Tánaiste Leo Varadkar has told the Dáil that there will be an increase in the minimum wage in the coming year.
Mr Varadkar said there would be pay increases in most parts of the economy and that was why indexation of tax bands was required.
He said these are not tax cuts and just ensured that if people got a pay increase or increment, that they would keep it.
He also said the Government was examining an increase in the fuel allowance and increases in pensions and social welfare so people can keep up with the rise in the cost of living.
The Low Pay Commission has submitted its report to Government on the current minimum wage of €10.20.
It has been reported that the Commission has recommended an increase.
Budget focus on spending, public services and recovery
Minister for Public Expenditure Michael McGrath said the overall emphasis of next month’s Budget will be on expenditure and on efforts to improve public services and secure economic recovery.
Minister McGrath told RTÉ’s News at One that the Government was conscious that it has been three years since any changes to income tax bands have been made and that staying static was not an option in light of rising inflation.
He said that “a static tax system that doesn’t change in any way in real terms …that is a tax increase”.
Mr McGrath said the Government will examine the scope of the fuel allowance scheme in the budget in response to concerns around rising fuel prices and the direct impact this is having on individuals and families.
He said that this season’s fuel allowance of €28 a week begins next week and 375,000 households will benefit from it.
The minister said there are no plans to introduce a price cap on energy providers.
He said the Government wants to support the ‘end user’ through what it expects is “a temporary period of elevated prices”.
Budget 2022 to be a €4.7 billion package
Minister for Finance Paschal Donohoe said next month’s Budget will stick to the spending limits already outlined by the Government.
The Minister made his comments at an appearance before the Oireachtas Budget Oversight Committee this afternoon.
The Minister outlined how next month’s Budget will be a €4.7 billion package which will comprise €3.2 billion in spending, including €1.1 billion in capital expenditure.
An additional €1 billion will be allocated for new spending measures while €500 million will be set aside for a tax package.
The Minister was asked by Sinn Féin Finance Spokesman, Pearse Doherty, if the spending limits would be adhered to even if there was “tax buoyancy” with higher than expected tax returns. He also asked how far the tax package would go to match the Central Bank’s estimate of average wage growth of 4.9% in the economy.
The Minister said it was his “absolute aim” to stay inside the spending limits outlined in the Summer Economic Statement.
He did say, however, that it was “really important” to prevent people who have seen their wages go up from seeing that increase “going into higher levels of tax”.
He also said he would update his expectations for where tax receipts for the year might end up, once September’s Exchequer figures are published next month.
The Minister was also asked to clarify if the Tánaiste, Leo Varadkar, was correct when he said earlier this week that even if Ireland was to sign up to the OECD deal on corporation tax, the current 12.5% rate would stay in place for companies with sales of less than €750 million.
The Minister for Finance said the Tánaiste was reflecting what was in the text of the current OECD Framework Agreement and was “completely correct in what he said”.
When pressed on whether the European Commission would permit two corporate tax regimes to operate, the Minister said he was engaging with the Commission on this “and other issues”.
Additional reporting: Robert Shortt