside Leinster House with the barriers and tight security, reports Marie O’Halloran.
Inside the House TDs are walking around in varying states of happiness.
“Smile,” says a Government backbencher as he approaches. “You’re going to get tax back today.”
Another is concerned about the level of giveaway.
“Have people forgotten – ‘we all partied’” former finance minister Brian Lenihan’s comment about the Celtic Tiger.
In the chamber itself TDs and are gathering and journalists are filling the in-demand seats on the press gallery.
The bell has started to sound – the usual five- minute warning before proceedings commence with Jack Chambers’ first budget speech as Minister for Finance.
Not long to go now.
It is nearly time for Budget Day to start in earnest. And as Marie O’Halloran points out it won’t be long before you hear someone from the opposition use the phrase “this has been a wasted opportunity.”
The Opposition get to have their say from 2.30 pm once Minister for Finance Jack Chambers and Minister for Public Expenditure Paschal Donohoe each complete their 45 minute speeches, starting at 1 pm.
Here’s the schedule of action today:
13:00 Speech by Minister for Finance (45 mins)
13.45 Speech by Minister for Public Expenditure, NDP Delivery & Reform (45 mins)
14.40- 15.30 Sinn Féin (including both Finance and Public Expenditure and Reform PER)
15.30 – 16.15 Labour (including both Finance and PER)
16.15- 17.00 Social Democrats (including both Finance and PER)
17.00- 17.45 People Before Profit – Solidarity
17.45 – 18.30 Regional Group
18.30- 19.15 Rural Independent Group
19.15 -20.00 Independent Group
30 MINUTE SUSPENSION
20.30 – midnight Financial Resolutions (eg votes on tobacco product increases)
A statement has landed from the Irish Hotels Federation and it is safe to say it is not happy.
It expressed “deep disappointment” with the measures reported in advance of Budget 2025, saying the decision not to reduce the hospitality VAT rate is “short-sighted and extremely concerning given the stark commercial environment that food service businesses are operating under”.
IHF president Michael Magner said the measures reported “would do next to nothing to address the enormous challenges confronting our sector while at the same time imposing further costs on thousands of hospitality businesses.
“These half-baked measures fall far short of what is needed to address the enormous challenges facing hospitality businesses. They demonstrate how out of touch policymakers in Government are with the commercial reality facing hospitality businesses,” he said.
He concluded by saying the “bottom line is that inaction now poses an enormous risk to our wider hospitality and tourism industry which, as one of Ireland’s largest indigenous employers, supports over 280,000 livelihoods, some 70 per cent of which are outside of Dublin”.
We have reached the point in the day where it is acceptable to post a video of a printer printing.
We have some more breaking news on tax credits from Jack Horgan-Jones.
Here are the increases set to be announced by Jack Chambers in the next couple of hours:
Some bad news for the vapers of Ireland coming in.
It is set to cost more next year with the introduction of a new tax. According to Cormac McQuinn, the rate is to be set as 50c per ml of eliquid in the electronic devices.
A typical disposable vape costing €8 would end up costing €9.23, according to a source.
There is an expectation the tax will kick in at some point in 2025 once the technicalities are sorted out.
The Government has previously banned the sale of vapes to under-18s and the Coalition is also working on legislation to ban disposable vapes on environmental and public health grounds.
There are also plans to prohibit flavours that often appeal to children, as well as for a ban on point-of-sale advertising displays in shops other than specialised outlets that only sell vapes.
This is Jack Chambers’s first budget and an important test for him as he seeks to consolidate his position as heir apparent to the leadership of his party, writes Pat Leahy
Not having held a major ministry and command of a big department before, it’s a big step up.
It’s Paschal Donohoe’s ninth budget, equalling the record set by the finance minister in the first Cumann na nGaedheal government, Ernest Blythe (finance mandarins sounded delighted with this query).
With the finances of the new State in parlous state, Blythe (in)famously reduced the old-age pension by a shilling – an act of fiscal rectitude for which he has not yet been forgiven in some quarters.
Donohoe was minister for public expenditure from 2016 to 2017 and occupied that role in conjunction with the job of minister for finance in Leo Varadkar’s first government, 2017-2020. He stayed in the Department of Finance when the current Coalition was formed in 2020 but moved back to public expenditure when the Taoiseach’s position transferred to Fine Gael at the end of 2022.
He is also president of the Eurogroup, the group of EU finance ministers whose countries use the single currency. But with nine budgets under his belt (will he get a tenth?) Donohoe surely qualifies as one of the architects of the Ireland of 2024.
There is to be some €1 million in funding for more community-engagement workers to be deployed to some of the most disadvantaged areas of the country.
