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to the Budget Briefing in Association with EY. I'm Emmett Oliver, and we're recording this, of course, in the wake of Budget 2025, which has happened over the last 24 hours. And I'm delighted to be joined by Brian Kelly, who's a tax partner at EY, and Jennifer Sweeney, who is a tax director at EY. Both of you are very welcome. I know you've had a busy 24 hours, so you've dusted yourselves off and joined us here today for the recording. Can I just kick off with yourself, Jennifer, and give us some idea what you thought, personally, were the biggest takeaways from this particular budget? Yep.

Thank you, Emmett, for having us.

So, I think one of the biggest takeaways that we've seen from the budget is that there was, you know, the government was looking to put money back into people's pockets here, and we've seen that they have achieved that through a number of measures. We see that the majority of the measures that have been introduced with this budget has been directed towards households and individuals to help alleviate the challenges that people have been facing recently with the cost of living, and high inflation. And while inflation has come down now, those prices are still at quite a high level that we're wanting and hoping will come down as well.

 There were some measures from businesses, which Brian can touch upon, but I think the majority of it, the key takeaway, was it was a budget for individuals and households, and just trying to help them meet those day-to-day costs.

 And, Brian, in terms of, obviously, there's hundreds of measures in there. We can't get to them all today. We'd have to have three or four different recordings to do that. But would there be... What would you say was the biggest impact on the typical household? Is there one or two items you'd pick out and say they'd be the ones that I would zone in on?

 Yeah, well, I think that the biggest measure, I suppose, that stands out is in the cost of living package. So, when we sat here with you last week, Emmett, we talked about the overall package being, was it 8.6 billion, I think, was there?

 Yeah, it was about 8.3 billion was what I think it was originally proposed as, and actually what's come out of it is that it's total to about 10.5 billion.

 A type of inflation. A type of inflation. And that's been made up of about three different packages within that. So, there is the expenditure package, which was 6.9 billion, which remains at that level, I understand. But then I think what's pushed it up is that cost of living package, which is about 2.2 billion, and then the tax package of roughly around 1.4 billion, which is making up that. So, you're seeing that they did actually take on board, I think, that there is a lot of expenses that households and families are facing, and they were looking to address that through a range of measures, whether that was by reducing taxes that are paid by individuals, or whether it's by putting money directly back into people's pockets through, you know, such as like energy credits and other once-off payments through the social welfare system.

 So, children's allowance and energy credits, for example, two of the measures, and we didn't obviously get into the detail of those last week, but that's a billion euro roughly, that they're spending. And it's an untargeted measure. So, I think some of the concern was there, and we talked about this last week, some of the concern is untargeted measures, will they further fuel inflation? We won't know until the time will tell us to where that lands, but I think that's, I guess, some of the criticism that the government might get is, well, you know, who's going to benefit from this if it's a sort of a give-away for all and it's untargeted.

 Clearly, cost of living pressures are a reality for people, but for some more than others, I suppose.

 And Brian, they've been chipping away at USC. We saw another concession on that front. Do you think this is kind of the long-term trajectory now as to kind of each budget to just have another little swipe at USC that came in, obviously, during the financial crisis? So, is that the sort of journey we're on?

 I'm not sure. I mean, I think that the policy imperative for USC obviously dates back to the GFC back in 2008-09, but like anything, once you bring something in, it's very hard to get rid of it. I think it brings in about $5 billion a year in terms of tax revenue. And I think the concern, I suppose, and this is a widely held concern, they don't want to narrow the tax base too much. So, from a corporate tax receipts perspective, we know that there's a narrow enough base there.

 There's an associated income tax narrow base associated with it.

 Does a day make come where if the corporation tax receipts go down, we may be going back to the income tax? So, if you hollow that out a bit more, is that the idea?

 I think that's it. USC, it's broadly applied, it's obviously progressive in nature, and it does apply, and they are taking more people out of the tax net by sort of reducing and changing some of the bonds and reducing some of the charging point, the presented charging point. But I don't see USC being something that the next government, let's say, will take on in a massively different way.

 And it is, as Brian says, USC is an unpopular tax that was introduced in 2011 during the austerity years. It is a very successful revenue driver for the Irish Exchequer.

 Now, while there are measures that have been introduced over multiple budgets over the years to sort of play around with the bonds, whether it's increasing the bonds or reducing the overall rates, what they are trying to do is kind of make it easy, make it so that those lower income earners or those people with low income aren't necessarily facing a USC tax bill because they may already be exempt for income tax purposes. But it does touch upon Brian's point that there is concern around there that for personal taxes, we do have a very narrow tax base.

 Small groups pay quite a large proportion.

 Exactly. And that is quite unusual when you look at other OECD countries. Other OECD countries would have maybe lower tax rates, but it's spread over a wider base of people. So that concentration on that small group of people who are paying tax, and once you do pay tax, we've talked about this at length, you enter our marginal rates quite early compared to other OECD countries. So when you are paying tax, you actually then start to pay tax at the marginal rates quite quickly. So potentially this is something that maybe future governments do need to look at and address to just tackle that narrow tax base, is to look at maybe having lower tax rates that are applicable to a wider range of people to just deal with that vulnerability there and to see if there is a better way to deal with that narrow tax base being funded by a very small group.

 I'm going to shift your attention a little bit away from the personal tax area to the business arena because I know that's what your bread and butter is advising you've got a big client base at EY and they want to know what's happening for businesses. We know obviously publicly the hospitality sector has obviously got certain views. We don't talk about all of that. But could you talk me through Brian, just come to you in a second, Jennifer, because these are often the ones that don't get as much amplification. They're not as well known to the public. But there's quite a lot of interesting things there for businesses.

 Yeah, there is. And I think more so on the SME side as opposed to the very large business side.

 Obviously there's the tweaks to the angel investor provisions that they flagged. And on the SME side they've also talked about enhancing the R&D tax credit to make the first year of refund due under those provisions to increase that from 50,000 to 75,000. So that's again in a startup business that's a welcome cash flow benefit that you can see a lot of people benefiting from in that SME startup space. On the large corporate side then, again, as we talked about, very well signaled that this foreign dividend participation exemption is being introduced. We'll see the detail of that when the finance bill is published on Thursday next week, the 10th. And again, that will be an enhancement to Ireland Inc's tax proposition, let's say.

