DUBLIN, Oct 9 (Reuters) - Ireland's finance minister will need to be creative in Tuesday's budget if he is to give taxpayers a meaningful break and fund additional spending while also balancing the state's books for the first time in a decade.
Ireland started reversing years of savage spending cuts and tax hikes in 2014, about the time its economy began to rebound sharply from a deep financial crisis, but Paschal Donohoe has far fewer resources this year than in those expansionary budgets.
Hemmed in by European Union borrowing rules, Donohoe will need to raise revenue elsewhere if he is to boost the budget package from the mere 350 million euros available to the 900 million to 1 billion euros local media say he is targeting.
The bulk of the larger-than-usual revenue boosting measures will be found through a substantial increase in stamp duty on commercial property, the Irish Times reported, ensuring income tax cuts will not go into one pocket and come out the other.
While Ireland's economy has posted the fastest growth in Europe for the past three years, sluggish sentiment surveys suggest many consumers are seeing few benefits amid increasing living costs, particularly in rents and rising house prices.
Prime Minister Leo Varadkar's government is also aware that with the agreement with their main rivals to back the minority administration set to expire in just over a year's time, the modest boosts will likely be the last to filter through to voters' pay packets before the next election.
The government will stick to its ratio of at least 2:1 in favour of spending increase over tax cuts, meaning more money for welfare payments and a health service struggling to keep up with a population that is also the fastest growing in the EU.
Donohoe may also add to initiatives already announced and under consideration to boost Ireland's chronic under-supply of housing, including the likely retention of a subsidy for first-time home buyers linked to new builds.
Donohoe, who was promoted to the role of finance minister in May, has also promised a package of Brexit measures for businesses at risk from neighbour and key trade partner Britain's departure from the EU.
However the government has said it can only consider major interventions such as asking for specific EU assistance when the shape of Brexit becomes clearer, meaning any help on Tuesday is likely to consist of easier access to working capital and funds to expand into new markets. (Reporting by Padraic Halpin Editing by Jeremy Gaunt)