Ireland unveils 10.5 billion euro pre-election budget giveaway
2024.10.01 10:22
By Padraic Halpin and Conor Humphries
DUBLIN (Reuters) -The Irish government handed voters 10.5 billion euros of tax cuts and spending increases in a pre-election budget on Tuesday that also outlined how it will use a 14 billion euro ($15.6 billion) Apple (NASDAQ:) tax windfall to improve creaking infrastructure.
Prime Minister Simon Harris must call an election by March but most analysts see November as the most likely date, when voters will start to benefit from the latest budget splurge resulting from Europe’s healthiest set of public finances.
His government distributed 10.5 billion euros to pensioners, parents, renters, workers and welfare recipients in the biggest non-pandemic budget since Ireland’s Celtic Tiger years, equivalent to about 2,000 euros for every man, woman and child.
For the third successive year, the government broke its own budget rules, supposed to cap spending growth at 5%, bringing opposition accusations that it was trying to buy the election.
“Today’s budget is unique in the opportunity it presents to plan, transform and deliver for the future,” Finance Minister Jack Chambers told parliament.
“It is clear that supply is the main constraint on growth at present. We are investing at scale to address these bottlenecks and put in place long-term solutions.”
At a time when some EU countries are tightening belts, an explosion in corporate tax revenues, mainly paid by a few large U.S. multinationals, has handed Ireland one of Europe’s few budget surpluses.
The Apple back taxes are set to push that surplus to 7.5% of national income this year.
The windfall resulted from an EU court decision that Apple had unduly benefited from unfair loopholes in Ireland’s tax regime, designed precisely to attract Big Tech companies to set up European headquarters in Ireland.
Those proceeds and 3 billion euros from bank share sales are to be spent on longer-term water, energy, housing and transport projects, although the exact use of the Apple portion will not be finalised until early next year.
Ireland has struggled to keep up with the demands of a fast-growing economy and population and address problems in housing, transport and healthcare despite extensive capital spending.
The budget included a package of “one-off” cost-of-living support payments for the third year running, this time totalling 2.2 billion euros, even though inflation has fallen to almost zero from 5% a year ago and 9% the year before that.
Harris denied that this was a return to the giveaway budgets of the mid 2000s that preceded the crash of the Celtic Tiger economy, pointing to the 6 billion euros the government was putting away in its new sovereign wealth and long-term infrastructure funds.
($1 = 0.8961 euros)