 Because you were saying last week, both of you think we're saying there's just a slight weakening of our offering versus competitor jurisdictions. Is there enough stuff in this budget to sort of improve on that, do you think, when you take these various measures or is there more work to be done?

 Yeah, well, I think there's some good messaging in Minister Chambers' speech yesterday around that focus on competitiveness in a couple of areas. So we talked about, well, sorry, just to go back to the participation exemption, we'll have, you know, we'll be introduced, it'll simplify compliance, it'll enhance the offering. And they've also signaled in the speech there that they'll look at enhancing the geographic scope of what it covers as and when, I suppose, the global minimum tax rules are embedded in other countries. So again, I think that is indication of a very coherent Irish policy in response to the BEPS II agenda.

 I think the other thing that was mentioned was, and again, this has been flagged in the past, you know, consideration of a foreign branch exemptions, which is another string to our bow if we were to introduce that, and another simplification measure. Again, today, foreign branches of Irish company are, their income is taxed in the head office at the Irish head office level with credit given for any foreign taxes paid. But again, that's quite convoluted and complicated. A simplification measure there would be welcome.

 And then I think the other areas that I was going to get into there that I'll go back to, there's a consultation that was published last Friday by the Department of Finance, and that will look at how Ireland taxes and how Ireland treats interest income and interest expense. So we have a very convoluted set of rules that have evolved over time.

 They all interlock with each other. They're quite difficult to administer and they're very conditional. There's a lot of conditions to be satisfied in order to secure tax deductions for commercial interest expense that has often occurred on M&A transactions, for example, and in other sort of funding decisions that businesses make. So I think that was signaled as something that the government is focused on. Again, with a view to looking at our future competitiveness. So that's welcome. I think the other thing that was talked about as part of the R&D section of the speech, together with enhancing the first year refund availability, is our review of the R&D tax credit regime. So again, are we getting value for money from that regime? What could we do to enhance it? What changes could we make to it? So again, I think that is welcome as an enhancement of our overall competitiveness.

 I mean, the other items then were, I think, the VAT threshold changes, so the registration changes that were introduced. I think that will, from a small business perspective, that will hopefully take some people out of having to register for VAT.

 And then I think you mentioned the hospitality rate. The VAT rate. We didn't see a change there. And obviously some people were calling for that. But I think holding the 9% rate on glass and electricity supplies until I think 30 April next year, I think has to be a welcome move for both households and for businesses. So I think that's some of the... Yeah, there's actually a lot in there. Do you

 Yeah, and I think for the hospitality... There was energy subsidy schemes, I think, for businesses. So again, I think it's an attempt to address those increasing costs that those small businesses are facing on their utilities.

 So all of that was welcomed and we're waiting for further details on that. In terms of, I suppose, our SMEs and entrepreneurs, what we are seeing, or what we saw in the budget was that they did increase some of the reliefs that are already available there, such as the employment investment incentive and start-up relief for entrepreneurs. So these are reliefs for if you're starting up your own business. And then what was also welcomed was the retirement relief. At the other end of the spectrum, when you're going to sell off your business and you want to retire, there were provisions that were introduced last year in last year's budget, which were supposed to kick off on the 1st of January 25, which a lot of practitioners were calling to be abolished or removed or amended in some way. So what was welcomed was the recognition that the upper age limit for retirement relief up to, I think it was 69 or 70, is still there in place for the unlimited relief. If you were selling your business to your child, which is welcome, and it recognises that people are working to those later ages. And then there was sort of a 10 million and 3 million cap that was due to be introduced, depending on the age of the person selling their business. It looks like now that that's been replaced that essentially if you sell your business to a child, they have to continue that business for 12 years after the sale. Otherwise, there will be a clawback in that retirement relief. So that is all very well welcomed.

 Yes.

 Probably one thing I just might add, though, Emmett, sorry, is just what we would have liked to have seen for our entrepreneurs and SMEs was the reduction of the USC surcharge of 3%. That's applicable for self-employed income. That's over 100,000. So the overall USC rate that you pay then is 11%, which is your top USC rate of 8% plus that 3% USC surcharge. And the reason we would like to see that, and a lot of practitioners have been calling for that for recent years, is to level the playing field between entrepreneurs and people, self-employed individuals who are taking on the risk of a sexual awareness.

 So many people in this economy are in that category. It's growing all the time. Exactly.

 And if you compare that, that you have employees who earn the same amount of income, they only pay USC at that 8%. So unfortunately, we didn't see that in the budget. And that was something that we would like to see.

 It was always next year. We would start the ball

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 talk a little bit about surprises? There's always one or two in the undergrowth of a budget that kind of catches people out. I have one that I don't know, you guys may not be surprised or maybe you were, but in the so-called mansion tax, it's not what it's called officially, but that's what people are calling it. So this is a new rate of stamp duty on properties over, is it 1 million? 1.5 million. 1.5 million. And there wasn't a lot of this as budget has been leaked, as you all know, and your own predictions were pretty on message and on spot. But this idea of a new stamp duty rate on sort of what you might call bigger houses, more expensive houses, was that a surprise to you guys? And what do you think is going on there? Or what's the rationale? Do you think clients of yours would have an interest in this whole measure?

 Definitely, there would be a lot of interest in seeing how this measure is going to be implemented. It was a surprise.

 So currently, stamp duty is payable at 1% on property up to a million. If you've got over a million, I think the stamp duty rate increases to 2%. So what they're proposing to do now with the budget is that that remains in place for properties up to a million and properties between a million and 1.5 will still remain at 2%. But anything over that 1.5 million amount, the stamp duty is actually going to be 6%. Now, there might be a bit of a rush to conclude sale contracts, but essentially what we've been told is binding contracts that are currently in position now. Once they're concluded by the end of the year, the old rates for stamp duty will still apply.

