Budget 2025: USC cut and double social welfare payments planned for autumn giveaway

Fianna Fáil and Fine Gael ministers are in favour of cutting USC by 0.5pc, the same as in last year’s budget, a measure which was projected to cost around €400m this year.

Budget 2024 saw the first fall in USC in five years to 4pc.

The Rent Tax Credit increase could be as high as €1,000 while a once-off doubling of social welfare payments is also being considered as part of this year’s cost-of-living package, which is expected to be smaller than last year’s.

The Green Party wants to keep the 20pc cut to public transport fares, initially brought in as a cost-of-living measure and which has since been extended in budgets.

Housing Minister Darragh O’Brien is also understood to be keen to extend tax cuts for landlords announced in last year’s budget, which were linked to them staying in the rental market.

The Government is keen to win as many votes as possible with giveaways, including an increase of at least €12 to the weekly pension.

In the past the cut to hospitality Vat hasn’t been passed on to the customer

Fine Gael has been “pushing hard” for the Vat rate for hospitality to be cut to 9pc, although one minister said this would be difficult to get over the line.

“I don’t know if we can pull it off and it’s a huge amount of money for one sector,” they said.

“If we don’t get that then we have to do something substantive for small businesses.”

However, Fianna Fáil has pushed back against the proposals, saying tax cuts for the wider working population should be targeted instead.

“In the past, it hasn’t been passed on to customers,” one Fianna Fáil source said.

“If we do the 9pc for hospitality, there’s no room for tax cuts,” another party source said.

“If we do the 9pc, it’ll be more than half of our tax package gone.”

​Former Finance Minister Michael McGrath said last month that a cut to 9pc Vat for the entire hospitality sector would cost €764m.

Restricted only to food and catering services, the tax cut would still cost the State €545m a year.

The Government allocated €1.4bn for tax cuts under last week’s Summer Economic Statement (SES).

Budget 2025 will include additional public spending of €6.9bn and tax cuts of €1.4bn. The jury is still out on whether the electricity credits, previously paid in instalments of €200 and €150, will be included.

“We’re in a different place now and energy bills have come down,” one minister said. “The appetite is there to keep doubling the social welfare payments and increasing the renter’s credit instead.”

Meanwhile, all ministers have been tasked with looking at measures aimed at tackling child poverty which were drawn up by the child poverty unit within the Department of Taoiseach.

The Budgetary proposals are understood to be across welfare, childcare, education and sports.

Ministers who are not happy with the measures put forward by the child poverty unit to their Departments are asked to come up with their own ideas to help reduce the issue.

Taoiseach Simon Harris has previously said he wants to make Ireland to be the best small country in Europe to be a child.