A bumper €2.2 billion will go into voters’ pockets, with Apple’s bonus €14 billion put aside as a nest egg for future projects.
With a hint of a smile on his face the Finance Minister Jack Chambers told lawmakers that Ireland had already collected far more corporation tax than it needs this year. |
October 1, 2024
By Shawn Pogatchnik
POLITICO EU
DUBLIN — Tax-rich Ireland unveiled a sweeping giveaway budget Tuesday that will put €2.2 billion into voters’ pockets — just in time for an election the government hopes will keep Sinn Féin out of power.
Finance Minister Jack Chambers used his budget speech to detail how he’ll give typical workers an extra grand to spend in coming months — and to confirm the government won’t yet spend its “transformational” €14 billion bonus from Apple.
With a hint of a smile on his face, the 33-year-old told lawmakers that Ireland had already collected far more corporation tax than it needs this year from the iPhone maker and hundreds of other U.S. multinationals based here.
The Apple windfall, being added to the 2024 national accounts thanks to a surprise European Union court judgment on back taxes due, will go into Ireland’s two new sovereign wealth funds. The government created those funds in last year’s budget specifically to ring-fence and grow its Europe-leading collection of corporate tax, expected to rise to a record €30 billion this year alone. That doesn’t include the extra €14 billion from Apple.
The coalition government of Prime Minister Simon Harris — eyeing a new five-year term in office following elections that must happen by March but could come much sooner — wants those funds to finance long-term investment in the country’s electrical grid, water system and transport links.
All those services are straining amid rising business demands, particularly for more power to feed the multinationals’ scores of data centers here, and a fast-growing population that is fully employed but struggles to find affordable homes.
“We’ve got to maintain our competitiveness. That’s why the investment in infrastructure is so important,” said Foreign Minister Micheál Martin, whose Fianna Fáil party seeks to stay in government alongside Harris’ Fine Gael.
The importance of infrastructure
Their two pro-business, middle-ground parties — once bitter enemies with roots in the opposing sides of Ireland’s civil war a century ago — have worked well together since agreeing in 2020 to share power for the first time and keep a then-surging Sinn Féin in opposition.
The Irish republicans have seen their public support plummet by nearly half in the past year, their anti-establishment appeal sapped, in part, because of a rising challenge from anti-immigrant militants agitating against Sinn Féin within its usual working-class power bases.
The government’s enviably deep pockets have also helped to wrongfoot Sinn Féin. Leader Mary Lou McDonald has been left to argue that, should her party rebound in the polls to lead Ireland’s next government, they would spend even more — but less wastefully.
Sinn Féin’s core promise to build public housing for as little as €250,000 per unit — half the current cost in Dublin — has been challenged by many economists as unrealistic.
Those economists likewise warn that competition for votes in such fiscally dynamic times will inevitably fuel inflation, no matter who wins the election.
By Shawn Pogatchnik
POLITICO EU
DUBLIN — Tax-rich Ireland unveiled a sweeping giveaway budget Tuesday that will put €2.2 billion into voters’ pockets — just in time for an election the government hopes will keep Sinn Féin out of power.
Finance Minister Jack Chambers used his budget speech to detail how he’ll give typical workers an extra grand to spend in coming months — and to confirm the government won’t yet spend its “transformational” €14 billion bonus from Apple.
With a hint of a smile on his face, the 33-year-old told lawmakers that Ireland had already collected far more corporation tax than it needs this year from the iPhone maker and hundreds of other U.S. multinationals based here.
The Apple windfall, being added to the 2024 national accounts thanks to a surprise European Union court judgment on back taxes due, will go into Ireland’s two new sovereign wealth funds. The government created those funds in last year’s budget specifically to ring-fence and grow its Europe-leading collection of corporate tax, expected to rise to a record €30 billion this year alone. That doesn’t include the extra €14 billion from Apple.
The coalition government of Prime Minister Simon Harris — eyeing a new five-year term in office following elections that must happen by March but could come much sooner — wants those funds to finance long-term investment in the country’s electrical grid, water system and transport links.
All those services are straining amid rising business demands, particularly for more power to feed the multinationals’ scores of data centers here, and a fast-growing population that is fully employed but struggles to find affordable homes.
“We’ve got to maintain our competitiveness. That’s why the investment in infrastructure is so important,” said Foreign Minister Micheál Martin, whose Fianna Fáil party seeks to stay in government alongside Harris’ Fine Gael.