 I'm okay then.

 What there is is there is a concern that this measure may have wider implications for corporate purchases, who are engaged in larger transactions that will be falling into that monetary value. So we'll just have to wait to see how that actually leads to a pattern.

 To make sure that commercial purchasing is separated out from just ordinary residential purchasing.

 Is that what we need to see? Yeah, I mean, the concern would be, let's say you had a commercial purchaser of a student accommodation block of apartments, let's say, would the 6% apply on an aggregated basis above 1.5 million? Hopefully that's not the intent, but I think that's one of the unintended consequences potentially that needs to be clarified.

 Obviously, in that space, they've obviously increased the bulk purchase of houses, which are different to apartments, let's say, but houses are effectively now going to be taxed, whether they're acquired on a bulk purchase in units of 10 or more at a 15% stamp rate. So that's gone from 10% to 15%. So, yeah, an interesting budget, a more interesting budget from a stamp duty perspective than the old ones.

 Yeah, stamp duty is not something that we normally see in there.

 Back to the future, we obviously have very high stamp duty rates in the Celtic Tiger years.

 There's a little bit of mixed messaging there because you've also got the inheritance tax changes where the thresholds are going up. So a nice home of some sort that's worth the value. You're getting more of an allowance there when it's given on to children and so on. But then when you sell at the stamp duty, it's higher originally. So it's just slightly to get a handle on what's going up and down in that area. It's tough enough, isn't it? Yeah, yeah.

 And it was a welcome measure with the capital acquisitions tax or inheritance tax to have those bonds increase because there was, I suppose, due to property prices increasing in recent years, there were individuals who were getting caught out in terms of that exemption threshold was being exceeded by the property tax.

 And it militates a little bit against people who in the Dublin era were obviously the valuations are higher. OK, just for internal fault alone, they just happened to live in Dublin. So there is that argument. Could I just bring on to the kind of the area that was a pressure point, I suppose, for the minister, which is housing and health care. There may be the two talking points almost driving the budget, particularly housing.

 Were they effectively sort of addressed, tackled, in your opinion? Obviously, there's a whole range of measures in there. But coming out of the budget, Brian, do you sort of say to yourself, were making some progress on housing or was there things missing there? What was your overall kind of assessment?

 Yeah, I mean, I think that a lot of measures, we'll talk about them now. But yeah, will any of them be effective in the round? I think collectively is the question.

 It's difficult to sort of break it down. But I think we talked about some of these windfall gains, like the AIB share sale, the government share sale to three billion. So we got clarity there as to where the government saw that being spent. So we've talked about the infrastructure. So water, Irish water, I think is getting a million to spend on enhancing our water quality and our network. I think there's 1.25 billion going into the land development agency, which again, I think was flagged. But it's being sort of included in this budget. This is where the funds are.

 And the land tax, there is still a little bit hazy about what exactly is going to happen there. But there is a land tax in here. Yes.

 So the residential land tax will be levied in 2025. Now, there is a measure that was announced yesterday that where you're using land, your land has been zoned for residential use, but you're using it in a different economic way, commercially farming, et cetera. You have an opportunity to effectively present to your local authority that your land is being used in a different way.

 So but that three percent of the market value of usable land will be levied. And the measurement date for that is the first of February, next year, 25.

 And do you think, Brian, just I know it's early and I'm sort of nervous even asking this question, but you think that will flush out a bit more land, like the amount of land coming on to the housing market are being made available for housing. Do you think it will have that effect or is that a long way to go before we get to that point? Yeah, I mean, there'll probably be a rush for potentially for people to sort of look to get their land rezoned from residential use to commercial use. And so, you know, I think that that will be interesting to see what happens there if land that had been sort of in the crosshairs is being sort of reclassified effectively as hands off here. You know, that's we'll see how that goes. You'd imagine it has to result in more land being being sort of made available for acquisition. So I think that is a big, you know, it's and it's good to hear that, you know, the farming community are going to be sort of accommodated there and other other users of land will be accommodated. I think some of the details. So the vacant the vacant homes tax. And, you know, that's something that I think they really should be pushing. So, you know, if you walk around any part of the country, there are what appear to be to delay person's dereliction in their election in the back of the town, you'll be you'll see it.

 Right. My own street alone. There's probably a couple of a couple that you could you could investigate.

 So it would be like use it or lose a type of regime where if the place is not used, you know, they just tax it until somebody is forced to sell it.

 That would be useful. But I think as well, I mean, if you look around a lot of city centers, you know, there's a lot of old buildings that are vacant and potentially it's just down to cost, you know, to revitalize them. It's so expensive.

 So I think, you know, that there needs to be maybe, you know, another approach as well.

 Stranded assets that are just sitting there.

 Yeah. So increasing that from five times to seven times the local property tax. I mean, again, that has to make people. Why would you have a house that you own that you're paying seven times local property just to keep it keep it?

 And is that holiday homes as well? Because I did see second homes also being mentioned. Is that a different thing? I think that's a different. Yeah. Yeah. But vacant is a particular category.

 We talked about the stamp duty. So the six percent rate is that going to sort of put a ceiling on on houses at that level and push the market down?

 We wait to see the mortgage interest relief extension. I think that's welcome for people that are still on high rates of say variable that didn't have a nonbank lender, for example. Exactly.

 So that so that the extension of that for the years is welcome. And the, you know, the help to buy extension to twenty twenty nine, I think is important. And then look, I think the the heat pump and that reduction from twenty three percent to nine percent for both purchase and installation of a heat pump. Got to be done, hasn't it? It's got to be done in terms of our carbon agenda, decarbonisation agenda. I think so. We had Seamus coffee on our. So you see Seamus coffee.

 Seamus coffee economists on our on our client and head of the fiscal council should also add the IFA. And, you know, the point he was making was it's difficult. You're trying to do as much as you can. How is it possible to be incentivising retrofitting of houses, but more building of houses based on the labour constraint that we have? So it's hard to please everybody. It's almost as if we should focus on either retrofitting or building houses. It's hard to do both. Only so many building workers to go around.

