Donohoe announces €1.5bn in tax cuts for Budget 2026 but says figures are based on ‘a no-tariff scenario'
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Irish Examiner
5 hours ago
- Irish Examiner
Alcohol health labelling 'will add over a third to costs'
Taoiseach Micheál Martin was lobbied by business representative group Ibec to delay the introduction of alcohol warning labels for 'at least' four years due to tariff fears. Ibec chief executive Danny McCoy warned the Fianna Fáil leader that the new requirements would lead to packaging and labelling costs increasing by 'over one-third'. The letter also suggested that some distillers had even suspended brewing in fear of impending tariffs by the US administration. Mr McCoy also sent the letter to Tánaiste and trade minister Simon Harris and health minister Jennifer Carroll MacNeill in early June. The Government agreed earlier last week to suspend the rollout of warning labels for two years. In May 2023, then health minister Stephen Donnelly signed the Public Health (Alcohol) (Labelling) Regulations 2023. It was envisaged that the law would make it mandatory for alcohol product labels to state the calorie content and grams of alcohol in the product. They would also warn about the risk of consuming alcohol when pregnant and about the risk of liver disease and fatal cancers from alcohol consumption. The change was due to come into effect in May 2026, to allow a three-year implementation period for the drinks industry. However, there have been rumblings in recent weeks that the plan would be postponed, with Mr Harris saying that it would be additional disruption and a 'potential trade barrier' as tariff negotiations continue. At Tuesday's Cabinet meeting, the Tánaiste told ministers that Ms Carroll MacNeill will defer the plans for two years. This is despite reports that it would be a four-year pause. Correspondence released under Freedom of Information (FoI) shows that the Taoiseach was being lobbied by Ibec to drop the labelling plans. On June 3, Mr McCoy called for the plans to be dropped for four years 'at least'. 'The wider drinks sector, but particularly many of the new emerging distilleries, have significant exposure to these new tariffs and the wider trade uncertainty,' wrote Mr McCoy. 'The majority of distilling across the country is now suspended. The introduction of new labelling requirements for the drinks sector, which will add over one-third to product labelling and packaging costs, should be suspended for at least four years to give some certainty to operators. 'Reducing regulatory burden costs to free up resources to allow companies invest in finding new markets would be a positive development.' Mr McCoy said that the legislation had been cited by the US administration in its 2025 National Trade Estimate Report on Foreign Trade Barriers, which he said was 'cause for further concern and reason for this legislation to be deferred'. He added: 'The industry does not want this to be an issue of disagreement in overall efforts to secure a resolution on trade relations and restoration of a tariff-free trading environment.' Further correspondence shows the letter was also forwarded from the Taoiseach's office to the Department of Enterprise several days later seeking an update on enterprise minister Peter Burke's engagement with Ms Carroll MacNeill. A letter sent from Mr Burke to Ms Carroll MacNeill on May 15 was also released under FoI. He said that recent months have seen 'significant global uncertainty and a rapidly shifting trading landscape', which he said 'could have profound competitiveness implications for small open economies like Ireland'. Mr Burke said that Ireland would be the first country in Europe to introduce the labels. 'The proposed measures will mean increased production and sale costs for Irish producers and importers and add to the price payable by consumers at a time when prices are also rising due to a multitude of other factors,' wrote Mr Burke. 'Notwithstanding the overarching health benefits of the proposal, I would ask you to consider pausing the introduction of the proposed new requirements.' Calls not to delay plans Meanwhile, Mr Martin was urged not to delay the plans and received a letter just last week from Alcohol Action Ireland chief executive Sheila Gilheany. She said that 'postponing alcohol health information labelling is not consequence free given the thousands harmed by alcohol in Ireland.' Read More Delaying alcohol warning labels prioritises profiteering over health, says Irish Medical Organisation
Irish Examiner
6 hours ago
- Irish Examiner
Jim Power: Budget countdown begins with big promises
The publication of the summer economic statement has set the budgetary process in motion, and the destination will be reached in early October. The two relevant ministers have outlined a budget package of €9.4bn, with a net tax package of €1.5bn, and an expenditure package of €7.9bn. This expenditure package will be comprised of current expenditure increases of €5.9bn or almost 75% of the total; and capital spending of €2bn or just over 25% of the total. Proposed Vat cut On the tax side, the Government has given a commitment to reduce the Vat rate for part of the hospitality sector — the food element — to 9% and this would cost around €580m in foregone taxes. If this is delivered and applies from January 1 next, it means that effectively less than €1bn would be available for personal tax changes. To put this in context, it is estimated that a 1% indexation of the employee tax credit would cost around €230m in a full year, so to index for projected inflation in 2026 would cost somewhere in the region of €460m; or a 1% decrease in the 40% tax rate would cost around €540m. If the government delivers the Vat cut from the beginning of 2026, which it has committed to, the tax package will be small. So not surprisingly, there are suggestions that the cut might be delayed until July, thereby significantly reducing the cost in 2026. If this transpires, the hospitality sector would have every right to be