Minister for Finance Paschal Donohoe has indicated he’ll have about €800 million for new spending and tax measures in Budget 2019, to be allocated on a two-to-one basis in favour of spending. This leaves just €270 million or so for tax cuts, barely enough to widen one of the income tax bands.

In its pre-budget report, the Irish Tax Institute outlines five ways in which Mr Donohoe could raise a further €1.5 billion: money that could potentially fund more meaningful tax reductions without upsetting the budgetary adjustment allowed under the European Union’s fiscal rules.

1: Restore the full VAT rate for the hospitality sector – €520 million

The institute notes that the 9 per cent rate introduced for goods and services across the hospitality sector in 2011 was a temporary measure that was meant to expire in 2013. Reverting to the 13.5 per cent rate would net the exchequer in region of €520 million. The Government is understood to be considering a partial restoration of the full rate for certain sectors of the industry such as hotels. The estimated cost to the exchequer of the reduced rate since its introduction has been €2.6 billion.

2: Raise excise on the “old reliables” – €204 million

Ireland has a long-standing policy of levying high rates of excise duty on alcohol products and has some of the highest rates of excise duty in the EU. The institute cites a report by the Government’s Tax Strategy Group, which suggests that a 10 cent duty increase on a pint of beer, half a glass of spirits and a pint of cider could yield €116 million while a 50 cent increase on a bottle of wine would net the exchequer a further €30 million. Equally another 50 cent duty hike on a pack of cigarettes could yield €58 million.

3: Carbon tax increase – €106 million

With the Republic expected to be hit with fines for missing its 2020 climate targets, placing an extra €5 carbon tax would have the advantage of reducing greenhouse gas emissions while raising revenue. Carbon taxes apply to various fuels and are calculated using the underlying charge of €20 per tonne of CO2. A €5 increase in the existing rate would reduce annual carbon emissions by 1.6 per cent while raising €106 million.

4: Equalising petrol and diesel excise rates – €353 million

The current excise rates are 58.7 cent per litre of petrol and 47.9 cent per litre of diesel. The lower rate for diesel was adopted under the erroneous assumption that diesel is cleaner than petrol. But diesel’s higher rate of emissions of nitrous oxide and particulates have been linked to premature deaths and strokes in humans. Equalisation could net the exchequer €353 million.

5: Increase PRSI contributions for employees and self-employed – €458 million

The Government’s Tax Strategy Group suggests there is scope to increase the PRSI rates to help fund pensions and other social welfare benefits. Increasing contributions by half a percentage point for employees and the self-employed would, on a combined basis, raise €415 million for the exchequer.