 Exactly. That's the plan. And I was looking at some figures before we came on to this recording. You know, the amount of building workers in Ireland hasn't really increased. It's actually decreased depending on time period. So I do think a lot of this is welcome measures, but just the labour market may be where the real issues are is getting people. But can I move you on a little bit to that more infrastructural area, Jennifer?

 We all hope we had great hopes for a big vision thing. And maybe I was it was my my mistake to be expecting that. But with the Apple receipts of between 13 and 14 billion and then you've obviously got extra windfall corporation tax receipts on top of that. And the minister was in a I think probably the best starting position of any minister really has ever been in. We were hoping for maybe a little bit more clarity and concreteness. No pun intended on the infrastructure side. We got a little bit of that, to be fair, talk of a framework and so on. Were you looking for a bit more or do you expect or were you kind of expecting us not to get a bit more? What was your sense of the infrastructure part of the budget?

 Yeah. So I think what was positive to see in the in the budget is that they were making provisions for the future. And this was very clear in Jack Chambers speech that he was talking about children who were born today. He wants them to have better access to health care, housing and basically a standard of living. So you can see that the government by setting up these various funds. Yes, there are excess revenue there that's coming from the city and from other areas are available that they have purposely said that they don't want to use on day to day spending. They want to invest it. And that's that's positive to see that because if you look back to Celtic Tiger years, it was a case of spend it now. Well, I have a lot of infrastructure that should have been invested in that wasn't. So we saw indications of what sort of infrastructure that they wanted to invest in from the sale of the AIB shares, that three billion amount, which was Irish water housing and the national grid. So that kind of gives you an indication of the areas of focus.

 Ideally, he touched upon as well, you know, transport. And he did touch upon about Ireland's competitiveness on the international stage in terms of attracting foreign direct investment, but also employment. So you would expect to see maybe there would be around investment around infrastructure outside of those three core areas, such as, you know, our road network, our transport system. So that's what is, I suppose, hoped we didn't get that level of detail and potentially it's for another day, maybe.

 Obviously, there's an election coming, but I suppose we did get an indication that to the extent that there are future that's a share sales that will be directed towards infrastructure. So there's a policy decision being made now. And I think, again, we got detail around the state aid case and the funds there in terms of, you know, the Department of Finance, the Department of Public Expenditure and Reform will effectively build a framework together to ensure that sort of decisions are being made that are in line with sort of, you know, delivering for public infrastructure. So I think its principles are, you know, deliverability, value for money, additionality and prioritization for economic impact. So I think they're beginning that work now. That will obviously go forward for approval in the first quarter from the departments for the first in the first quarter of next year. We'll have a new government. It's the reality at that stage. So I think we'll know more about, you know, how those funds will be directed into the future, frankly, under the next government's mandate.

 Yeah, I suppose it's a nice problem to have in a way. It's a kind of, as we would term it, a first world problem to have all this money staying there. But I suppose the public are very interested in what specific they want to see a big kind of project. Or I think my rail land to the airport might be waiting for another one yet, but I'm still fighting away for it. You might get that channel tunnel to Wales. Exactly. I no longer have to take the ferry. Finally, folks, is there anywhere people can go and see how this budget has affected them? What would you advise if they want to sort of do the numbers and just assess their own household position after this?

 Yeah, certainly we have an EY budget calculator. So that's a useful tool for people to go to and pop in their current earnings and then just see how the changes in the income tax rates and the tax credits will impact their, their direct take home pay.

 So we have some figures here just to kind of give you a rough idea, like a single person who's earning 45,000 euros and is a homeowner. Just with the changes to the standard rate ban, the tax credits and the USC, they have approximately an additional 800 euros that's going to be part of their net pay. Add the energy credits. Again, it's another measure coming in at a different angle of about 250. They've got roughly over a thousand euros. And if you take the same person who is probably a renter as opposed to a homeowner, they would have the rent credit. So their overall tax saving is actually over a thousand euros. And again, then add the energy credits of about 250. You know, you're looking at over 250, you know, back in their pocket. So that kind of gives an indication as to how the different measures, whether it's tax or the cost of living or, you know, public spending, how that is actually impacting people.

 Yeah.

 And Jen, on the small benefit exemption, we haven't we haven't talked about that.

 That was one of those ones that people may not be aware of.

 Exactly. So that was probably one of the other surprises that came in the budget. So the small benefit exemption is a very useful incentive for employers to reward their employees.

 It's like a bonus annual bonus type of thing.

 It's typically something that is essentially you can give a non-cash item or a voucher to a tax free once it meets certain conditions. Typically, you can give up to two items a year where the aggregate value is a thousand euros. Normally, historically, this was reserved for, you know, your Christmas voucher at the end of the year to say thanks to your employees for all their hard work or the Christmas hamper. So I suppose there's been a lot of complexity and difficulties in how the relief was being administered in terms of that, you know, only the first and the second item that you would give in your you gave your employee would actually qualify for the relief. So you could find yourself in a scenario where, you know, you bought a bunch of flowers for an employee in February because it's their birthday. Easter came around and you gave them an Easter egg. The value of the two were 50 euros and you've utilized that one thousand tax free limit on those two items. So when it came to Christmas to give that Christmas voucher, actually, that Christmas voucher was taxable.

 So there was slightly not living in the real world a little bit, maybe from a previous year or something that it's a structure of it.

 So that's just the complexities and how the relief was structured. What the minister announced yesterday was that he's increasing the overall aggregate value to one thousand five hundred, which is welcomed. And then essentially you can give up to five different items to your employee throughout the year. So five different qualifying benefits. So that potentially can address that example there that I gave you.

 If any of my employers are listening, I don't want an Easter egg next day. But I want something bigger than that. But I understand the point you're making. Yeah, exactly.

 Listen, we have to leave it there. Thank you very much, Brian Kelly, who is a tax partner at EY and Jennifer Sweeney. Thank you as well. Tax director at EY. Thank you both. You do well in your predictions.

