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BUDGET BOOST Paschal Donohue announces minimum wage increase as he vows to ease 'cost of living’

However, there was bad news for smokers who will see a rise of 50 cents excise duty on a packet of 20 cigarettes

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Minister for Finance Paschal Donohoe (right) and Minister for Public Expenditure and Reform Michael McGrath arriving at Government Buildings, Dublin PA Photo

Minister for Finance Paschal Donohoe (right) and Minister for Public Expenditure and Reform Michael McGrath arriving at Government Buildings, Dublin PA Photo

Minister for Finance Paschal Donohoe (right) and Minister for Public Expenditure and Reform Michael McGrath arriving at Government Buildings, Dublin PA Photo

Finance Minister Paschal Donohue vowed to ‘ease the cost of living’ as he announced plans to raise the minimum wage by 30 cent and to widen tax bands in his Budget speech.

The Fine Gael deputy struck an optimistic note in his speech in the Dail, saying more than 400,000 jobs will be added to the economy over the next 12 months as Ireland emerges from the Covid pandemic.

He admitted that housing was the “core issue” facing the State but said the government are “determined to build more homes.”

However, there was bad news for smokers who will see a rise of 50 cents excise duty on a packet of 20 cigarettes - with motorists will also facing increases VRT charges.

Minister Donohue opened his speech by praising the Irish response to the pandemic and said we are entering a phase where we will “restore our public services and living standards.”

“Our supports worked. We responded in the right way at the right time.

“This response was strengthened by the solidarity of the European Union.

“But that response could only take place due to the careful management of the economy in the years leading up to the pandemic.”

He added: “We managed our affairs well in better times, so that we could support at a time of great national difficulty.”

Minister Donohue said the government would raise the minimum wage – as well as broadening the tax bands to put more money in people’s pockets.

The standard rate band is set to increase by almost €1,500.

He said: “The government accepts the recommendation of the Low Pay Commission to increase the national minimum wage by 30 cent to €10.50 per hour.

“In addition, in order to ensure that the salary of a full-time worker on the minimum wage will remain outside the top rates of the Universal Social Charge, the ceiling of the second USC rate band will be increased from €20,687 to €21,295 - a move which will give a benefit to workers whose income is above that amount.”

There was also good news for people working from home as an income tax deduction amounting to 30pc of the cost of vouched expenses for heat, electricity and broadband was announced.

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Donohoe also said the Employment Wage Subsidy Scheme (EWSS) would be extended for a further four months.

"For those whose jobs have not yet returned. This Government stands with you. For those concerned with the rising cost of living, this Budget will help you. For those worried about owning a home or paying their rent, this Budget will support you. And for businesses looking to the future, this Budget will back you.

"I am an optimist by nature and I believe there are truly exciting times ahead for this country and its people."

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Finance Minister Paschal Donohoe (right) and Public Expenditure Minister Michael McGrath

Finance Minister Paschal Donohoe (right) and Public Expenditure Minister Michael McGrath

Finance Minister Paschal Donohoe (right) and Public Expenditure Minister Michael McGrath

He said housing was the “core issue” facing the country and vowed to increase the supply of homes.

“Recent figures show national property price inflation of just under 9 per cent in July.

“The rise in prices is due to the imbalance between housing demand and supply, as well as the impact of some of the savings built up over the pandemic being directed into housing.

“I appreciate the strain, anxiety and worry caused by the shortage of homes.

“This is why total housing expenditure has more than doubled since 2016, and as of 2021, it will be more than 40pc above the peak level in 2008.”

Donohoe said the Government took the “historic decision” to join the international agreement on a minimum corporate tax rate.

He acknowledged that he had previously spoken about the importance of the 12.5 per cent rate to our economy.

However, he said: “I strongly believe our national interest is now best served by joining this agreement.

“It maintains our tax competitiveness and strengthens our position in the world.

“The agreement is balanced and represents a fair compromise.

“While here will be a cost to the Exchequer, it provides long term certainty for businesses and investors for the benefit of jobs.

“The agreement is in our interests.”

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