Urgent Update: Government Budget Unveiling Tuesday with Cuts

UPDATE: The government is set to unveil the highly anticipated budget for 2026 on Tuesday at 1 PM, promising significant shifts in fiscal policy amid economic uncertainty. This year’s budget, framed as one of the most austere in recent memory, comes after ambitious campaign pledges for cheaper childcare, increased housing, and improved healthcare that have yet to materialize.

With a total package of €9.4 billion, including €1.5 billion earmarked for tax cuts, the government has signaled a cautious approach to personal taxes, focusing instead on “jobs and investment,” according to Finance Minister Paschal Donohoe. He has confirmed that there will be no changes to personal income taxes despite the ongoing cost-of-living crisis.

Negotiations are intensifying over social welfare payments, particularly regarding pensions. Last year, pensions rose by €12 per week, but sources now suggest an increase of only €10 to €11 is realistic, reflecting the government’s preference for gradual adjustments to avoid future cuts if economic conditions worsen.

Housing initiatives are also in the spotlight as the government prepares to roll out its updated “Housing for All 2.0” plan. Reports indicate there will be tax breaks for developers and a potential VAT cut aimed at stimulating new apartment construction. Despite this, Taoiseach Micheál Martin has clarified that the focus will remain on new builds rather than extending the First Home Scheme to second-hand properties.

In an effort to support the hospitality sector, the government plans to reduce the VAT rate from 13.5% back to 9%, a measure expected to take effect in mid-2026. However, this decision has raised eyebrows due to a lack of evidence supporting its effectiveness.

Amid these changes, the government is also expected to address childcare funding, moving away from promised immediate reductions to a strategy focused on increasing capacity. Tánaiste Simon Harris emphasized that the target of reducing childcare costs to €200 per month will be pursued over the longer term.

The budget will also introduce a new tax on vape liquid, with a flat rate of 50 cents per milliliter set to take effect on November 1. This tax was initially part of last year’s budget but was postponed to allow industry preparation.

The budget presentation will be followed by a response period from opposition parties, with voting scheduled to begin around 8 PM and expected to continue late into the night. As the government braces for scrutiny, the impact of these financial decisions will be felt across various sectors and by citizens at large.

Stay tuned for real-time updates as this story develops, and follow our coverage for critical insights into how these budget changes will affect you.