 We'll we'll have you again, as they say. Thanks for getting so much of it right. And we'll see you same time next year. Right. We'll have a further look. Thank you for tuning in to this post budget 2025 briefing in association with EY. We hope you enjoyed it. And of course, for any more information on budget 2025 on what it means for you, there's EY budget dot for further information.

Welcome to our budget briefing for 2025. My name is Emmett Oliver, you're very welcome along and we'll be looking today at the most salient and pressing issues in budget 2025. I'm glad I'm joined today by Brian Kelly who's a tax partner at EY and also have Jennifer Sweeney who's a tax director at EY. Folks, you're both very welcome first of all. Thank you for joining us. Thank you very much Emmett for having us. I might just say first of all sketch the scene I suppose a little bit. The Minister Jack Chambers, he's an over budget and he obviously has a lot more resources available than to I probably safely say any other previous minister just in terms of the raw numbers available but of course it's all about choices and measures and policy decisions. If I can come to you first Jennifer, can you just sketch out what you think the priorities might be in this budget and the kind of areas the minister is going to tackle from your perspective?

Yep, so as you said like the minister does have a lot to play around with and we are in a fortunate position that we are in surpluses and have been in surplus budget situations for the past number of years when you compare that to what we're seeing in the UK and the US. I suppose from a personal tax perspective which is my area of expertise and my colleague Brian can certainly look and comment on sort of the more macro level. From a personal tax perspective what we're looking to see is the easing of financial pressures that the public have been facing in recent years with high inflation and obviously looking to see some measures around cost living, trying to address and ease those pressures. What we're also wanting to see is suppose is easing in certain taxes potentially to assist in getting more money directly into people's pockets and purses.

 And I suppose it's a difficult balancing act for the minister in the sense that he wants to support people with as you say the cost of living crisis. I know inflation has come down from a ties but equally I suppose the other part of what he has to do is to make sure that the measures he's introducing don't either stoke up inflation as well. So it is a fine line for him isn't it?

 Exactly, so that's it. So what we're seeing that's been released in the media is that there is particular measures that are being introduced. It's potentially either by tinkering with the tax rates and the tax bans and the USC rates and tax credits to assist directly getting more money into people's pockets. But potentially is what we're seeing is through a range of measures and probably what we're like to see is more targeted measures as opposed to just wider measures that are available to everyone where there's going to potentially be an influx of cash in the economy that could overheat and sort of start rising that that inflation rate again.

 Brian I suppose from the minister's perspective there's a lot of different choices here. He can obviously increase state payments that's one way he can try and do things that maybe would help with certain overheads that people have in their daily lives whether it's transport or childcare there's a whole range and in some ways that's a difficult challenge. There's so many options there as gender versus a big surplus to be paid out so that's the challenge has just been very targeted isn't it?

 Yeah and as always you know this phrase comes up every year it's about striking the right balance. I'm sure you've heard that before you know what we know from the minister's summer economic statement in July is that the government's priorities here are to support households and firms where they can deliver improvements in public services and boost the resilience of the economy and that includes enhancing you know infrastructure projects our capital constraints including housing. So I think we're going to see a focus and I think the way I see this budget is it will be a bit of a giveaway budget it's obviously a pre-election budget they need to make sure they don't you know stoke demand you know too much and overheat the economy as you've said.

 The four D's concept that we've heard about you know the agenda that the government sees in the future in terms of you know the demographic change that's coming and is already underway. Decarbonization we know what we need to do there but we're behind our targets and we need to address that. Digitalization then is you know digitalizing the economy modernizing the economy and then that's in the context of what's happening globally there's a sort of a drive towards de-globalization. So all of that is how the government is seeking to chart a course you know for the next for the next cycle the next fiscal cycle. As you said the the budget surpluses we're running consecutively are you know pretty unheard of in most of our lifetimes. It's a great position to be in but there's a huge responsibility in terms of infrastructure and value for money from infrastructure investments and I think making sure that you know the minister alleviates the cost of living pressures whilst not overheating the economy and then setting a course for future infrastructure investment is really where I think you know our ministers are focused. I think the the thing to recall that there's two I suppose data points that are that are important to recall two years ago and both Pascal D'Onnio and Jack Chambers have talked about this two years ago we had inflation at 10 percent. It's you know it's now expected to be down to close to two percent even by the end of the year so I think that the let's say the the interest rates that have been affecting people through their mortgages and other sort of general inflation rates are are easing already so in that context the government needs to be careful about actually how much they seek to fuel the economy how much they actually seek to spend in the economy and not further sort of get that inflation rate going back back in the wrong direction so I think that's that's it. The other point I wanted to make up is again from a from a fiscal and from a public finances perspective I think where we sit today I think in 2012 our national debt to national income ratio was 160 percent. I think our expectation is that by the end of 24 it'd be down to 72 percent so the you know the health of our budget surpluses and our sort of you know other windfall gains that that we're experiencing and the sort of the the ability to the flexibility that gives the government is as you said is is is pretty unique and it's it's not something we've we've experienced in too many too many budgets.

 No you'd feel sorry for some of the previous ministers who would have loved to have had these set of figures in front of them. Jennifer just to talk through taxation in particular and other measures but just talk about the average household and how they might be situated and all of this taxation I suppose is maybe less visible you only see it briefly in your pay packet and you may only not even calculate it some people obviously very very much do but do you think taxation is something where there will be more money going back into people's pockets or would you look at some of the other measures that direct supports just talk us through some of that.

 Yeah if I start off with taxation what we know from the budget is 1.4 billion has been put aside for tax measures and with tax measures they can be utilized in a certain manner that impacts taxpayer directly so essentially reducing the amount of tax that they're paying on their salary and impacting that net pay that is hitting their bank account with their pockets to try and increase it and the the minister Jack Chambers has actually said that he wants to try and put a budget in place that workers are gaining up to a thousand euros from the various measures that are going to be introduced by this budget. I think last year it was roughly around 800 euros whereas he's striving now to just increase that to a thousand euros and he has also said that he wants to particularly target low to middle income workers that they are an absolute priority from the range of measures that he is looking at introducing.

