Budget 2023 was delivered on the 27th September 2022 to the Dail by Ministers Donohoe and McGrath and the main focus was on supporting individuals and businesses through the current challenging cost increases environment. All aspects of our society and economy have been hit with sizeable cost increases over the past 12 months and this Budget seeks to support the many people and areas that have been severely impacted.
Inflation is projected at 8.5% for 2022 and 7% for 2023, with energy costs contributing approx. 3% of these increases. Growth in the economy in 2023 is estimated at 4.7% while modified domestic growth is expected to come in at 1.25%.
For individuals the increase in the tax credits will benefit somebody on €40k + per annum to the extent of €70 per month and a rent tax credit will be available of €500. These tax reductions, allied with increase in wages/salaries, and the energy credit should provide people with some additional financial resources to cover some of the increased day to day living costs.
Likewise for businesses the new Temporary Business Energy Support Scheme should greatly assist in meeting some of the energy costs increases that have occurred. This new scheme, which will be administered by the Revenue Commissioners, will provide for a subsidy of 40% of the increase in the relevant costs subject to a cap of €10k per trade/company per month , and the scheme will run from 1 September 2022 to end of February 2023.
A major plus for the Irish economy is the one off spend is being mainly funded from this year’s tax surplus and does not require borrowings. In addition the number of people in employment is at a record high and unemployment is at approx. 4.5%. The strength of the economy has enabled the Government to provide the necessary supports to individuals in tax reductions and social welfare payment increases and businesses in the new energy support scheme.
Overall the Budget is a very positive statement about the current financial wellbeing of the Irish economy and there is something for almost all sections of the economy with additional significant spend on housing, health, education, justice and social welfare. However there are many challenges still to be met as we face increasing interest rates, high national debt, inflation, Brexit issues and fallout from the war in Ukraine. In the past this would have been termed a giveaway or election type Budget but it would be unfair to label this Budget in that manner and it is certainly a budget of necessity for our time.