The Empowering Communities Programme (ECP) – spearheaded by Minister of State Joe O’Brien -targets areas of deprivation with community workers helping to develop responses to local concerns and raising issues at local and national level.
The ECP has been in operation in some 15 areas around the country, and earlier this year it was expanded to Tallaght-Jobstown and Roscommon-Castlereagh.
The budget at a glance.
The budget is set to include funding for 1,600 extra special needs assistants (SNAs), Cormac McQuinn reports.
It is understood there will also be provision for more than 750 special education teachers as part of measures sought by Minister of State Hildegarde Naughton.
There will be a extra special needs classes for the 2025/2026 school year on top of the 3,300 already in place with the additional SNAs working in these as well as mainstream classrooms.
A previous estimate suggested that 350 more special education classes will be required.
Breaking news on the cost-of-living package. It seems when it is all added up it now amounts to more than €2.2 billion, which is in line with last year’s, writes Cliff Taylor. We will have to see how this breaks down between households and business but talk of scaling back the once-offs has clearly got lost in a last-minute push for more.
There is expected to be a support fund for regional airports as part of efforts to support balanced growth and relieve pressure on Dublin Airport due to the passenger cap there, reports Cormac McQuinn.
The 32 million annual passenger cap was a condition of planning permission for the second terminal in 2007.
Airport operator DAA has warned it is likely to breach that cap by at least a million passengers this year. It is looking to extend the limit to 40 million.
Minister of State James Lawless – whose remit covers international transport – has previously spoken of the need for airlines to move away from their dependency on Dublin Airport.
It is understood he sought the support fund in the budget for Shannon and Cork and other smaller regional airports, with the aim of encouraging balanced growth.
There is also to be investment in ports to help them prepare for the development of the offshore renewable energy industry and increase shipping capacity.
The final cost-of-living package will now come in at just shy of €2bn, well in excess of the €1.5bn that had been expected, writes Jennifer Bray.
Most of this will be made up of lump sum payments to be given out over the autumn and winter. There are ten lump sum payments due to be announced and they are:
An October bonus double payment for welfare recipients, another welfare Christmas bonus payment, a €400 disability support grant, €400 carer’s support grant, €300 fuel allowance payment, a November double child benefit payment, a December double child benefit, a €200 living alone allowance, a €400 working family payment and a €100 child support grant for those in receipt of the qualified child increase payment.
We have more from Taoiseach Simon Harris explaining why this is not the biggest giveaway budget in the history of the State.
He said the Government has taken a “sensible approach” to Budget 2025 – which includes a cost-of-living package that will “help people in the here and now”, reports Sarah Burns.
Mr Harris has also denied that it looks like a “if-you-have-it-spend-it” budget with “billions and billions of a surplus” set aside for the future.
Speaking on his way into Cabinet this morning, the Fine Gael leader said there were three elements to Budget 2025 – a cost-of-living package between now and Christmas, a spending package for next year as well as a package to “substantially increase” the scale of investment in infrastructure. He said the Government had taken a “balanced approach” and insisted it had listened to the public.
The Taoiseach said although the country was at full employment and inflation was falling, cost-of-living challenges were still “real” for people across the country.
“People in this country are saying: ‘yes Simon, the economy is going well but I’m still worried about the electricity bill, I’m still worried about the energy bill’,” he told reporters.
Mr Harris also said suggestions there was “nothing” in the budget for the hospitality sector were “completely untrue”, adding there would be “an exciting package of support” for businesses.
However, he said there did need to be “an honest conversation” about the cost base being faced by smaller businesses in particular.
The Taoiseach also acknowledged there would be an election in “due course” and said the latest budget was to show people the Government was “listening”.
“I’m a bit old fashioned for a young politician,” he said. “I think that if you come to work and do a good job people might actually vote for you and therefore I think it’s fair to say that the focus of all three parties in Government on this budget has been to deliver a good budget to show people that we get it, that we’re listening.”
Mr Harris added that it would have been “absolutely galling” for the Government to stand up in the Dáil later today and say “the economy is going well but there is nothing we can do to help you until January despite having a large surplus this year.
“It wouldn’t have been acceptable to the people of Ireland and Government.”
He said although the details of the budget would be debated, he believed that many families, older people, carers and people with a disability would by the end of today “feel seen by this Government and I think that’s important in politics”.
When is a giveaway not a giveaway?
Today’s budget will not be a giveaway one, according to the Taoiseach, Simon Harris. He said this morning the Government had taken a balanced approach, “a sensible approach … it’s about giving people a little bit of their own money back”.
“I make no apology for giving people a little bit of their own money back between now and Christmas, because that’s the buffer we need to provide people with, to allow the timeline between inflation falling and bills falling.”
