Tax credits, school books, creche grants – Budget 2025 is poised to be the mother of all giveaways

Before taking or turning down a flight to Brussels to become European commissioner, Finance Minister Michael McGrath has a final budget to prepare.

Budget 2025 is the last chance for the Coalition parties to move the dial ahead of a general election. And it’s already shaping up to be the mother of all bumper giveaways, not least with the added edge of new Taoiseach and Fine Gael leader Simon Harris wanting to put his own stamp on proceedings.

Fine Gael sneaked in to try to steal McGrath’s thunder last year with three junior ministers being strategically rolled out to demand a middle-income tax package in Budget 2024, McGrath’s first as Finance Minister.

Tánaiste Micheál Martin noted the move “undermined the budgetary process”. But McGrath won’t be fooled again and, as early as February, he signalled there will be “substantial” income tax cuts in the next budget.

His lunchtime address to the Fianna Fáil ard fheis today is expected to see more teasers of what’s to come. Among the items on budget table already are:

⬤ A higher tax credit to allow the first €20,000 of wages to be income-tax free, up from the present €18,750;

⬤ Cutting the highest rate of PRSI for employers;

⬤ And free school books all the way up to Leaving Cert level, currently available up to Junior Cert.

And that’s just for starters. Both Fianna Fáil and Fine Gael are showing an interest in childcare, even though it’s a Green Party portfolio.

Fianna Fáil is talking about reducing the cost of childcare. But Harris is also looking at the supply, availability and distribution of childcare.

The Taoiseach wants to set up a new fund to help creche providers expand their operations and provide more places, and also to help those who have had to close down due to rising costs. A new model of childcare for children from disadvantaged backgrounds is also being looked at.

A new Cabinet sub-committee on disability will meet next week and ideas are expected to flow from there. A support package for business is being drafted by newly-appointed Enterprise Minister Peter Burke. And there’s a plan for retention of gardaí in the offing too.

None of these items will come cheap and there may have to be extra funding provided before September’s budget.

The appointment of a new Taoiseach has raised concerns in Fianna Fáil of a Harris bounce as well as whether the Fine Gael leader can be trusted.

Fianna Fáil backbenchers are said to be “jumpy”, even if ministers are less concerned. The Taoiseach has the capacity to call the general election and his commitments to hold off until next year is viewed with suspicion, as are his pledges to go back to Fine Gael’s core values.

“Trust in politics has to be built up and if it’s in their interest they will make it work,” a senior Fianna Fáil source said this week.

McGrath’s control of the purse strings and his clear intention to open them should assuage some of the fears.

However, Fianna Fáil potentially has its own upheaval to come this summer. Aside from the fallout from the local and European elections, the appointment of the next European commissioner will also cause some changes in Martin’s Cabinet line-up.

As part of the Coalition deal with Fine Gael, Martin has the pick. Ironically, Fine Gael has several suitable candidates, including a certain former taoiseach and former foreign affairs minister, but it’s not in their gift.

Martin himself appears to have passed up the opportunity, leaving McGrath with the invitation to RSVP. McGrath certainly hasn’t done anything to dampen down the speculation.

Next in the queue are Agriculture Minister Charlie McConalogue and Health Minister Stephen Donnelly. Housing Minister Darragh O’Brien and Education Minister Norma Foley appear to be home birds too.

Donnelly going to Brussels might be tempting for Martin, as he has Jack Chambers lined up to replace him. After fending off Fine Gael for the plum posting, Fianna Fáil won’t get away with not sending someone of Cabinet rank.

It was a bit random, but the Dáil had a debate this week on the 20th anniversary of the smoking ban. “In newspapers, columnists questioned whether Ireland was becoming a nanny state – we have heard that again in recent times – and if we were going too far,” Martin said of the crowning glory of his political career.

Three months later, however, Fianna Fáil got pasted in the local elections, despite the Celtic Tiger being at its purriest. Then-finance minister Charlie McCreevy was exiled to Brussels to become European commissioner and Bertie Ahern pivoted Fianna Fáil to become more caring. McGrath isn’t being forced to go anywhere.

But Fianna Fáil is facing another huge decision on who goes to Brussels.

‘McGrath’s control of purse strings and his intention to open them should assuage some fears’