Could this be the first of many Budgets planned under shadow of Brexit?

FEW could envy those involved in the behind-the-scenes discussions leading up to Budget 2020. Ongoing uncertainty remains as to what the next steps, form and timing of Brexit will be, with the multiple considerations of a no-deal Brexit surely testing the Government’s ability to produce a Budget now which can respond to all potential outcomes, both for businesses and individuals.

From a personal tax perspective, this Government has certainly been mindful of the risk of the backlash that future reversals of poorly timed tax cuts could produce.

In light of this, for most people, Budget 2020 brings little in the way of a good news story for their current finances.

Certain measures will go some way to improve household finances for parts of the population. Families had good news, with an increase to the home carer credit, free GP care extended to under-eights, and the introduction of free dental care for under-sixes.

For the vulnerable, increases to the living alone allowance and fuel allowance were welcome, albeit small. Reduced prescription charges, a lower monthly threshold for the Drug Payment Scheme, and increased medical card income thresholds for people over 70 will benefit some of the population.

Offsetting these somewhat, and impacting more broadly, were the measures tackling climate change. Households will see an immediate increase in auto fuel costs — with home fuel costs rising from May 2020.

However, many people will welcome that the increased income from these taxes will be ringfenced for reinvestment into other climate change initiatives, which could ultimately be of benefit to individuals.

Maintaining employment levels has taken priority — with initiatives like the Brexit loan scheme and specific sector initiatives to support Irish employers and their employees. The Government recognises it will need to be flexible — and so sectors of the Irish economy will be reviewed and assessed as the effects of Brexit come to light.

Financial intervention will be deployed as needed to those sectors most affected.

Planning for the future will be on the minds of households

We cannot ignore the fact that a no-deal outcome will result in a deficit in the public finances in 2020. The impact that such a deficit would have on the pockets of Irish citizens in future Budgets will be of concern. Speculation will remain as to whether 2020 will bring interim Budgets — as the ramifications of Brexit eventually unfold.

Raising revenue may become necessary and, although it is uncertain what form this may take, income tax and its revenue-raising ability in times of near full employment could be viewed as part of the solution.

In short, Budget 2020 will be viewed as unremarkable for individuals. Although not resulting in an immediate negative impact on the pay packet of the Irish taxpayer, planning for the future will no doubt be on the minds of households in this period of uncertainty.