Budget season is nigh (10th of October) and kites are flying so I am going to pin my flag to a mast and outline some of the likely changes that can be expected in Budget 2024. Making predictions is a dangerous game, committing them to writing is madness! However, writing for the DCU Alumni I feel I am among friends and let’s face it, it wouldn’t be the first time I made a fool of myself in front of a DCU crowd – Rag Week 1999 I still have scars but thank you it was some craic!!
In this regard, I am going to make a few predictions in relation to the Budget and perhaps mention some items that are more wish list than prediction.
Cost of living measures
I think from various soundings from various politicians the cost of living measures will be the main focus for Budget 2024 and we will see a package of measures aimed at reducing the burden on individuals and families. I do not think there will be a change to income tax rates nor will there be the introduction of a mooted middle rate of income tax. However, I do believe we will see increased standard rate bands and potentially an increase in tax credits. Also, I think the USC is an area that will see a reduction in rates or more significant increases in the banding which will positively affect taxpayers bank balance.
I think there will be an increase in both the children’s allowances and there will be some increased supports to help reduce the cost of childcare.
Finally, I think there will be some direct supports such as electricity credits to assist with rising costs.
Other welfare payments including the State Pension could see increases. It is also likely that the minimum wage will go to €12.70.
I think the Help to Buy Scheme will be extended to assist first time buyers.
In an effort to stop small landlords leaving the market, I expect to see some stimulus on this which could see a tax free rate to a limit or a lower rate of tax on residential rental income to bridge the gap between the corporate tax rate of tax on rental (25%) and the marginal rate paid by individuals (up to 55%).
I expect the Minister to continue on the agreed carbon tax increases, however, some relieving measures may be introduced/maintained to deal with cost of living affects. I think the BIK exemption on electric cars will be extended. I think there will be other business stimulus to encourage investment in renewable energy such as: Incentives to invest in renewable energy technologies Supports to sustainable buildings (retrofitting grants, capital allowances)
What I would like to see International Tax
At a high level from a tax technical perspective, I would like to see an approach to the adoption of the various changes at international tax level that ensures Ireland remains as competitive as possible within the new international tax frameworks. This will involve where possible making the unprecedent level of change in this area as easy as possible for businesses to adopt. With a particular focus on early engagement with stakeholders, allowing feedback and reviews of draft legislation and guidance as early as possible with as much lead in time to allow companies to prepare for any changes. Where possible the administrative burden of new legislation should be reduced as much as possible.
More specifically I would like to see included the introduction of a Territorial System of Tax in Ireland. While the detail of this is quite technical at a high level, this would see Irish corporate entities taxed on profits generated in Ireland only (i.e. foreign sourced income would be exempted) rather than the worldwide income approach currently in place (i.e. tax on worldwide income with credits for foreign tax incurred). Some positive soundings were recently announced in this regard.
I would like see improvements to the SMEs supports to make them easier or more appropriate for the companies that really need them. In particular:
making the R&D tax credit refunds payable in one year rather than three would give SMEs much needed cashflow Enhancing the Employment Investment Incentive Scheme to make it more fit for purpose Further enhancement to the Key Employee Engagement Programme (KEEP) would help SMEs attract and retain staff in the current competitive market Enhance the Entrepreneurs' Relief to make it internationally competitive
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