Taoiseach Leo Varadkar has said that this year’s budget will contain a tax package that will enable middle-income people to “keep more of the money they earn”.
The Fine Gael leader said, however, he was not going to be “prescriptive” about whether this would come in the form of a new tax rate or changes to tax bands.
It comes just days after the Government confirmed that it will have a budget surplus of €26bn budget surplus over the next two years.
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During the run-up to last year’s budget, the idea of a 30% tax rate was floated for “middle income earners”. Mr Varadkar asked then Finance Minister Paschal Donohoe to examine whether the new rate would be possible.
It was decided that it was too difficult to introduce at the time, but that a review would be undertaken by current Finance Minister Michael McGrath.
Asked by the Irish Mirror whether or not the projected surplus cleared the way for the 30% tax rate, Mr Varadkar warned that some of the money will need to be kept for tougher times.
However, he vowed that there will be a tax package for middle-income earners in the budget.
“When we talk about the budget surplus, we should always talk about the national debt,” he said.
“We have a national debt of €250bn, one of the highest per capita in the world. We do need to think ahead and we do need to start paying down that debt and setting aside money for when the time comes and revenues fall off so that we can insure ourselves against ever having to experience austerity again in this country.
“But as Minister McGrath said the other day, there will be a tax package in the budget and there will be about our package in the budget.
“We want middle-income people to be able to keep more of the money they earn. We also want people on pension and welfare to receive an increase in the budget.
“It's my view that we should get to a situation whereby people don't pay the highest rate of income tax until they're earning €50,000 or more. We've got to €40,000 now and I want us to do more in this space.
“But I'm not going to be prescriptive about the mechanism by which we get there.”
Senior Government sources told the Irish Mirror last night [thurs] that the 30% rate is “still under consideration”.
They argued that increasing tax bands so that people pay the 40% rate of tax at a higher level and introducing a new tax rate does the same thing.
“It isn’t important. It’s the same amount of extra money in your pocket.
“An option being considered is a further increase in the €40,000 band. [This] is more likely.”
Changes to the tax bands last year were worth €800 a year to a middle-income worker.
It is anticipated that Fine Gael is likely to push for similar measures again this year.
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