 So I suppose if we just kind of take a step back if we look at the tax and I suppose what we've seen in prior years with budgets they do a little bit of tinkering with the standard rate band and USC bands and your tax credits so if we take a look at that and see probably how are they going to spend that 1.1 billion just trying to anticipate it I can walk you through some figures.

 I hope you'll have good news for me personally is what I'm hoping to hear.

 Bear with me I'll try and walk you through the figures and we'll try and use it as a guide to where we think that this this 1.4 billion is potentially going to be spent on those tax measures. So what we've seen released in recent weeks is the standard rate band is likely to be increased by 2,000 euros so the standard rate band for a single person.

 So you can earn more before you get taxed.

 Exactly so what the standard rate band is essentially the amount of income an individual can earn that will be subject to our standard rate of tax which is currently 20 percent that standard rate band is 42,000 per year for a single person so they're looking to increase that I think or it's anticipated that they're looking to increase that by 2,000 years.

 Do you think the 2,000 is a lot in comparison to other budgets? I don't know the figures but it sounds junky enough to me.

 Yeah like it depends on I suppose if you look at various budgets you depending like you know if you go back 10 years during the austerity years that there probably wasn't any increase and in sort of prior to that and in other years you would have seen an increase and it could be in increments of a thousand or fifteen hundred or two thousand. So we reckon the two thousand is kind of in line with what we've seen in prior years. Another measure that we are hearing a lot of information about is that they're looking to reduce the USC rate of four percent which most people would be paying to 3.5 percent.

 They've been chipping away at that for a few years because it's not a very popular tax not any tax is but it's one that is sort of visible and people are because it was brought in a few during the financial crisis it has annoyed people so that's interesting they might have another little.

 That's correct yeah it's so they've always played around with the the bands of income that's subject to the various rates of USC it ranges from 0.5 all the way up to 8 depending on the level of earnings and what they're trying to do is I suppose those middle rates where you have income roughly around around the early 20,000 to the early 40,000 they're looking at trying to reduce that because then it's more targeted a wider range of taxpayers can actually avail of that. What we've seen is by just those two measures so increasing the standard rate band by 2,000 euros and potentially reducing the USC rate from four percent to 3.5 percent and that's roughly going to cost about seven hundred seven hundred thirty million. So if we again take a step back there is 1.4 billion that's been put aside for tax measures we've already by just those introducing those two measures to alleviate taxpayer pay at the costs that taxpayers are facing and to put a little bit more money back into their net pay that's costing about seven hundred and thirty million which leaves a balance of roughly around six hundred and thirty million for them to play around with. We anticipate potentially what they've done as what they've done in prior years is that they will probably adjust the personal tax credits as well. What we saw last year was they increased I think the majority of the tax credits by 100 euros the year before that they increased it by 75 euros. So there's an anticipation that potentially what they're going to do is they will increase probably the core personal tax credit so that's your single person's tax credit your married person's tax credit widowers and single parents tax credits by 100 euros and then there is the other more frequently used tax credits such as the PAYE tax credit and the earned income tax credit by potentially 50 euros.

 So when you put all of that together there's going to be a tax package that will have a big uplift for the average person household and so on.

 It's a direct impact because it's going to influence the amount of net pay that they can take home. The overall cost I suppose of just doing those of just increasing those tax credits is roughly around about five hundred and sixty eight million for a full year. So if you couple that with the the seven hundred and thirty million for the increase in the standard rate band and decrease in the USC bands that is eaten into a huge portion of europe 1.4 billion that they've allocated to tax measures.

 So and we do know that they also want to recognize renters and the increase in pressures that they are renters are facing.

 So the renters credit.

 Yes there is a rent tax credit which is currently 750 euros and we're seeing a lot of indications that that's likely to increase to a thousand euros. So again we've got to factor that into the cost as I previously.

 Let me bring Brian in on this as well. Brian obviously the housing crisis is something you know it's been with us for a few years now so this budget isn't going to on its own eliminate obviously interest rates are controlled elsewhere by the ECB so there's nothing the Irish government can do there. We've heard about this renters credit which will increase. Do you think that and other measures may be able to help on the housing piece or is that more infrastructural in nature.

 I think it really is infrastructural and again it's down to our again these these capacity constraints that we have. I mean I think we have to recognize that the government is focused on this and is putting record investment into housing and social housing.

 But we know that more investment is needed to support to support home building.

 Look the inherent cost of land in the state is is an issue and I think the the residential zoned land tax I think is something that a lot of people are calling for.

 To actually put some tea to that and actually start levying it and ultimately what that would do is is hopefully sort of release more more land that that housing could be built on into into the sort of instant market and therefore make it more affordable for make hoarding less attractive as well as flush out more land.

 Yeah flush out more land exactly and ultimately make it more cost effective for someone to actually either build a housing estate or build you know build social housing.

 So do you think that will be in this set of measures it seems to be moving backward and forward then there was mention of what would be people are farming land and so on.

 Yeah I mean it's that one is probably harder to predict in terms of what you know what decisions are going to make on that. I think the other impeding factor in recent years has been the high cost of capital at the high interest rates. So I think the fact that interest rates are hopefully on the way down in response to inflation being under control will mean that you know actually getting finance to sort of build some of these things you know will alleviate things. I think the other real capacity constraint that we all know about is the limited supply of construction workers that we have. So I mean we've sort of debated amongst ourselves in terms of what could they do there. There is clearly a there's a focus for you know people educated here to go to third level university courses. I think incentivizing and making it easier for trades people to be in the market and to sort of sort of fill that void on the sort of supply side is key and that goes to both you know new builds you know in terms of infrastructure it goes to all types of infrastructure that the country needs to stay competitive in terms of water investment you know housing is part of it, road, rail, electricity generation.

 Are you saying something needs to be done to get more construction workers into the system? Maybe it's not in this budget but that's

 yeah I think it's a long-term gain because we were debating this this morning and we were saying there's a there is a huge focus for everyone to pursue third level education but essentially you know we we have a lot of

 so into the apprenticeship route is there too.

 There are alternatives there and I think we need to look at investing and encouraging these alternative routes such as apprenticeships and the various trades.