The importance of infrastructure
Their two pro-business, middle-ground parties — once bitter enemies with roots in the opposing sides of Ireland’s civil war a century ago — have worked well together since agreeing in 2020 to share power for the first time and keep a then-surging Sinn Féin in opposition.
The Irish republicans have seen their public support plummet by nearly half in the past year, their anti-establishment appeal sapped, in part, because of a rising challenge from anti-immigrant militants agitating against Sinn Féin within its usual working-class power bases.
The government’s enviably deep pockets have also helped to wrongfoot Sinn Féin. Leader Mary Lou McDonald has been left to argue that, should her party rebound in the polls to lead Ireland’s next government, they would spend even more — but less wastefully.
Sinn Féin’s core promise to build public housing for as little as €250,000 per unit — half the current cost in Dublin — has been challenged by many economists as unrealistic.
Those economists likewise warn that competition for votes in such fiscally dynamic times will inevitably fuel inflation, no matter who wins the election.
The Apple windfall will go into Ireland’s two new sovereign wealth funds. | Annice Lyn/Getty Images
The government’s trove of tax and spending moves are designed to add more than €1,000 to average incomes in the coming year.
Ireland already pays parents €140 per child each month. Newborn babies in 2025 will earn their parents a triple first payment of €420, while all households will get double payments of €280 for each child next month and again right before Christmas.
All households will see €250 automatically deducted from their winter utility bills, too.
Cash for kids
Income tax bands will be raised sharply to prune €1.6 billion from payslip deductions, particularly for workers earning less than €44,000 a year, in a system that already taxes lower-paid workers little by international norms.
Chambers said the changes would mean workers earning less than €20,000 would pay no income tax at all.
Simultaneously, the national minimum wage will be hiked by 6 percent to €13.50 an hour, or €27,400 a year for a fulltime worker — the second-highest in the EU behind Luxembourg.
To soften the blow from Ireland’s EU-leading property prices and rents, tax write-offs on rent payments will be increased, while two programs for subsidizing the eye-watering price tag of property will be extended.
The budget for the state’s Land Development Agency will be raised 25 percent to €6.25 billion to boost supply in a market where private developers complain costs are already too high to build apartments at affordable prices.
Chambers said Ireland would spend €3 billion more than previously planned on infrastructure projects in 2025. This would be financed not by the Apple back taxes but a different windfall: the sale of shares in Ireland’s second-largest bank, AIB, following its state bailout and nationalization in 2010.
Chambers said the sovereign wealth funds — one earmarked for infrastructure, the other for environmental projects — would grow to more than €16 billion next year, much of it coming from Apple. “Protecting and nurturing” these investment reserves would be essential to secure Ireland in what he called “a more shock-prone world.”
“While we cannot prevent external shocks,” he said, “we can ensure we are on the best possible footing when they do occur.”
The government’s trove of tax and spending moves are designed to add more than €1,000 to average incomes in the coming year.
Ireland already pays parents €140 per child each month. Newborn babies in 2025 will earn their parents a triple first payment of €420, while all households will get double payments of €280 for each child next month and again right before Christmas.
All households will see €250 automatically deducted from their winter utility bills, too.
Cash for kids
Income tax bands will be raised sharply to prune €1.6 billion from payslip deductions, particularly for workers earning less than €44,000 a year, in a system that already taxes lower-paid workers little by international norms.
Chambers said the changes would mean workers earning less than €20,000 would pay no income tax at all.
Simultaneously, the national minimum wage will be hiked by 6 percent to €13.50 an hour, or €27,400 a year for a fulltime worker — the second-highest in the EU behind Luxembourg.
To soften the blow from Ireland’s EU-leading property prices and rents, tax write-offs on rent payments will be increased, while two programs for subsidizing the eye-watering price tag of property will be extended.
The budget for the state’s Land Development Agency will be raised 25 percent to €6.25 billion to boost supply in a market where private developers complain costs are already too high to build apartments at affordable prices.
Chambers said Ireland would spend €3 billion more than previously planned on infrastructure projects in 2025. This would be financed not by the Apple back taxes but a different windfall: the sale of shares in Ireland’s second-largest bank, AIB, following its state bailout and nationalization in 2010.
Chambers said the sovereign wealth funds — one earmarked for infrastructure, the other for environmental projects — would grow to more than €16 billion next year, much of it coming from Apple. “Protecting and nurturing” these investment reserves would be essential to secure Ireland in what he called “a more shock-prone world.”
“While we cannot prevent external shocks,” he said, “we can ensure we are on the best possible footing when they do occur.”
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