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Scope for €1.5 billion in tax cuts for Budget 2026
The Government is allowing scope for €1.5bn of tax cuts in Budget 2026, according to the Summer Economic Statement.
The spending package will be €7.9bn, which is a 7.3% increase on 2025.
It means the total package of tax cuts and spending increases will be €9.4bn in the budget next year.
However, the Summer Economic Statement warns: “If there is a deterioration in the tariff landscape, the Government will recalibrate its fiscal strategy reducing the quantum of the budget package.”
Of the €7.9bn increase in spending next year, current spending will rise by €5.9bn while capital expenditure will increase by €2bn.
Much of the current spending increase will go to support existing services as the population expands.
It means funds will be spent on social welfare and on investment in the health sector.
It will also be used to increase staffing levels in the public sector and increase staff numbers in the public service.
The Government is providing total public spending of €116.6bn next year, composed of €97.5bn for current spending and €19.1bn for capital expenditure.
The statement says: “While the headline budgetary position is in surplus, this is almost entirely due to a handful of corporate taxpayers.”
It says over the medium term an aging population, the phasing out of fossil fuels and digital transition “will have profound implications for the Irish economy”.
It says the Government will aim to run a budget surplus and continue to invest in the Future Ireland Fund and Infrastructure, Climate and Nature Fund.
Speaking following the publication of the statement, Mr Donohoe said the Government was considering a number of different scenarios in relation to potential US tariffs.
“On budget day, not only will we publish our estimate regarding what we believe is the most likely outcome for 2026, if it’s appropriate at that point we’ll also publish a number of different alternatives,” he said.
He said the Summer Economic Statement makes clear that the Government will assess where they are in relation to budgetary planning, particularly in September, to ensure the framework published today remains appropriate.
Mr Donohoe said today’s statement outlined the most appropriate response to “what we know at the moment” in relation to trade with the US.
Earlier, Mr Donohoe told RTÉ’s News at One that the Government is “fully committed” to the capital programme in the summer statement.
He said: “We believe it is the best response back to the economic uncertainty that we are in, being able to outline how we will invest in our future and how we will pay for it.
“The rest of our economic statement is the very best judgement that we can outline regarding the economic conditions that we are in and the scale of the budget package that is appropriate, and we will review other elements of us when we move into September. But the capital program in particular, we are fully committed to.”
Article Source – Scope for €1.5 billion in tax cuts for Budget 2026