 Certainly we do have a lot of tradesmen who have exited Ireland for various reasons they've either gone to the UK, Australia, maybe travelling so we also need to look at how we're going to encourage them to come back and there's a range of tax incentives there that we can utilize that we do use in our professional industries that potentially could be extended and looked at to attract you know.

 And do they target particular sectors? Is that what you mean like they'd be aimed at particular worker groups or occupations or is it just you know the ones you're talking about earlier the general the USC and so on and the allowances the bans changing do you think they could help or do you think something that's more specific might be needed?

 I think yeah I think by certainly looking at the amount of taxes that people are paying is is one way of addressing it. I do think as well potentially having targeted tax incentives to attract you know where we're experiencing staff shortages you know such as with trades people health as well as another area you know it certainly would be beneficial so it could be a two-prong approach you know that you're looking at your general taxation but then you also have very targeted incentives to attract you know Irish people who have left and to get them to come back but also we are living in a global mobile labor market whether we like it yeah and look I think the other point there is you know when we talk to business people all the time and when we talk to either Irish domestic businesses or multinational businesses that have invested here what they tell us is like you know this is the this is the biggest issue for them it's actually it's finding the talent and then it's it's housing housing the talent so we have incentives like SARP which is an incentive that encourages sort of sort of higher um higher executives come in for a period and so on yeah so you're saying yeah but but ultimately it's

 it's like that would be attractive um and certainly making them more accessible it's interesting yeah we'll see if the minister is listening to this podcast as he puts his finishing touches into Budget 2025 alongside EY's tax experts and discover what the new measures mean for your business. Find all the real-time insights and analysis on how this Budget impacts Ireland, organisations and individuals. Visit eybudget.ie

 let me just broaden it out a little bit more because we're a bit stuck on time as obviously as tend to be in these um its productions um the one that I suppose strikes me is the hospitality sector is looking for the VAT rate to go back that's one that's that's going to be interesting so that whole area of VAT and tax on business generally we've already mentioned multi number we know the minister is unlikely to touch the corporation tax rate which is obviously um you know at an international level being reformed and so on but do you think the tax on business whether it's hospitality or other businesses is something that will be um a centerpiece for him

 well you know I think I think our expectation is that the sort of the the the business tax measures will be fairly limited in a couple of a couple of areas we we are um absolutely expecting something that's been sort of planned by the department of finance all year and you're probably familiar with it it's it's a it's a participation exemption for foreign dividends so so multinationals that have an Irish holding company structure today or an Irish business that has investments overseas in the form of other legal subsidiaries and entities today foreign source income under Irish rules is is subject to tax at by default at our higher 25 rate of tax um and Ireland is sort of uh out of whack let's say with competitor countries like the Netherlands like Luxembourg like the UK for example uh whereby they have exemption systems they have a territorial regime and they exempt exempt foreign source income from further taxation effectively the thinking there is that the the income has been subject to tax in in the source country already so there's no value to having you know another layer of tax applied at the shareholder level so I think that is that is due to to come in it's it's well signaled at this point it's it's a it's a rule that will um simplify to some extent Irish um sort of holding company uh sort of um compliance for for example and will it'll apply to dividends uh received by an Irish company after the first of January 2025 and uh the the the nexus is where the dividend is received from an EU or tax treaty member country

 so you think that will bolster our fdi offering that well I think the effect of it

 I think it'll help I think it's something that you know given the the step change that the global minimum tax that was introduced in in the finance bill and finance act last year which introduced the the 15 minimum tax rate um I think I think that has obviously to some extent um caught against Ireland's twelve and a half percent sort of rate from a competitiveness perspective and I think what this would do is is sort of at a minimum simplify compliance and you know potentially incentivize well

 it's it's it's a low hanging fruit in a good sense that it can be done quickly and have a pretty quick impact as

 we don't quickly it's taking a lot of work I wouldn't have to understand we're about to work the department of finance has done this year to to to get us to get us delivered um so I think that Trojans meant to work there thereby our drafts people um but I think it will you know it'll definitely be a welcome uh sort of tool in our sort of competitiveness toolbox from from a tax perspective I think the other the other area that people are calling for Emmet is is on the R&D tax credit side so again as part of um our adoption of the global minimum tax rules uh last year we we very very um uh in a very welcome to measure we increased our um R&D tax credit from from 25 to 30 percent we also made it refundable which which was key from a from a pillar to from a from a top-up tax perspective so um I think again there's further calls for what other credits could we introduce could we introduce new credits on

 that's really interesting because um you kind of thought because the 15 minimum tax that whole area was kind of a bit in frozen but you're saying there's there is live policy decisions there that the minister could take to to make some changes

 absolutely yeah yeah I mean there's a gaming tax credit that was introduced um a couple years ago that that um is you know is one sort of area that that you know to incentivize sort of production of of of games uh you know in Ireland and there's other I think there's other green energy incentives that that I think people are probably expecting a ramp up of that um as as part of you know encouraging investment in in green energy so again you could see super credits of maybe 40 50 percent if if um if that's something that the government is is is seeking to use as a lever to sort of incentivize people to

 Jennifer um Brian has given us pretty good indications but might be there I would say we'll see next week but he sounds like he knows what he's talking about and has a good insight into it in terms of surprises there's always one or two that people don't see coming sometimes there can be a bit of a political hand grenade things that look innocent on paper but people strongly object to and so on equally there can be a nice surprise on the other side something that people don't get is there anything that you'll be sort of looking for yourself as you hear him reading his speech out and it'll be online obviously the the actual speech text as well is there anything in that that you'll be going to go oh that's something I didn't see you coming or something you might maybe the rest of us haven't seen coming that you're spotted

 um I suppose in terms of surprises we've seen this uh with uh various years of budgets that there is quite a bit of leakage uh and I suppose the government is I blame the media um trying to suppose test the waters in terms of certain incentives of measures that they're looking to induce introduce so you actually do find that um when you come to budget budget day a lot of what has been released in the public domain for in the weeks coming up to it actually transpires to be in the budget or or something similar to it um that's not to say that there's always one or two surprises in there and I suppose we'll just have to wait until we actually see that um uh which is the first of October um I suppose there's probably two uh two items that I would probably would remind people of that were introduced last year and in prior budgets that may catch certain business owners and people um by surprise so the first is that the PRSA oh sorry the PRSI uh rates will increase on the first of October of this year so on budget day next

