Minister Paschal Donohoe guarantees €257m Christmas bonus

With just four days to go until the budget, the Government is expected to restore the Christmas bonus, which had been axed during the crash, on a permanent basis.

The Independent Alliance is claiming credit for the move, despite assurances given last week by Taoiseach Leo Varadkar that it would be paid.

Following a meeting between the alliance and Mr Donohoe yesterday, it is now certain the 9% Vat rate will increase in order to raise in excess of €520m.

The alliance had opposed the Vat hike, with Finian McGrath telling Cabinet colleagues the move would “screw businesses”.

During their meeting, Mr Donohoe told the alliance it faced a choice of Vat rises or sharp increases in excise duty on diesel to fund other tax cuts and spending increases.

Proposals to help older people who want to convert family homes into sub-units they could then let out are still under consideration.

Taoiseach Leo Varadkar has criticised Mr McGrath’s comments at Cabinet that increasing the 9% Vat rate would “screw businesses”.

At Cabinet, Mr McGrath hit out at the plans, and said that while big hotels need to be stopped from gouging customers, the Government should not be hitting small hotels, B&Bs, and guesthouses.

Speaking in Brussels yesterday, Mr Varadkar said people looking for tax cuts while demanding spending increases are not rational.

I can understand why everyone is calling for no tax increases or even lower taxes or spending in loads of areas, but unfortunately that just doesn’t add up,” he said.

“There is only a certain amount of money and you have to match the amount of money you bring in revenue with the amount that you spend. And a few people are looking for tax cuts or to avoid tax increases while also at the same time looking for more spending.

“You would be very quickly walking back down the pathway to recession and austerity again.

“And I’m determined that if I’m to do anything as Taoiseach, as prime minister of Ireland, as leader of this country, it’s to make sure we break out of that cycle once and for all.”

Mr Varadkar insisted the budget is not yet finalised but stressed the need to balance the books.

But particularly at this stage of our economic cycle, as the economy is going well and particularly as we are entering into a potential period of great risk which is heading into the period of Brexit, it’s more important than ever that we balance the books, that we have a balanced budget next Tuesday,” said Mr Varadkar.

Meanwhile, the necessary finance to pay for an additional 800 gardaí will be a centrepiece of Mr Donohoe’s budget on Tuesday, it can be revealed.

Because of retirements, totalling about 300 a year, the force will need to hire an additional 800 recruits in 2019 if it is to reach its target of bringing the total number of gardaí in the country to 15,000 by 2021.