‘’We’ve chosen to not spend billions of euro that we have to protect our future. We’ve chosen to put that into a fund for climate emergency,” Mr Harris said.
“We’ve also got to listen to people and if there is anyone in Ireland or in Dáil Éireann who thinks that the cost-of-living crisis isn’t real, who thinks that people don’t need a bit more support in raising their kids in terms of financial assistance, I’d like to meet those people, because it’s not where people in this country are at.”
What will the “size” of the budget be? Normally there is a headline figure but calculating what it is this year is something of an “ecumenical matter”, according to Cliff Taylor
First up is the package of once-off payments going to households, likely to total close to €2 billion. The signs are that the vast bulk or perhaps all of these will be paid this year. Nerds like myself would point out that technically these are adjustments to Budget 2024 rather than matters for Budget 2025. But this small matter is unlikely to worry the politicians or headline-writers.
Second are the tax and spending measures that are the normal fare of budget day. These have long been signalled at around €8.3 billion. Add this to the €2 billion in once-offs and you go over €10 billion.
This is probably the fairest estimate of the size of the package. But the Government will also allocate another €3 billion from the sale of its shares in AIB to investment projects over the next few years. If you want to add that in you get over €13 billion. And then there is the €14.1 billion coming from Apple.
Here the Government is going to give indications of where the money might be spent, but not allocate it in detail. And so we head over €27 billion.
You can choose your own preference – I will stick to €10.3 billion for now and see what exactly happens today.
Bleary eyed officials are making their way back into the Department of Finance and the Department of Public Expenditure after a late night. One sleepy mandarin says printing of the documents didn’t get under way until about 4.30am, after being checked and rechecked.
Political meetings ended after midnight, but officials then had to make sure that the sums added up and the figures were correct.
Political tensions were greater than previously in the final days – a function both of the proximity of a general election when Fianna Fáil and Fine Gael will compete for votes, but also of the fact that Fianna Fáil basically thinks Simon Harris is trying to hog the credit for everything. The lads would never do anything like that, of course.
That comes from Political Editor Pat Leahy. It should be pointed out that The Irish Times political team are pretty bleary eyed themselves after what must seem like an endless sequence of late nights and leaks. They’re not done yet and have a fair few miles to go before they sleep.
The Government will approve a once-off €1,000 reduction in student fees – less than the €1,500 sought by Minister for Higher Education Patrick O’Donovan – and it will not be permanent as had been sought, writes Jack Horgan-Jones. The move will bring the cost down to €2,000
There will be a once-off reduction of apprentice contribution of €1,000 (a third). For Post Grad Supports the fee contribution will increase from €4,000 to €5,000. The total once-off package will amount to €100m in supports for third -evel students.
The traditional winners-and-losers narrative is out the window with giveaways across the board, reports Eoin Burke-Kennedy. Opposition parties will struggle to land a blow and perhaps, on the eve of an election, that’s the point.
Economists will, however, criticise the size of the package (it’s almost the same size as last year’s) when inflation has subsided but most of all they will criticise the untargeted nature of many of the one-off payments.
Many of them, including the double child benefit, will go to families who don’t need them or to households who are no longer in the grip of a cost-of-living crisis with real wages rising again. The same goes for the €250 energy credit. Last year an estimated €100 million of these energy credits went to families who own more than one home.
Far be it from us to put words in Paschal Donohoe’s mouth but it appears that when saying “you can’t deliver everything that is expected” he was ruling out any reduction of the VAT rate for the hospitality sector – or even part of it.
Minister for Public Expenditure Paschal Donohoe has been speaking on his way into Leinster House. “You can’t deliver everything that is expected of us. But there are many other measures contained within the budget that I believe can make a very positive difference to small businesses across the country.
“Measures from a spending point of view will be outlined today to help businesses at a particularly costly time and changes will be made that will be important for small businesses. From the point of view of the taxes they pay, so many other changes are happening.
“The most important thing, of course, we can do to support small businesses and indeed employers of all sizes within our country is have a healthy economy that is capable of continuing to grow in the future. And this budget will deliver that.”
Minister for Health Stephen Donnelly will announce an expansion of the publicly funded IVF scheme as part of Budget 2025, reports Jack Horgan-Jones.
Introduced just a year ago, more than 1,200 couples have availed of it so far and the first babies have been born.
Donnelly plans to expand the scheme in two areas during 2025.
First, to include donor assisted IVF. Currently couples who require a donor egg/sperm are unable to access publicly funded IVF because donor materials are not regulated.
However, with the passing of the Assisted Human Reproduction Act this year and work on the establishment of the Assisted Human Reproduction Regulatory Authority under way, it will be possible for couples requiring donor assistance to access the scheme during 2025.
