Minister for Public Expenditure Michael McGrath says the aim of Budget 2021 is to give people hope and confidence.
The budget will be announced later today by Minister for Finance Paschal Donohoe and Minister McGrath.
Speaking this morning Minister Donohoe says Ireland is dealing with deficits that are “unimaginable” because of Covid-19.
“We entered into 2020 having balanced our national finances – we were due to move into an accelerated surplus, we had a rainy day fund in place. We made all those decisions in anticipation of future difficultly but none of us saw the kind of difficulty that Covid-19 could be,” said Mr Donohoe.
Among the expected moves to be announced today is that people on the Pandemic Unemployment Payment (PUP) will be paid the social welfare Christmas bonus if they have spent at least four months on the income support.
The measure was one of the last agreed last night during final negotiations on Budget 2021, which will be announced at 1pm today.
The largest budget in the history of the state will focus on Covid-19, Brexit, housing and getting people back to work.
Health is to get an extra €4 billion euro to spend between Covid and other healthcare including extra beds and ICU capacity.
There will be a multi-billion euro fund including targeted supports for businesses that have been forced to shut because of Covid and the live entertainment industry.
At least €500 million will be given to the Department of Housing which will tell local authorities to directly build social housing.
There will be money for affordable housing and the help-to-buy scheme is being retained at the higher €30,000 rate.
Carbon taxes are going up by €7.50 a tonne, which will mean it will cost €1.47 extra to fill a tank of diesel and €1.28 for a tank of petrol.
A bag of coal will cost 90c more and a bale of briquettes 20c more.
Motor tax and VRT are also set to rise for high polluting vehicles.
The cost of a pack of cigarettes will go up 50c but alcohol is expected to be left alone.
Income tax rates are also not going to change under the first budget of this coalition Government.
Leading economists have said that increasing Ireland’s debt to fund additional spending in the budget is the right approach.
A budget deficit of €21 billion is forecast this year.
Professor of Economics at DCU, Edgar Morganroth, thinks borrowing more now is the right call.
“Currently, debt is really cheap, so there is not going to be an implication in terms of the interest bill, at least not yet.
“Of course, you can only borrow so much. At some point the market will determine that you have over-stretched yourself and you are not going to be able to pay back, in which case the interest rates are going to increase, but we are not at that point yet.”