It often takes a few days for the dust to settle on a Budget and its full impact to become clear.
The enormous tax cuts granted to the hospitality sector and apartment builders mean there was no relief for middle income earners.
An assessment by the Economic and Research Institute found that the Budget would result in a 2% reduction in household incomes.
Middle earners are now squeezed on two fronts - they are paying more tax at a time when grocery bills are soaring.
Inflation figures published on Thursday show food prices galloping ahead by almost 5%. Beef is up 23%, milk 12%, butter 11% and coffee 10%.
Supermarket shopping is non-discretionary; in other words, it is not something people can skip when money is tight, such as a foreign holiday.
But the latest inflation figures showing a 2.7% increase in overall consumer costs come after years of price rises.
The increase in the cost-of-living was 7.8% in 2022, 6.3% in 2023 before dropping to 2.1% last year.
It means although wages have been rising by an average of 5%, people aren't feeling wealthier.
The Coalition did not increase the point at which people start paying the higher rate of tax in the Budget, meaning that as workers earn more, largely to keep up with inflation, they will face bigger tax bills.
Here are some examples of how workers fared after the Budget:
- A household with a married couple with two children and one PAYE income earner on €55,000 will be €49 worse off annually
- A single self-employed person with no children on €25,000 will be €28 worse off
- A single PAYE worker on €75,000 will be €71 worse off
- A married couple with two children on one PAYE income of €35,000 will be €1,846 better off as they are helped by the Working Family Payment.
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While Coalition figures may talk up the Budget it is worth remembering the Department of Finance slammed the idea of tax cuts for hospitality in July of last year, describing them as "unjustified."
Officials said it "would constitute an enormous fiscal transfer of taxpayers' money to the sector, which the evidence available at present does not support".
Fine Gael leader Simon Harris made good on an election promise to reduce VAT for cafes and restaurants which also helps multinationals such as McDonald's and Burger King.
The commitment was also included in the Programme for Government, and then Fianna Fáil and the Independents were on board too.
While the cost of the hospitality VAT cut is €232m next year, as it is being introduced in July it will be €690m the following year.
The enormous cost explains why Minister for Finance Paschal Donohoe was adamant he could not reduce taxes for workers at a cost of €1.3 billion and cut VAT for hospitality and apartment developers at the same time.
There is no doubt cafes and restaurants have been struggling.
Analysis by PwC's head of restructuring Ken Tyrrell shows there are 30 insolvencies for every 10,000 businesses every quarter in Ireland.
However, the insolvencies for firms in the hospitality sector have been running at about 80.
The Central Statistics Office figures for accommodation and food service activities showed a 9.2% drop over the past 12 months.
Cafés and restaurants are always more volatile than other sectors.
However, hospitality needed some help, but the real question was whether there was a better way to do it which didn’t inflict damage elsewhere.
Transferring tax cuts to one sector of society has had the effect of cutting disposable income for the customers of cafes and restaurants. And that has implications too.
The other large new tax measure was the VAT reduction on the sale of new apartments.
Again, this was an expensive step which will cost the State €390m in tax foregone in 2027.
In some ways, the justification for this is clearer.
The effects of the housing crisis of homelessness, the housing shortfall, spiralling rents and unaffordable house prices are irrefutable.
The Coalition had no choice but to use every available lever to get apartment building moving after a 24% collapse in output last year.
What is less clear is whether the VAT reduction for that sector, and a number of other tax breaks for developers announced in the Budget, will definitely result in a badly needed surge in the supply of new homes.
It will possibly take a number of years before that question is answered.
