The Minister for Finance, Jack Chambers, this afternoon revealed the Budget for 2025, with a focus on infrastructure, family supports, and cost-of-living concerns.
Of note for the retail sector, Chambers announced that the Universal Social Charge (USC) will decrease from 4% to 3%.
He added that the main tax credits – personal, employee, and earned-income tax credits – will all increase by €125.
From 1 January, the minimum wage will increase by 80c, to €13.50 per hour.
This, along with the USC change and an increase of the entry threshold to the new rate, where the entry point increased by €1,622, to €27,387, means that workers on minimum wage can expect an increase of about €1,424 in take-home pay annually.
For SMEs in Ireland, Chambers announced support for the sector, moving forward, with plans in place – but not currently implemented – towards a Stamp Duty exemption.
Chambers said, “To further support Irish business to grow and scale, in the coming year, my department will, subject to state aid considerations, introduce a Stamp Duty exemption.
“This measure would enable Irish SMEs to access equity via financial trading platforms designed to support their funding needs.”
Food Drink Ireland welcomed news of support for SMEs, with director Paul Kelly noting the challenges facing the sector, such as labour costs, tight margins, and competition.
Kelly said, “With the introduction in 2024 of border controls to our largest export market, Great Britain, further adding to costs, it is essential that the scheme is up and running as soon as possible, and that qualification criteria encourages, rather than discourages, access by SMEs.”
The Budget also raised VAT registration thresholds that apply to the supply of goods and services – currently €80,000 and €40,000, respectively – to €85,000 and €42,500.
This aims to further support SMEs.
Drinks
Chambers also announced excise relief for cider producers.
Ireland has the fourth-highest cider excise rate in the European Union and the second highest across all drinks categories.
Chambers said, “I am extending the excise relief introduced last year for independent small producers of cider and perry, to cover what is known as ‘other fermented beverages’, which includes products such as mead and wines other than grape wine, such as elderberry wine, strawberry wine, etc.
“In addition, I am extending this relief to higher-strength cider and perry produced by independent small producers.”
Tobacco Products
Following a number of initiatives to discourage the sale of tobacco products, Chambers announced that the price of cigarettes will increase by €1 from midnight.
This will bring the price of the average price of a packet of cigarettes to €18.05, aiming to further discourage addiction.
Simon Clark, director of smokers’ lobby group Forest, described the hike as “brutal” and said that law-abiding smokers were being “discriminated against”.
Clark said, “This brutal hike in the cost of cigarettes will drive more smokers to the black market and fuel illicit trade.”
A tax on e-cigarettes and vapes will increase from the middle of next year, at a rate of 50c for every millilitre of liquid.
This will increase the price of the average vape with 2ml of e-liquid from about €8 to €9.23, including VAT.
Paul Malone, the spokesperson for Vape Business Ireland, responded to the Budget by saying, “As a responsible retailer, I agree with the measures announced by the minister to improve the oversight and administration of vaping products.
“However, enforcement is crucial, and retailers would like to see a clampdown on unsafe product and black-market activity.”
Malone concluded, “While we welcome the government’s announcement in the Budget, we do have concerns that Ireland may be straying into overregulation and damaging the future viability of SMEs as a result.”
‘Wasted Opportunity’
Retail Excellence Ireland (REI), the largest representative body for the retail industry, has been calling for a reduction in VAT and further supports for retailers in recent months.
Responding to the Budget, the CEO of REI, Jean McCabe, said, “Regretfully, Budget 2025 has been a wasted opportunity, and indeed the increase in the minimum wage will have a seriously negative effect and will lead to businesses closing down – putting many of those workers who this measure is meant to benefit, out of work.”
McCabe added that once-off supports are not enough, and there needs to be more long-term relief for the industry.
She said, “We could – and should – have seen a reduction in employers’ PRSI, and indeed a reduction in both the standard VAT rate and the hospitality VAT rate.
“This government has delivered a disappointing Budget for the retail industry, which will have serious consequences.”
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