Budget will include tax measures to promote remote working – Varadkar

Tánaiste says most of €500m in tax measures will be used to offset inflation impact on take-home pay

 Tánaiste  Leo Varadkar: ‘We think [remote working] is going to be a big part of the future.’ Photograph: Gareth Chaney/Collins

Tánaiste Leo Varadkar: ‘We think [remote working] is going to be a big part of the future.’ Photograph: Gareth Chaney/Collins

 

Tánaiste Leo Varadkar has said that most of the €500 million for tax measures in the Budget will be used to offset the impact of inflation on people’s take-home pay.

Mr Varadkar, the Minister for Enterprise, also said the budget will be used to promote remote working and he said this will involve updating the scheme that sees workers supported for utility costs.

The Fine Gael leader has previously promised that the up-coming budget will include a tax and welfare package that protects people from the rise in the cost of living.

Speaking at the time of his party’s pre-Dáil think-in, he said the tax measures will help “middle income people in particular”.

On the last day of his trip to Washington DC on Tuesday, Mr Varadkar said the budget tax package will be “roughly €500 million” and “most of that will be used to index tax credits and bands”.

He said this would ensure that if people do get a pay increase over the coming year, “they’re able to keep most of it and don’t lose most of it to tax”.

Mr Varadkar added: “that’s very important particularly at a time of high inflation.”

However, he said he could not offer details of proposed changes to the tax bands saying: “that’s not determined yet”.

The Tánaiste said there will also be space within the tax package for measures to promote remote working.

“We think is going to be a big part of the future and particularly can be beneficial in terms of work-life balance and also having more people living and working in rural Ireland.”

No significant effect

At present, employers can give their staff €3.20 a day tax-free to their employees though it is believed that not many do this.

Alternatively, workers can file a tax return to claim a proportion of home expenses back.

In the recently published Tax Strategy Group Papers, Department of Finance officials argued that improving the Remote Working Relief could place a considerable economic burden on the State, given the widespread support from both employers and employees for remote working.

Enhancements would not have any significant effect on encouraging more employees to avail of remote working, should they be offered it by their employer, the document argues.

Asked about the need for enhanced incentives given that many people are already working from home without them, Mr Varadkar said people worked from home during the pandemic because they had no choice.

He said the difference now is that the Government want people to have a choice on working from the office, from home or at a remote hub. “So that does change the picture.

“What we’d like to do is have a system whereby if somebody is working from home, they incur costs as a result – particular utility costs – that they’d be able to defray that in some way against the tax that they pay.

“That exists already, but it hasn’t been updated in many years and there’s a plan to update it.” He said the level of support that will be on offer is not decided yet.

Public expectation

Mr Varadkar was asked about the level of public expectation on what the budget will deliver and if there was a danger of disappointment on the day of the announcement.

“You know, it’s always the case in the run up to the budget that there’s a lot of speculation about what’s going to be in it and what’s not.

“Fundamentally, what the budget is going to be about is making sure that the economic recovery, post-pandemic continues.

“So making sure, for example, that those wage subsidies aren’t withdrawn too quickly and that we make sure that we protect as many jobs and businesses as possible.”

He added: “Obviously we’re working on a budget package of between €4.2 billion and €4.7 billion which is not small, but when you consider the amount of commitments that are already made, rising population, demographics, the room to manoeuvre is a little bit smaller than that.”