What does Budget 2026 mean for companies large and small?
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What is the main topic discussed in this episode?
Breakfast Business with Enterprise Ireland on Newstalk. So we now know what the government will spend our money on next year. Some groups will be happy, but most ordinary taxpayers won't be any better off, despite the government sitting on a surplus of 10 billion euro. The budget was, though, targeted at companies, at entrepreneurs, at investors. And as such, right up the breakfast business street. Joining us to break down what it means for consumers and companies large and small is Duno Daugherty, Workforce Tax Partner with PwC. And Harry Harrison is also a tax partner here with PwC. Good morning to you both.
What does the Budget 2026 mean for taxpayers?
Morning, Joe.
Can I start with you, Harry? What was the economic backdrop to the budget?
Running a budget surplus this year of 10.5 billion, projected to be 5 billion next year. All sounds good. But I think if you look at the total tax revenue we're taking in as a country now, that's well over 110 billion, with about a third of it from corporate tax and a third of it from income tax. So any small swing in that, given the percentages, could push us out of that surplus. And there's definitely headwinds out there. I mean, clearly the tariff discussion is out there. There's a lot of geopolitical noise. So there's a lot of headwinds. I mean, one of the things we've... hear from talking to companies a lot is the competitiveness landscape in Ireland. You know, there's a report by the US Secretary of State recently which talked about Ireland in the terms of, you know, high labour and operating costs, you know, a shortage of high quality office space and housing and a really difficult and tedious planning process.
These aren't things we like to hear from a country that's a significant investor.
But it is useful to hear it for us to focus minds. We will come to infrastructure in a moment, Harry. I'm going to bring in Dune O'Doherty. Dune, who are the big winners in terms of tax?
No winners, Joe, to be fair.
Not even the hospitality people?
How does the budget impact companies and entrepreneurs?
Yes, but given the delay between when that comes in and the increase in the minimum wage, for example, there is a time lag there. You know, from a personal tax perspective, if I look at it, last year an individual taxpayer was up about €1,000 between income tax cuts and the cost of living measures.
Which was notable, and they noticed it in January this year.
Absolutely. We're going to feel the absence of it in January this year. In fact, I think we're actually going to feel the absence of it sooner. I think when the next electricity bill lands in your doormat or in your inbox and you don't have an energy credit to set against that, I think that's when the pressure is going to hit.
Is that because the carbon tax rate has been set now at 71 euros?
Correct, and those scheduled carbon tax increases are going to kick in and come into play. So notwithstanding, positively, that the government committed to retaining that 9% reduced VAT rate on energy bills, there's going to be very little reprieve because those carbon tax increases are going to kick in.
Do you think fiscal drag is going to play a factor now? Because if your nominal wages go up but the tax bands aren't changed, you might be dragged into the top 40% rate.
Absolutely. And I'd even go further than that.
What are the economic factors influencing the budget?
You're going to have individuals who are dragged into the tax net in the first place and then those who are dragged into the higher rate. Wages are growing in Ireland. Wage inflation is growing at four and a half percent.
We've previously been able...
They are, but without that corresponding adjustment in bands and credits, average taxpayers are going to pay more. The only relief they got was a small tweak to USC, up about €13, but that's going to quickly be eroded by the increase in PRSI, which has already taken place this October, so this month, and there are additional increases hard-coded in for each October between now and 2028. So no extra change in people's pockets.
Harry, the Irish Examiner refers to it as the Big Mac Budget, which I think might be a decent description.
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:01–0:41
2
What does the Budget 2026 mean for taxpayers?
0:41–1:51
3
How does the budget impact companies and entrepreneurs?
1:51–2:55
4
What are the economic factors influencing the budget?
2:55–7:28
5
Who are the winners and losers in the new tax structure?
7:28–10:03
6
How will the carbon tax affect ordinary taxpayers?
10:03–11:16