(Bloomberg) -- Ireland’s government delivered a giveaway budget to voters, taking advantage of a financial situation that’s been boosted by soaring income from multinational firms and a back-tax windfall from Apple Inc.
The €10.5 billion ($11.7 billion) package announced Tuesday included income tax cuts, increases in welfare and pension payments, help with energy bills and rent, and extra payouts to families with children.
Prime Minister Simon Harris will be counting on the bonanza to keep voters on side before the next election, which must be held by March 2025, but could happen as soon as next month. Harris, who became leader just six months ago, was polling well even before the budget, which may encourage him to call an early vote.
Ireland is in an enviable fiscal position compared with other European countries, many of which are struggling with deficits. On Tuesday, French Prime Minister Michel Barnier delayed a target to get his country’s budget gap within the European Union limit by two years.
Still, Ireland’s solid public finances are largely thanks to the €38 billion in corporate taxes it will reap this year, much of it due to multinationals such as Apple and Pfizer Inc. Those receipts are being topped up by the €14 billion one-off from Apple, the result of a recent European court ruling.
That additional cash will be allocated to investment in infrastructure, such as housing, the energy grid and water system, Finance Minister Jack Chambers said Tuesday. Those are issues that multinationals have long wanted addressed, as they impact Ireland’s attractiveness.
Irish central bank chief Gabriel Makhlouf had warned against giveaways in a pre-budget letter in June, advising the government to stay within its own 5% annual overall spending increase rule.
Chambers acknowledged the volatility of some of the tax revenue, calling them “potentially transient receipts.” Excluding that revenue, Ireland would be recording a deficit this year like its European neighbors.
A sale of AIB Group Plc shares will also contribute to the infrastructure upgrades, including €1 billion for Irish Water to allow works on capital projects and providing connections for new housing, €1.25 billion for the Land Development Agency and €750 million for the electricity grid.
The extent of the measures will adds to speculation that a general election will come sooner rather than later. Harris’s Fine Gael party was ahead in a poll published in the Irish Times last month. Sinn Fein, the main opposition party, has lost ground after leading its rivals in 2023.
Other budget measures included:
- Stamp duty of 15% on bulk buying homes, up from 10%
- Stamp duty of 6% on homes worth more than €1.5 million
- An extension to the help-to-buy scheme to assist first-time buyers
- A new relief for expenses incurred on a first listing on an Irish or European stock exchange, as well as a Stamp Duty exemption subject to State Aid considerations
- Increasing relief available under the Start-Up Relief for Entrepreneurs scheme from €700,000 to €980,000
The levy on banks, meanwhile, has been extended for another year, with a target yield of €200 million, Chambers said. “It remains appropriate that the sector continues to make a contribution to the Irish economy following the support they received during the financial crisis,” he said.
(Updates with poll, deficit figures starting in third paragraph)
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