Cost of living, tax breaks & fuel costs dominate budget

The Government has faced criticism from all-sides on the foot of a budget which opposition parties and advocacy groups have criticised for not doing enough to benefit working people.

Measures aimed at addressing the rising cost of living, including a raise of the threshold of the highest income tax band, increases to social welfare payments, and the continuing of fuel excise cuts were targeted by the Departments of Finance and Public Expenditure in Budget 2027.

Cost of living measures

The threshold at which people will begin to pay income tax at 40% was raised from €44,000 to €46,500, while Personal, Employee, and Earned Income Credits were increased by €125.

This was joined by a €100 increase to the Home Carer Tax credit, and a €1,600 increase to the threshold for the Universal Social Credit 3% band to €30,300. The latter was to take account for the increase to the minimum wage to €14.94 per hour.

However, Sinn Féin TD Pearse Doherty said that the income tax measures mean little to the majority of workers, as they do not earn enough to avail of the tax breaks in relation to the raising of the band threshold.

"The majority of Irish workers, over 1.5 million, will get less than €250 in a tax break. It is less than €5 a week at a time when people have seen price increase after price increase over the past year," he said.

There were also increases to social welfare payments, including a €10 increase in weekly rates, a new cost of disability payment of €500, and an increase to the Carer's Allowance disregard to €1,150 for a single person and €2,300 for a couple.

However, the Disability Federation of Ireland (DFI) said that the €500 payment falls far short of the needs of disabled people, and covers just 5% of the extra costs disabled people face.

"For those in receipt of long-term disability payment, the new payment will largely restore the €400 Disability Support Grant removed in Budget 2026. DFI has called for that grant to be reinstated and, separately, for a weekly payment of €55 worth €2,860 a year, six to seven times what has been announced," they said.

Fuel costs

In a bid to stave off further fuel protests, the Government also announced an extension of cuts to fuel excise rates until February next year.

This was joined by a reduction of the carbon tax on home heating oil and gas from €63.50 per tonne of CO2 to €48.50 per tonne, which Minister for Finance Simon Harris said will not be raised again "in the lifetime of this Government".

However, he said that the measures did not signal a "weakening of our resolve to de-carbonise the economy".

€1.5 billion was announced for the ESB to fund investment in renewables, while €2 billion was announced for Eirgrid to increase grid capacity.

However, environmental NGO Environmental Pillar said that the reduction in carbon tax was a sacrificing of long-term thinking for "short-term populism".

Oisín Coghlan, Policy Advisor for Environmental Pillar said that the Government had missed an opportunity to ring-fence revenues for environmental measures.

"Ireland's continued reliance on fossil fuels is leaving households exposed to repeated external shocks and volatile energy prices, with many struggling to meet the cost of essential energy needs.

"But, yet again, a Irish government responds to an energy crisis by doubling down on locking the country into volatile fossil fuel usage," he said.

Public sector pay talks

As a prelude to this year's budget, public sector workers across the country began a work to rule action to force Government to "meaningfully engage" in talks to agree on a new public sector pay deal.

The previous deal expired in July this year. A national day of strike action, which is expected to involve tens of thousands of public sector workers, is set for 14 October.

Minister for Public Expenditure Jack Chambers addressed the industrial action in his Budget announcement, and said that "Government, unions and representative associations must now refocus on delivering an agreement without further delay".

"I have made significant provision in today's Budget package for public service pay.

"I would now call on ICTU and other associations to match this intent by re-engaging as a matter of urgency and standing down the ongoing industrial action," he said.

The Public Services Committee of ICTU said that the funding announce falls short of that hinted at in recent commentary.

"Public service workers will be left in no doubt that they were right to support industrial action in pursuit of pay measures to address the effect of inflation.

"The Government has demonstrated fiscal capacity elsewhere in the Budget, but has apparently not allocated enough to resolve a pay dispute that is now escalating," it said.