 Tuesday we think we're talking tax cuts but um yeah and I suppose the competitiveness point that we talked about in terms of you know that whole competitiveness from a labor market perspective and the cost of employment I think there's a measure in prior years and there's this idea of a fiscal drag where the government I shouldn't say free money because it's not free money but what I mean but that is because of inflation certain categories and thresholds get passed because there's more the salaries go up or the money goes up and that brings just by standing still the government get extra revenue so that that people kind of miss that you know

 yeah and I think that's it we just need to be mindful that yes they are trying to um give back roughly around a thousand euros to taxpayers as Jack Chambers has said ideally what you're hoping to see is in those measures where they're going to do that that it also takes into account any prior measures that the government has put in place that potentially um kind of takes away from that thousand so the first is yeah PRSI rates will uh be rising on the first of October which essentially next Tuesday so um class a PRSI contributor which is the majority of people who are working in the private sector pay employee PRSI at four percent that's going to increase to four point one percent so there is going to be a bit there is going to be a direct impact there on your net take-home pay which you hope will be balanced out by the other measures you talked earlier right okay okay

 employers PRSI will also rise from um by by the same percentage so again it's an additional cost to employers um you know on top of employing individuals and this is the first of um six incremental increases between now and 2028 um that was introduced in last year's budget because um the government is looking to preserve the social welfare fund and the and this is viewed as a way of actually

 you don't hear these things discussed it's really interesting i mean you just yeah it's sort of hidden away in the text um those kind of measures so you're saying overall they'll offset in other areas but they're still there

 that's the hope uh that they would do that and you had one more that's the one more as well again it was um it was introduced previously is auto enrollment um that is due to uh commence on the first of january 2025 and the legislation was passed earlier this summer to facilitate that actually occurring now there's still a lot of um pieces that need to be ironed out but this again is an additional cost that employers will need to face essentially what auto enrollment is is essentially it's an incentive that's been introduced by the government to encourage people to start saving for their retirement much earlier and to actually make uh to to actually contribute because i think up to a third of workers do not have a private pension uh or occupational pension scheme in place so it is a scheme that is um essentially that once you are an individual who is working that's aged 23 to 60 years and you earn 20 000 euros that you are what you're likely then going to be a candidate that's going to be automatically enrolled into the saving scheme that is government led um so there is a couple of questions there that needs to be answered in terms of um you know um how is that going to be run in parallel um by employers who have occupational pension schemes that they may have some employees that participate to that to that occupational pension scheme and other employees who don't by choice um but then are now essentially are going to be a

 lot of busy pension departments in companies and pay run hr and all that all of that and brian we're going to have to wrap up soon but maybe you could um maybe take a broader look at the overall budget and the direction i suppose the this is just a personal view it's not an ey view but i suppose the minister has to look at the short terms we talked all these measures that jennifer's talked was true for the year ahead you know there's sort of short term pieces that would give some relief from inflation and interest rates that have been going up but then there's the sort of longer the median term view where as you've mentioned yourself the bottlenecks the infrastructural issues and i suppose in some ways a budget is a short term set of measures for the year ahead so maybe we're being unfair on the minister to look at these bigger infrastructures he's not going to be the correct all of those in the budget but are you looking for things that might be more macro in nature in this budget that will help some of the you've already mentioned labor tightness already but is there other things you're going to be looking out for that aren't those short term measures as important and all as they are but are more sort of into the medium and long term that he might have in his speech

 yeah i mean we know about obviously the sort of rainy day funds that have been established and i think you would have some people suggesting well look you know why not use those rainy day funds for investment in irish infrastructure rainy day funds that are funds that we built and potentially invested in in you know derivatives markets overseas who knows what they're going to be invested in but but can we put those funds to use within within the irish economy and get value value for that from capital investment so i think i think the task here i think as we set out is is you know it's a pre-election budget but i think the government has been fairly responsible in terms of where they're looking to to sort of focus focus investment and they are very clearly planning for Ireland's future in terms of where they see you know the bottlenecks that are coming down the line we talk am or aging of course we talked about the four d's at the start i mean i think it's very clear that that there's a there's messaging coming here that you know we are growing older as you say the world is changing it's becoming more fragmented you know there are more sort of events in in the last sort of 10 years you know covid obviously the the issues the you know the war in the Ukraine the war in the middle east in terms of what how that's escalating um so i think Ireland has been very resilient through all that change in recent years i think i think what citizens of Ireland are looking for now is well how are we going to sort of adapt ourselves as a sort of a modern uh as a modern sort of country how are we going to sort of plan for the future and ultimately do that in an equitable way so that there's prosperity um you know for all and i think that's also part of what um you know mario draggy's report sort of calls for at a european level um you know i think the the some of what mario draggy is concerned about and which i think some you know irish government ministers would share that concern is you know how do we invest in the way that that that sort of lifts all boats and not in in a way that is sort of you know selective in in any sort of part of the economy or to certain investors i think that's that's the way you keep the eu project on the track for the future and really what what what draggy is calling for at a european level is is i think an additional 800 billion of of investment at a european level year on year in capital in capital projects and that's across across the the members

 and you want to make um the investment as productive as possible so you get some of your money back exactly um yeah so that's the big test as well all right well folks thanks for participating we there's plenty of food for thought there we'll have you in again and next week on thursday and we've been looking at budget 2025 we'll have a fresh look again at Thursday and look at the detailed measures in what was there surprises or otherwise and you can get more information on budget 2025 if you visit eybudget.ie where you can have a look and there's various information and calculators there about the different measures so we'll have our our viewers have a look at that but for the moment both of you thank you very much and that was uh jennifer swiney who's the tax director at ey and brian kelly is a tax partner at ey thank you both very much