Average worker will be €1,000 better off after Budget 2025, says Finance Minister

The average worker will be a €1,000 better off after Budget 2025 when income tax changes and cost-of-living payments are taken into account, the Finance Minister has said.

Jack Chambers said that energy credits would be a “strong component” of the cost-of-living package as people still struggle with high prices.

He said whether there would be more than one energy payment still had to be finalised.

He added: “What I would say is the decisions that we make on energy credits will be about protecting families and ensuring that the energy costs which are still in our economy are mitigating through the winter period.”

He said that reductions to the Universal Social Charge (USC) would be “central” to the income tax package part of Budget 2025.

He added: “So USC will be a central component of the income tax package that I design, and we really want to target low to middle-income earners and workers in our economy, and ensuring that we have a competitive income tax system that rewards work.

“There’ll be progressivity in how we design that, which is an important component of all budgets that we’ve developed and I think between the tax package and also the cost of living payments, I think average workers should benefit (by) at least €1,000 when it comes to income tax reductions and cost-of-living payments in Budget 2025, which again rewards work and supports 2.75 million people who contribute so much every day.” 

Asked if the USC should be phased out over time, Mr Chambers said any party that states they would abolish the tax “isn’t being honest about their management of the economy”.

He said if €5 billion is removed from the permanent tax take, they would have to “find it elsewhere”.

He added: “We have to make sure in all our economic decision making that the medium to long term trajectory of the economy is in sight, and the decisions we take on tax and spending can be sustained long into the future.

“We want to make sure that for the next generations that come after us, that they have an economy and a country which has built better infrastructure, but that the decisions we take on tax and spending can be sustained through that period, and that we move away from the cyclical nature of economic decision making, which we’ve had in previous decades.” 

Asked about whether the 13.5% VAT rate for the hospitality sector would be reduced, Mr Chambers said: “When it comes to issues with businesses and competitiveness in the economy, there is a serious issue for many businesses, hospitality sector, retailers and small medium enterprises. We need to make sure that the decisions and policy measures that we’ve already taken are sustainable from medium to long term.”