Donnelly is also planning to amend the access criteria to include couples experiencing what is known as ‘secondary infertility’ – these are couples who have an existing child but then have fertility issues. One element of the current criteria sets out that a couple accessing publicly funded IVF must have no living children together.
Why is it called a budget anyway? We are very glad you asked.
The word budget as we use it today was most likely coined in a satirical cartoon of the-then British prime minister and chancellor of the exchequer Robert Walpole in 1733. After he published details of Britain’s finances, a cartoon in a satirical magazine featured him opening a bag of snake oils under the not entirely hilarious caption: “The Budget Opened”.
And what was a budget? Well, in middle English and old French a budge was a small suitcase – it is part of the reason ministers still carry a briefcase into the Dáil on budget day.
And now you know.
A new universal companion pass for people aged over 70 will also be introduced with everyone over that age allowed to bring family member or friend on public transport free of charge, reports Political Correspondent Jennifer Bray.
As it stands people over 70 can apply for a companion pass provided they satisfy a medical assessment but as part of Budget 2025, Minister for Social Protection Heather Humphreys has secured agreement to make the pass universal for all over-70s in a move designed to tackle issues such as isolation and loneliness.
The start dates for two significant social welfare reforms will also be announced as part of Budget 2025.
Pay Related Benefit, which ensures those with stronger working histories receive higher welfare payments if they lose their jobs, will start on March 31st, 2025, while the long-promised pension enrolment scheme will start on September 30th, 2025.
By way of a public service announcement, if you are planning to be in Dublin city centre today you can expect significant traffic restrictions around Leinster House with a significant Garda presence and barriers installed on all the approach roads to the Dáil.
The following locations are impacted
• Across Molesworth Street
• Across School House Lane
• Across Kildare Street in the vicinity of Setanta Place
• Across Kildare Street in the vicinity of the Shelbourne Hotel
• Across Merrion Square West in the vicinity of Clare Street
• Across Merrion Square South opposite Leinster Lawn
• Across Merrion Street Upper in the vicinity of Reilly’ Bar
• Across Merrion Street Upper opposite Government Buildings (Fitzwilliam Lane) beside Merrion Hotel.
So, how do we know so much about what is going to be in the budget this year?
And was it always like this? The answer to the second part of your question – actually, it’s not your question, it’s our question but anyways – is a resolute no.
The annual budget used to be one of the most closely guarded secrets in Irish – and indeed in world – politics.
Going all the way back to the late 1940s, the then British chancellor of the exchequer Hugh Dalton was forced to resign after making a casual remark about his budget plans to a journalist that then found its way into the evening papers minutes before he delivered his speech to the House of Commons.
Can you imagine if the same rules applied today? There’d not be a Minister left in Dáil Éireann today.
In an Irish context, for donkey’s years, the budget plans of the minister for finance was as tightly guarded a secret as the Third Secret of Fatima.
Leaks were a sackable offence. Then Fianna Fáil started releasing – slightly secretly – the top lines of the budget to the evening newspapers on the day of publication. It slowly became a free-for-all and these days almost every line in the budget is flagged well in advance.
So, what do we know now? Thanks to our hard-working political reporters who’ve been assiduously mining various sources for weeks and a fairly newly found propensity amongst politicians to give all their secrets away early in the day we know almost everything.
Here are just some of the things you can expect to be announced later today.
Many families will gain thousands of euros over the next 12 months, as the Government seeks an electoral launch pad from today’s budget.
Tax changes are expected to increase average wages by about €1,000 and a series of one-off payments in the coming months, including €250 in energy credits and two double payments of child benefit, will be among the measures announced in Budget 2025. The Budget will be unveiled in the Dáil at 1pm. The Green Party was happy last night to secure a triple payment of child benefit as a “baby boost”.
A range of other spending commitments will amount to the biggest budget giveaway to households ever, with an election due by March of next year and expected by many to take place in November.
The Government will project a large surplus, again driven by bumper corporation tax receipts, while also setting money aside into its savings funds. The Government is also expected to announce that some of the proceeds of the Apple tax case will be committed to investment in four areas – water, electricity, transport and housing.
The Irish Times understands that welfare increases will include a €15 increase for maternity and paternity payments; a package for carers will include an increase in the Carer’s Allowance means test limits to €625 per week for a single person and €1,250 per week for a couple; an increase in the Carer’s Support Grant to €2,000 from €1,850; and the Carer’s Benefit will be extended to self-employed workers.
Overall there will be a €12 increase to weekly welfare payments, and a €20 increase in the Domiciliary Care Allowance. Student grants will also increase by 15 per cent. The Qualified Child Payment will be renamed as the Child Support Payment – and weekly payments for under 12s will be increased by €4 to €50 and for over 12s increased by €8 to €62.
Read our Budget Main Points here.