Mixed signals before budget as income tax cuts to be ‘modest’, says Chambers

There were mixed signals from Government on the forthcoming budget on Monday, as Fianna Fáil Ministers and TDs gathered in Tullamore, Co Offaly, for the party’s think-in ahead of the resumption of the Dáil next week.Fine Gael leader and Tánaiste Simon Harris promised that tax cuts in the budget would support people “who get up early every morning and go to work”, reprising a line used by Leo Varadkar during his campaign for the party leadership in 2017.In an address to the Mullingar Chamber of Commerce on Monday morning, Harris – who as Minister for Finance has responsibility for tax policy – promised that the Government’s commitment to support people who work hard would be reflected in a personal income tax package in the budget.He said cutting business taxes and cutting income tax “are the priorities” for the budget, which is set to be delivered in four weeks’ time on October 6th.READ MOREHowever, a few hours later, speaking at the Fianna Fáil event, Minister for Public Expenditure Jack Chambers played down expectations of a big tax giveaway. Chambers said cuts to income tax would be “modest”, benefiting most people by only a few hundred euro a year.Chambers echoed Harris’s language, saying the Government wanted to help those who get up early “but also get up and work nights too, so it’s about all workers across the economy”.However, he cautioned against unrealistic expectations about the scale of the tax package. “I’m honest about what I believe it will achieve. It will be a modest income tax package, one that amounts to €1.5 billion in total,” he told reporters at the think-in.[ Budget 2027 unlikely to see return of energy credits, says TaoiseachOpens in new window ]“I’m very clear that it is modest and the adjustments will amount to, you know, it could be a few hundred euro, depending on your income, which I know on an annualised basis would be perceived as modest among the public.”Also speaking at the Fianna Fáil event, Taoiseach Micheál Martin indicated that the return of energy credits was unlikely, though he did not want to completely rule out some one-off payments in the budget to help with the cost of living.However, he said any such measures would reduce the capacity of the Government to fund other areas, citing childcare and disability.“We want to reduce the cost of childcare. The more you put into one-off payments, the less you have to reduce childcare costs,” he said.“Every time you do a one-off payment by say €1 billion or €2 billion, you reduce your capacity to deal more substantively with issues that matter to people on an ongoing basis ... so energy credits for everybody – I can’t see the capacity being there to do that.”However, the Taoiseach said he had a “favourable disposition” to a suggestion from one of his backbenchers, Cork TD Seamus McGrath, to scrap stamp duty for first-time buyers, indicating that it was an issue that could be discussed ahead of the budget.Later, in a statement, McGrath said: “I very much welcome the Taoiseach’s comments today. I have been making the case for the removal of stamp duty for first-time buyers and I believe there is an undeniable argument in favour of providing this relief.”But the idea was categorically ruled out by Harris during the summer when he told The Journal there would be no changes to stamp duty in the budget, saying it was “not a lever I intend to pull”.Later, Minister for Children Norma Foley signalled that she expected to be able to announce significant reductions in the cost of childcare.“This must be a breakthrough budget in terms of early years and childcare costs for parents,” she said.