The Irish Congress of Trade Unions (ICTU) has today (26 August) said the Government must place the economy on a firmer footing by reducing reliance on corporate tax windfalls and increasing investment on infrastructure.
As part of its 2026 pre-Budget submission, ICTU warned that despite Ireland's apparent economic strength, the country's fiscal position is "deeply misleading," with the government running an underlying deficit once windfall corporation tax receipts are excluded.
In order to mitigate against the over-reliance on corporate tax receipts, ICTU is urging the Government to prioritise investment in infrastructure and innovation, while reducing child poverty and improving public services.
The submission also calls for Government to rule out reducing the VAT rate for the hospitality sector to 9%, describing proposals to cut the rate as “economic folly”, given the €800m cost at a time when all available evidence suggests the sector is doing well.
The Irish Congress of Trade Unions is due to meet Minister for Finance Paschal Donohoe and Minister for Public Expenditure Jack Chambers this morning.
Speaking about the pre-Budget submission, ICTU General Secretary Owen Reidy said:
The fundamentals of good economic policy remain the same regardless of external pressures - invest in people, productivity, and public services while ensuring fiscal sustainability through a broadened tax base.
With a welcome commitment to multi-annual budgeting, Budget 2026 provides an opportunity to future-proof the Irish economy while supporting workers across the country. However, continued over-reliance on corporate tax windfalls represents a clear and profound source of risk that Budget 2026 must address.
Therefore, the Government must prioritise investment in Ireland’s productive capacity, increasing spending on education, skills, and research and development while ensuring the tax base is sufficiently robust. Alongside that, Government must support workers by strengthening collective bargaining rights and increasing the minimum wage.
Finally, the Government must abandon its plans to extend the 9% VAT rate to hospitality - this is an €800m economic folly while doing nothing to improve productivity or raise living standards.
Key Budget 2026 Proposals
Productivity and Investment:
- Increased per-pupil spending on education and skills to match other high-income European countries.
- Enhanced public R&D investment to drive innovation and competitiveness.
- Deployment of National Training Fund surplus to upskill workers.
- Retention of the 13.5% VAT rate for hospitality.
More and Better Jobs:
- Increasing minimum wage to living wage levels as previously committed by government parties.
- Strengthening collective bargaining in line with EU directives.
Economic Security:
- Introduce second tier of child benefit, lifting 60,000 children out of poverty.
- Development of public childcare option, focusing on areas of low supply initially.
Economic Resilience:
- A ‘carrot over stick’ approach to managing the green transition, with funding increases for public transport, retrofitting, and electric vehicles.
- Promote countercyclical economic policies, with net spending increases limited to 5%, with any further spending funded through broadening of the tax base, in line with the Commission on Taxation and Welfare.
