The Summer Economic Statement, published in July tells us that €390 million is available for tax relief measures; however, €170 million of this is pre-promised to tax cuts announced in last year’s budget statement leaving €220 million for Budget 2018. Brian Keegan, Director of Public Policy and Taxation, commented on the possible uses of the €220 million, and said “while €220 million for Budget 2018 might seem like a lot of money”..., “it won’t buy a lot of tax relief for individual taxpayers”.

Improved efficiencies in the taxation system and the need to ensure it is as growth-friendly as possible are a focus for Government; according to the Summer Economic Statement. Other measures include:

• Reform of the income tax system will be targeted towards middle income earners, underpinned by the objective of making work pay.
• A SME focused share remuneration scheme, promised last year, is due to be introduced in Budget 2018.
• The 12.5 percent corporation tax rate is fundamental to the corporate tax policy objectives.
• Ireland is committed to the BEPS process and is playing its full part in implementation.
• The darkest cloud over the momentum in the economy relates to Brexit and the uncertainty attached to the post-exit nature of the trading arrangements between the UK and the EU.

The fiscal space or the budgetary room is €1.2 billion for 2018. Taking into account the full-year cost of measures introduced last year, in the absence of additional revenue-raising measures, this leaves around €500 million for new, discretionary measures next year. The statement goes on to note that €300m of this amount is available for new expenditure increases, which when added to the pre-committed spending will bring the overall expenditure increase to €2 billion. The statement also commits to introducing the rainy day fund but contributions will be €500 million per year, for 2019, 2020 and 2021; half of what was indicated in Budget 2017.