In a pre-budget submission released yesterday, Ibec laid out proposals for a €4.6bn spending package but said the Government needs to resist the urge to offer “temporary giveaways” to Irish households ahead of the general election.
Ibec noted that existing spending commitments already limit what is available for budget-day spending. This includes resources committed to the Future Ireland fund, the Contingency Reserve, and the Infrastructure, Climate and Nature fund.
The lobby group urged the Government to focus on competitiveness in Budget 2025, as challenges emerge around “state-driven investment competition, geopolitical tensions and decreasing trading openness”.
Fergal O’Brien, Ibec’s executive director of lobbying and influence, said multinationals have indicated there is a sense of “policy complacency” about the success of inward investment.
It is recommending that the entry point to the higher rate of income tax should increase to €46,000 a year, while tax credits should increase by €100 for single earners and €200 for married couples and civil partners.
The group noted that Irish energy costs are “significantly higher” than those in other EU countries. It called on the Government to undertake a benchmarking exercise to find out why this is.
Ibec also proposed a number of actions related to the delivery of net-zero carbon targets in Ireland, including the introduction of a carbon contracts scheme targeted at industrial companies and a “super deduction capital allowance” for business investments in environmental areas.
Investments in critical infrastructure and affordable housing should also increase in the upcoming budget, Ibec said. There should be a further extension of the development contribution waiver beyond the end of this year. This is a waiver on levies payable to local councils for new residential developments. Housing targets should increase to 20,000 social, affordable and cost rental units each year by the end of the decade.
“Every indication is that the Government will likely have less money for Budget 2025 than in recent years, if they are to align with domestic fiscal rules,” Mr O’Brien said, adding that there is “a natural pre-election temptation” to provide benefits for Irish households.
“This approach would pose a considerable risk to the stability of public finances in the future given the current global context and obvious gaps in economic and infrastructural capacity in the economy,” he said.
