Brendan Burgess
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Barra Roantree: Does the Government want to help the country’s poorest children, or the richest?
Budget 2025: Spending the same amount cutting inheritance tax as went to permanent payments targeted at the poorest children was an odd choice
An excellent summary of the government's priorities.
Among the other tax cuts announced was an increase in the lifetime thresholds above which Capital Acquisitions Tax applies on gifts or inheritances. The Minister for Finance justified this €90 million tax cut – which benefits a tiny fraction of the population – on the basis these thresholds were last increased in 2019, since when property prices have grown.
Yet despite an impressive sounding €12 per week cash rise in most social welfare payments from January, these will remain below their 2020 level in real terms (adjusted for inflation). In other words, despite five years of strong economic growth, the core rates of social welfare payments will not even have kept pace with price increases over the course of this Government.
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For example, another two rounds of €125 energy credits will land in the door of every household before Christmas regardless of their bank balance, as will two extra months of child benefit for those with children. These temporary payments will all inevitably have to be withdrawn by the next Government. And when they are, there will be consequences for incomes at the bottom of the distribution.
This is particularly concerning given we have already seen progress on reducing income inequality and poverty stall, particularly for children.
Recent ESRI research in partnership with Community Foundation Ireland showed that material deprivation – the share of individuals in households unable to afford two or more items from a list of ten essentials – rose sharply from 17.7 per cent in 2022 to 20.1 per cent in 2023 for children.