WEALTH July 22, 2026 0 Comments

Could €1.5bn in Tax Cuts Unleash a Business Boom or Mask Bigger Risks in Budget 2027?

Budget 2027 is shaping up to be quite the financial sprint, with the government rolling out a hefty €8.5 billion package that’s not just about numbers but about navigating the ever-thorny cost of living crisis. Picture this: €1.5 billion earmarked for tax cuts, aiming to give hardworking folks a much-needed breather as bills keep climbing. Tánaiste and Finance Minister Simon Harris paints a picture of an economy that’s standing tall — record employment, solid consumer spending, and a buzz of investment — yet dims the spotlight with a warning about the shaky global stage that could trip us up. It begs the question: Can Ireland keep its economic footing while rewarding the grit and grind of its people? Strap in, because this budget isn’t just about spending; it’s about future-proofing through shrewd investments and cautious optimism underlined by the ever-present shadow of geopolitical tensions and a tax base that leans heavily on a handful of juggernauts. Oh, and tax expert Daryl Hanberry thinks it’s about time we widened the income tax bands — throwing fuel on the fire of the debate around fair tax cuts and spends. Intrigued? You should be. LEARN MORE

Budget 2027 will include €1.5bn in tax measures, the government has said in its Summer Economic Statement.

The cabinet has signed off on an overall Budget package of €8.5bn that includes €7bn in new public spending. The Budget will be announced on 6 October.

Tánaiste and Minister for Finance Simon Harris said the tax cuts included would allow government to “support workers at a time when cost of living pressures are weighing on so many people.”

Speaking today, Harris said that the economy remains in a good position despite “significant challenges” with record employment, strong consumer spending and high levels of public and private investment.

“However, the international backdrop remains highly uncertain, and our economic resilience could yet be tested,” he continued.

“For that reason, Budget 2027 will be about rewarding hard work, boosting competitiveness and investing for the future.

“The budget package of €8.5bn will allow us to continue to improve public services, to ramp-up spending on critical infrastructure and, importantly, to deliver a tax package that supports workers at a time when cost of living pressures are weighing on so many people.”

Public spending will increase 5.9% next year with planned growth of €5.9bn in current expenditure and €1.1bn in capital expenditure.

The government said its expenditure ceiling for 2027 will be €125.5bn between €105.2bn of current spending and €20.3bn of capital spending.

The Department of Finance has projected a €9.2bn general government surplus this year. When stripping out corporation tax receipts, however, there is an underlying €10.8bn deficit.

Just 10 companies account for more than half of corporation tax receipts, and the Summer Economic Statement states that state revenue is increasingly reliant on specific products made by multinationals rather than the wider sector.

The government is putting surpluses into two long-term savings funds and investing in infrastructure to mitigate the risks posed.

The Summer Economic Statement says that Ireland began the year on a “reasonably solid footing” but the conflict in the Middle East “threatened to put a spanner in the works”.

“The macroeconomic fallout – in Ireland and elsewhere – has been relatively contained; nevertheless, the risk of a commodity-driven slowdown remains, given ongoing geopolitical tensions in the region,” it added

Daryl Hanberry, tax and legal partner at Deloitte Ireland, in response called for a €6,000 income tax band increase over the next three years to bring the marginal tax rate threshold to €50,000.

He said that the tax bands haven’t moved in line with average earnings and that increasing the income tax band by €2,000 would cost €505m or 6% of the total Budget 2027 package.

“However, if the intention is to also make changes to the income tax credits, this will push the income tax package over the €1bn mark and leave little wriggle room within the total €1.5bn tax package for other tax measures,” he continued.

Deloitte’s Daryl Hanberry. (Pic: Supplied)

“The high level of tax receipts put Ireland in a unique position to be able to make decisions around investments. But these strong receipts also serve as a reminder that Ireland is exposed to any changes in tax policy.

“It underscores why making these investments now is needed. In next month’s exchequer returns, the Pillar Two filings may show an even further increase in corporation tax receipts, but this can’t be considered permanent.”

Photo: Simon Harris. (Pic: RollingNews.ie)