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Budget 2024 Commentary: Leading you through complexity with confidence

Planning for future growth and resilience

Budget 2024, like predecessors, in one of the high points in the annual political and fiscal calendar.

There was a lot of hype in the run up to budget day, the main themes around easing the tax burden for workers, giving more to households continuing to struggle with the cost of living, the housing supply, and foreign direct investment. The budget was also heralded as the final chance to secure Ireland’s 2030 climate targets.

The substantial €1.1 billion in tax measures out of the total core budget package of 6.4 billion were supported by strong exchequer receipts of €61.4 billion to the end of September this year, €3.5 billion more than the same period last year, unemployment is just over 4 per cent and a record 2.64 million people were working at the start of summer 2023.

However, against this we have a situation where inflation remains stubbornly high albeit falling, and any easing seen earlier in the year has stalled in recent months. According to the ESRI’s latest assessment of the state of the Irish economy GDP is set to fall by 1.6 per cent this year, meaning a technical economic recession. The warning was to keep tax cuts at levels needed to adjust for wage inflation.

The most strategic element of Budget 2024 was to announce the introduction of two new investment funds the Future Ireland Funds to protect living standards and public services and the Infrastructure, Climate and Nature Fund to allow for sustained levels of investment in infrastructure in the event of economic downturns and to support climate and nature related projects. Given the uncertainty around the windfall nature of corporate tax receipts, this is a prudent measure and to be welcomed.

Overview

 

Budget 2024 tax measures feature a range of supports for individual and business taxpayers. Measures include:

  • movements to income tax and USC rates and bands,
  • increases to the R&D tax credit to offset the impact of higher 15% rate of corporation tax,
  • measures to provide help to landlords, renters and mortgage holders and
  • a number of cost-of-living measures that provides cash relief to taxpayers.

There were also a number of consultations and reviews announced, which we look forward to engaging with the Minister for Finance and his colleagues on over the coming months.

Conclusion

 

In our view Budget 2024 measures address some of the cost-of-living pressures and the needs of society today while also looking to the future of the tax system. The various consultations on aspects of the tax system such as share remuneration and interest deductibility are positive indications of future changes. However, there were missed opportunities in the budget to maintain our attractiveness for inward investment and support our domestic businesses in their growth, expansion and the cost of running the business with more enhancements to enterprise supports such as the Employment Investment and Incentive scheme and the Key Employee Engagement Programme.

The finer details on the measures announced in Budget 2024 will be published in Finance (No.2) Bill 2023 due on 19 October 2023.

We hope you will find Deloitte’s commentary on Budget 2024 insightful and informative. Keep an eye out for our insights on the Finance Bill when it is published later this month.

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