aggrieved. Restaurants and food businesses are the most crucial element of our tourism product, and many businesses are struggling to stay afloat. Inflation Data released by the CSO last week show that in 2024, Irish food prices are the third highest in the EU-27 and are 12% above the EU average. In the year to May, agricultural output prices increased by 20.7%, with cattle prices up by 48%. These prices obviously feed into restaurant input costs, but the pressures are compounded by labour costs, insurance, water charges, commercial rates etc. I am a supporter of the reduced Vat rate, and I think it is now more appropriate to provide some limited support to a key employer of people all over the country, and a vital part of the tourism offering, rather than to pump money through excessive expenditure into an economy that is still doing quite well. Does the Irish economic cycle need a continuation of out-of-control current expenditure now? I think not. Even if the Vat cut is pushed out, the extent of the easing of the personal tax burden will be miniscule. We should have learned from the past We should have learned our lessons from the pro-cyclical policies of the past. The summer economic statement projects planned expenditure of €108.7bn this year, which is €3.3bn higher than planned in Budget 2025, and it is likely to turn out even higher than this latest projection. Not surprisingly, the Irish Fiscal Advisory Council is not happy and has justifiably accused the Government of 'poor planning and budgeting.' Obviously, the ability of the two ministers to deliver the proposed budgetary package, and indeed to deliver the ambitious, but detail lacking, revised National Development Plan, will be heavily contingent on the future performance of the economy, and especially the actions of Donald Trump. Downward creep in projections There is not a lot of detail in relation to economic assumptions in the summer economic statement, but it is interesting to note that for 2025 the Department of Finance is projecting growth of 2% in modified domestic demand (MDD), down from 2.5% in April, and 2.9% in Budget 2025 last October. For 2026, MDD is projected to grow by 1.8%, down from 2.8% in April, and 3% in Budget 2025. There is downward creep occurring in Ireland's economic projections, which seems logical in the context of Trump-induced uncertainty. In relation to the National Development Plan, it is quite amazing that we must await detail on the projected spend until close to budget time. What in the name of God has been happening since January? The aspirations outlined in the revised plan — such as energy, water, housing, transport infrastructure, and climate change — are difficult to argue with, but delivery on time and on budget will be essential. One hopes there will be greater control, transparency and accountability in relation to National Development Plan delivery than we have seen with major infrastructure projects such as the children's hospital and the infamous bicycle shed.
The Journal
8 hours ago
- The Journal
Jobseekers are avoiding part-time roles in fear of losing other social welfare
JOBSEEKERS ARE DETERRED from taking up part-time employment in case they lose out on other social welfare entitlements, a specialist expert group has told the government ahead of Budget 2026. In order to ensure unemployed people are motivated to get a job again in the future, the government has been told to increase means-tested social welfare allowance thresholds so that they are in line with the national minimum wage or a recipient's earnings. It comes as Fine Gael leader and Tánaiste Simon Harris floats the possibility that the jobseekers' allowance would be removed from the overall increases to social welfare, in favour of higher increases to pensioners. The Tax Strategy Group, an expert advisory panel at the Department of Finance, said this week that 'inconsistencies' have appeared in Ireland's social welfare system as it has evolved since the late 1800s. It explained, in its annual reports to government ahead of the budget this year, that jobseekers are disincentivised from picking up shifts in part-time roles in case they impact the specific thresholds of income which are disregarded from social welfare payments. A portion of a person's income is not taken into account when assessing how much they are entitled to from a social welfare payment. This means that you can earn a certain amount of money, without it affecting your entitlements. Advertisement In some cases, the threshold of income that is disregarded from the means test, which will later determine the value of the total payment, is surpassed when jobseekers take up part-time roles, leaving them with not enough money to rely on each week. It can also impact any other means-tested social welfare payments that they may be receiving, the tax experts' report said. 'This is a penal approach that acts to disincentive an unemployed person from taking up part-time work,' the report from the Tax Strategy Group said this year . It has recommended that a system should be agreed whereby the values of these thresholds increase annually, 'whether aligned with the National Minimum Wage or earnings', to make sure that jobseekers find work. It added that this change would avoid situations where a person's social welfare entitlements are impacted or reduced, and that it should be done in order to achieve Ireland's policy aims for social welfare. The report later questioned if there was indeed a 'policy rationale for creating this deviation' – in which case, the state should disregard the advice, it said. Speaking earlier this month, Tánaiste Harris said he was not convinced that dole increases should be in line with other social welfare payments, such as pensions and disability payments. 'When there are other supports out there for very many people who can't work for very many good reasons. That's my opinion. We'll thrash it out all that out at the time of budget,' he told reporters. Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. Learn More Support The Journal
